Energy Bill [H.L.]

HL Deb 02 March 2004 vol 658 cc203-48GC

(Eleventh Day)

The Committee met at half past three of the clock.

[The Deputy Chairman of Committees (Lord Hogg of Cumbernauld) in the Chair.]

Baroness Miller of Hendon moved Amendment No. 141ZA: After Clause 151, insert the following new clause—

"PRINCIPLES OF BEST REGULATORY PRACTICE BY AUTHORITY

In the Utilities Act 2000 (c. 27), after section 5A (duty of authority to carry out impact assessment) insert—

"5B PRINCIPLES OF BEST REGULATORY PRACTICE BY AUTHORITY

In performing its duties under section 4AA of the 1986 Act and section 3A of the 1989 Act, the Authority must have regard in all cases to the principles of best regulatory practice (including the principles under which regulatory activities should be transparent, accountable, proportionate, consistent and only targeted at cases in which action is necessary).""

The noble Baroness said: In moving Amendment No. 141ZA, I shall speak also to Amendment No. 141ZB. The concept of best regulatory practice is not some abstract philosophical or theoretical concept; it is something to which every branch of government should aspire. I say right at the outset of my remarks, and as emphatically as I can, that there is no desire or intention to reformulate Ofgem's regulator objectives.

Amendment No. 141ZA seeks to bring into the energy sector some of the precedents set by the Communications Act and, more recently, the Water Act in relation to regulatory activity. It is significant that those two Acts came under a different department of state than the present Bill, so perhaps the DTI needs to take on board the attitude of its colleagues elsewhere in the Government.

The principles of best regulatory practice, as defined in the amendment, are that regulatory activity should be, transparent, accountable, proportionate, consistent and only targeted at cases in which action is necessary".

I wish that I had been the author of that excellent and succinct definition.

However, these principles were developed by the Better Regulation Task Force and are in fact supported by the Government. They are built into Section 3(3) of the Communications Act 2003 and Section 39(4) of the Water Act 2003. The two Acts impose requirements that must apply to all aspects of Ofcom's and Ofwat's regulatory activities. It is therefore appropriate, and indeed—to take a word from the principles themselves—"consistent" that the same principles should also be enshrined in this Bill.

Ofgem says that it aspires to meet these principles anyway, and therefore no over-prescriptive burden is being placed on it. Indeed, the case for including this provision in the Bill is strengthened by recent legislative action supported by the Government.

The Sustainable Energy Act 2003 placed on Ofgem a statutory duty to carry out impact assessments on all significant regulatory proposals. There is nothing in the amendment to which any authority bent on good government would object or to which the Government to their credit have not already subscribed. On the contrary, refusal to accept this wholly uncontroversial amendment could possibly send the wrong message to a future Ofgem that it is not bound by the principles of best regulatory practice.

Amendment No. 141ZB requires the Secretary of State to apply the same principles to her functions under the Utilities Act. I think that I need say no more than that. I should like to assume that the Government would accept this provision on the basis that it sets the same standards that they would obviously want to set themselves. I beg to move.

Lord Triesman

I think all noble Lords would agree with the noble Baroness that the better regulation principles are ones to which we would expect the authority to adhere. Indeed, the authority in its recently published draft corporate strategy has committed to these principles.

As someone who served on the Better Regulation Task Force for some time and who chaired one of its national inquiries and served on several other of its national inquiries, it gives me particular pleasure to say that we are happy to consider this amendment. It would formalise in statute the commitment that Ofgem has already made to be guided by the principles of best regulatory practice. It would follow similar provisions placed on Ofcom and Ofwat in the Communications Act 2003 and the Water Industry Act 1991 respectively, ensuring consistency among regulators.

A provision to have regard to best regulatory practice is placed upon Ofcom in the Communications Act 2003. A provision in the Water Industry Act 1991, which has yet to come into force, seeks to place a similar duty on both Ofwat and the Secretary of State.

We propose to follow the Ofwat model and consequently would hope to suggest an alternate drafting to the noble Baroness on Report, but there will be a draft in the terms that I have described. An important distinction is that the statutory general duties in the Communications Act apply only to Ofcom, and so it is appropriate to have an obligation to have regard to better regulation principles which applies only to Ofcom in that case. The Water Industry Act 1991 provides that the general duties apply to both the Secretary of State and the regulator, and so it is appropriate for the obligation to have an appropriate form of wording that deals with them both. In other words, each form of words has been written in a way that is distinctive to the needs, but nonetheless there has to be a central and general duty which is common: to have full and proper regard to the better regulation principles.

To be consistent, the obligation to have regard to better regulation principles should apply to the Secretary of State as well as to the regulator, even though the amendment seeks only to place a duty on the authority. However, the Petroleum Act 1998 covers regulation of offshore oil and gas industries, which is not covered by the Utilities Act or regulated by Ofgem. We would be opposed to such a reference in the form of an amendment to the Utilities Act.

Having expressed the need to ensure that we have consistency—a point which is absolutely right—and having made the point that there are some distinctions because of all of the different combinations of bodies that need to be regulated in any particular set of circumstances, I give noble Lords my assurance that if they withdraw the amendment today, we shall return to the matter at a later stage when we have had a proper chance to consider fully how the amendment should be drafted to give full effect to the concerns of the noble Baroness.

Baroness Miller of Hendon

I thank the Minister for the generous way in which he has dealt with my amendment. At first, I thought that he was going to say, as Ministers often say, "The noble Baroness has spoken well and we take her points on board but"; however, this time he did not use the word "but". He went on to say that the Government may bring something similar back at Report stage. Of course, I take pleasure in withdrawing my amendment.

Amendment, by leave, withdrawn.

[Amendment No. 141ZB not moved.]

Clause 152 [Application of general duties to Part 3 functions etc.]:

The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Whitty) moved Amendments Nos. 141A and 141B: Page 117, line 15, leave out "this Part" and insert "Part 3 Page 117, line 22, leave out "this Part" and insert "section (Modification of licence conditions for offshore transmission and distribution) or (Extension of transmission licences offshore) or Part 3 of this Act

On Question, amendments agreed to.

Clause 152, as amended, agreed to.

Lord Whitty moved Amendment No. 141C: Transpose Clause 152 to after Clause 155.

On Question, amendment agreed to.

Clause 153 [Supplementary provision about licence condition powers]:

Lord Whitty moved Amendments Nos. 141D and 141E: Page 117, line 38, leave out "this Part" and insert "sections (Modification of licence conditions for offshore transmission and distribution) and (Extension of transmission licences offshore) and Part 3 of this Act Page 117, line 41, leave out "Part" and insert "Act

On Question, amendments agreed to.

Clause 153, as amended, agreed to.

Lord Whitty moved Amendment No. 141 F: Transpose Clause 153 to after Clause 155.

On Question, amendment agreed to.

Baroness Miller of Hendon moved Amendment No. 142: Before Clause 154, insert the following new clause—

"Independent Chief Energy Engineering Adviser

APPOINTMENT OF CHIEF ENERGY ENGINEERING ADVISER

(1) The Secretary of State shall appoint a suitably qualified person to be his Chief Energy Engineering Adviser on matters pertaining to the supply of all forms of energy.

(2) The general duties of the Chief Energy Engineering Adviser shall be to advise—

1. (a) the Secretary of State on a long-term sustainable co-ordinated approach to infrastructure planning in relation to energy supplies, and
2. (b) on such other matters relating to the energy supply industry as the Secretary of State may from time to time determine.

(3) The Chief Energy Engineering Adviser shall be responsible in the performance of his duties to the Secretary of State, but shall otherwise be independent of the Government.

(4) The Secretary of State shall provide funding for the office of such adviser and for his office and staff and for the payment by the adviser of fees to consultants whom he may from time to time employ."

The noble Baroness said: I wish to speak to Amendments Nos. 142 and 143 together. First, I shall speak to Amendment No. 143, because it is merely a consequential amendment which arises only if the main amendment is accepted. It adds the funding of the chief energy engineering adviser and his office to the services to be provided by the Secretary of State and listed in Clause 154.

The main amendment is to create the office of the chief energy engineering adviser, whose duties are set out in subsection (2) of the proposed new clause. The chief energy engineering adviser shall advise, (a) the Secretary of State on a long-term sustainable co-ordinated approach to infrastructure planning in relation to energy supplies, and (b) on such other matters relating to the energy supply industry as the Secretary of State may from time to time determine".

The new clause makes it clear that the chief energy engineering adviser, while reporting to the Secretary of State, is independent of the Government. The justification for the creation of this office in the vital field of energy supplies is simply to ensure that short-term political considerations shall not dominate or even influence essential decisions.

There are precedents for the existence of such an office—the Government's Chief Medical Officer and the Chief Scientific Adviser. I do not believe that successive governments have ever felt threatened by the existence of these two independent officers. On the contrary, their pronouncements and decisions are more readily accepted by the public than any directly from the Government or from Ministers.

In an area as important as energy supplies, which has its own controversial facets—I shall not digress by listing them—it is essential that the Government should automatically receive totally independent and disinterested advice and not simply be told what they would like to hear. I hope that the Minister will accept this as a constructive amendment which, incidentally, has the fullest support of the Institution of Civil Engineers. I beg to move.

Lord Jenkin of Roding

I would very much like to support the amendment. My noble friend mentioned the precedents of the CMO advising health Ministers and of the Chief Scientific Adviser in the Department of Trade and Industry. I have had direct experience of working with such people and their predecessors in various of my previous manifestations and have always found them of enormous value. When I was Secretary of State for Health, the Chief Medical Officer was a doctor of immense distinction, who stood apart and aside from the main body of my officials in the department. I found I could always rely implicitly on his advice. Moreover, he was not slow to criticise Ministers if he felt that we had got it wrong.

We have had a more recent example of that in the person of Sir David King, the Chief Scientific Adviser, who has made no secret of his view that the Government are not going to get by in the next couple of decades without new nuclear build. He has said so in a number of well publicised speeches across the country. That may have embarrassed Ministers, or some Ministers, but the fact is that it has greatly enhanced his own credibility and stature in the eyes of the scientific and engineering community outside. I believe this is an important proposal.

I have another, rather more personal reason, for welcoming the idea. My great-grandfather was the first professor of engineering at Edinburgh University. He was the secretary of the British Association committee that was set up to establish electrical standards, which were then adopted by the BA. The ohm, the amp and the volt are what they are today because of the work that great-grandfather Jenkin did in the 1850s. He worked, of course, to Lord Kelvin, who was the chairman of the committee. Lord Kelvin was, in effect, a chief engineering adviser to the Government. They did not have that specific appointment, but they had always felt it necessary to have access to engineering skills of the highest order to make sure that the policy they were adopting was right. I believe that this would be a very valuable appointment. It would carry considerable prestige and status. I think that it would be a very great reassurance to members of the public if the Government really had close at hand truly top-quality engineering advice.

It would also do one other thing which perhaps is not wholly relevant to this provision—it would raise the status of engineering in the general scheme of things. I set up and appointed the members of the first Engineering Council. That did not succeed. There was then the subsequent attempt at the Engineering Council. We now have the Engineering and Technology Board which we hope will make strides in re-establishing the status of engineering. To have a chief engineering adviser on energy at the DTI would be to create, in a sense, a hero, which is what the engineering profession really needs if it is to attract young men and women to follow careers in engineering. I do not say that that is the main reason, but that will be one of the consequences. It would have that consequence because the appointment would be one of high profile, high status, high skill and very great respect.

I believe that this is a valuable step. I hope that the Government will not just dismiss it out of hand.

3.45 p.m.

Lord Ezra

I should like to support the proposal put forward so effectively by the noble Baroness, Lady Miller of Hendon, and the noble Lord, Lord Jenkin of Roding, for the reasons that they have given. My particular interest in this would be to maintain a long-term view of energy infrastructure implications. As ever more energy is needed and as new forms of energy are developed, so the long-term inter-meshing of these new developments needs to be studied independently. I think that the DTI or whatever future government department is going to be responsible for energy could not but gain from the establishment of a leading engineer covering the energy sector in the way that has been described by the noble Baroness, Lady Miller.

Lord Triesman

In the context of university life, I also saw a great deal of the now Chief Scientific Adviser Sir David King, who was originally a very eminent scientist at the University of Liverpool. Of course, I have seen and had close contact with the Chief Medical Adviser and others. I share the admiration that Members of the Committee have expressed for the work they have done and the kind of model that it provides. I should like to try to set out why the Government believe that there may be a distinction between this proposal and the kinds of role played by those very eminent scientists and by the medical scientists advising the Government in veterinary science.

As the noble Baroness, Lady Miller of Hendon, said, Amendments Nos. 142 and 143 need to be considered together. I share with her the desire to ensure that the Government have the best possible available information and advice at their disposal to develop and deliver energy policy. The noble Lords, Lord Jenkin and Lord Ezra, have underlined that self-same point. However, the Government take the view that such advice is already available and that there is no requirement for the Secretary of State to appoint and remunerate a chief engineering adviser to give independent advice on matters as they relate to all sources of energy supply. I shall try to explain why.

As I understand it, this is not a new proposal. Noble Lords will recall that the appointment of a chief engineer was debated in your Lordships' House on 16 July 2003, following the Institution of Civil Engineers' report, The State of the Nation, which advocated the appointment of a chief engineer to offer advice on sustainability and infrastructural renewal, which were the two elements of the contribution of the noble Lord, Lord Ezra a few moments ago. At that time, my noble friend the Parliamentary Under-Secretary of State for Science and Innovation provided the Government's view to the House that it would not be desirable to give what appeared to be such diverse areas of responsibility to a chief engineer. The Government do not wish to review that proposition in light of the amendments before us. Indeed, they would wish to identify several reasons in addition to those that were given by my noble friend last July.

It is difficult to think of a single advisory post that is directly connected to a broad industry in a way that science in itself is not, because it covers many industries, concepts and disciplines. The same point could be made about medical sciences, where a vast number of disciplines and associated industries are involved. It would be hard to think of a single advisory post that would have such a wide remit and such an important role in view of the impact on the economy of the issues surrounding energy supply.

As drafted, the amendment would create a post which crossed government responsibilities relating to all aspects of the economy as they relate to all aspects of energy sources: gas, electricity, renewables, oil and coal. It is hard to imagine the way in which the wide breadth of knowledge that would be required to undertake that role effectively could be encompassed in a single individual. The Secretary of State would be provided with an adviser who might not be a master of any one of those areas, but who would be required to be spread across all of them. Therefore, the advice would perhaps not command the same level of confidence of the energy markets or of government. That might be a justifiable conclusion to reach. To give the post of chief engineering officer real gravitas, therefore, would require a large investment of resources to ensure that his office was of sufficient size and quality to provide expert advice on all aspects of energy. That would require a considerable level of funding, which frankly might well be better spent elsewhere. It would also add a further burden to business, in terms of the information sought by the office of the chief engineer to gain a full appreciation of all market conditions in the UK and internationally. In fact, the Secretary of State already receives expert advice on energy matters from government advisers, economists and consultants as well as from the energy industries themselves. The Government's newly appointed sustainable energy policy advisory board provides independent, expert advice to Ministers to help deliver a sustainable and coherent energy policy.

There are obviously occasions when the Government look for wider views on the development of policy. We have done that and we shall continue to do so. For example, in developing the energy White Paper, the Government undertook the largest-ever consultation on energy policy. Views were sought not only from traditional stakeholders, but actively sought also, in terms of ideas and priorities, from the general public—through workshops, web-based discussions and roadshows. Overall, 6,500 people and businesses provided invaluable advice. Four-and-a-half thousand of those responses were from the public.

One of the benefits of liberalised competitive markets is that decisions are taken not by one individual, but rather by the combined actions of people who run the energy companies and supply fuel and power to their customers—people who are real experts and who know and understand the real business. That is my point about the direct connection between an industry comprising a number of parts and the general oversight of science, which is not homogeneous in that sense.

Finally, it could be argued that one has only to read the letters pages of national newspapers to see that independent advice on energy matters is given freely by almost everybody and without restraint. The availability of advice is itself not the problem; the problem would be in creating in one individual a sufficiently comprehensive set of skills and abilities that would be accepted in the industry as such. With the greatest respect, I do not believe that that would apply to the deliberations of Sir David King, for example. Therefore, I urge the noble Baroness to withdraw Amendment No. 142 and not to move Amendment No. 143.

Lord Ezra

It is regrettable that the Minister has seen fit to reject the amendment without further thought. He did so by magnifying the potential role of the advisor beyond what is intended by the amendment in order to show that it could not work. The point that he missed is a very important one: the proposal could have been an excellent way in which to mobilise the support of the professional engineering organisations.

In recent months, the Institutions of Civil Engineers, of Mechanical Engineers and of Electrical Engineers, have all shown a considerable interest in energy matters, but that has been provoked by the White Paper and by the debate that is going on now. That interest could soon wither away. A way in which to maintain the interest of the institutions in energy matters, which form a very important part of the economy, would be to make the appointment that the noble Baroness proposes. The Minister should think again about the amendment in that light.

Much has to be done to mobilise the potential engineering resources that we have in this country. As the noble Lord, Lord Jenkin of Roding, pointed out, engineering still does not get the acclaim in Britain that it receives in other countries. This could be one way in which to add to the importance of engineering. Therefore, I ask the Government to think again about the amendment.

Baroness Carnegy of Lour

I do not believe that it is only the professionals in the field whose interest needs to be mobilised. I believe that the public will need a good deal of help in understanding the hard issues behind the choices that will have to be made. They will need help to understand what will happen in their neighbourhoods, which, let us face it, they will suffer from if there is a lack of energy. Although it may be difficult to find an individual who can embrace all the expertise that might be required, as the Minister said, the Government do have a problem. As their policies develop, they will need far more public confidence than I believe they will have.

Much fear is exhibited at meetings about developments in the windmill field. Arguments develop between those who believe that windmills are the answer to global warming and that therefore we must support them and those who are absolutely horrified about what, for example, they will do to the very important tourism industry. Those meetings need input from someone with a lot of authority, who is not given to political spin. The energy White Paper is in my view a spin document—a political document. It does not help us forward very much except in giving a framework for thinking, which the Government want us to have.

Matters will have to move on in a practical way. We may have to develop nuclear energy much more—I am sure that we will have to, in fact. But even as the present ideas develop, professional advice will be needed, at a high level, which people feel that they can trust. I have been at meetings where people who have worked in the industry and who could explain about power lines and windmills, for example, have been present. That helps the public to understand and gives them confidence, but it is a local thing. People may have confidence in someone whom they know, who has perhaps worked all his life in the particular industry that he is talking about. That happens with the Chief Scientific Adviser and Medical Officer, and we see it happening in Parliament and on television, when such people are interviewed.

The Government have a problem and they need to find a solution to it. They may not find the solution in this amendment, but they should think very seriously about the matter. It is a jolly good idea to think about it.

4 p.m.

Lord Gray of Contin

I had not intended to participate in this debate, but like all good debates it has provoked something in me that I want to explain. If I were the Secretary of State, I would be very much inclined to adopt the line that the Government have taken on this amendment—and I shall tell Members of the Committee why that is.

The White Paper has not been mentioned. If ever there was a case for someone advising the Government, it is reflected in that White Paper, which is a disaster that satisfies nobody and achieves very little except to provide a basis for argument. If the new post is created and someone is appointed to it who is anti-nuclear, there will be an outcry from all those who support nuclear power, saying that the appointment has been contrived and that that person has been put there to prevent the development of nuclear power. If, on the other hand, the Government appoint someone who is very favourable to renewables, exactly the same argument will be used by the other side. If the Government were to follow that line and make such an appointment, they would merely create a stick with which they would be beaten at every available opportunity. I know that that is not the popular view on this side, but it is a practical view, and one that I fear might be realised if such an appointment was made.

Lord Jenkin of Roding

I plead guilty to having stimulated my noble friend Lord Gray of Contin into making a speech. He was putting his views to me quietly, and I asked him why he did not stand up and say them. Now he has, and I am not too sure how pleased I am about that, although it is a perfectly understandable view.

I listened to the Minister with increasing dismay and confusion. He started by referring to the debate last July, in which the proposal was put before the House that there should be a general industrial adviser to the Government. He made the point that the noble Lord, Lord Sainsbury, made on that occasion—that the brief was altogether too wide for any single individual to hold. I hope that I am interpreting that point reasonably fairly. Therefore, such an appointment would be impossible.

The appointment being proposed does not reflect that original proposal but is much more narrowly focused on the area with which we have been concerned in this Bill, and with the other issues surrounding it—namely, that of energy supply, and the whole future of our energy policy. I cannot conceive why that should be regarded as too wide to justify the appointment of an expert advisor to the Secretary of State in this area. I say what I say next with the greatest respect to my noble friend Lord Gray of Contin. When the noble Lord, Lord Carrington, was the Secretary of State for Energy, and I was his number two, as spokesman in the House of Commons, with the title of Minister for Energy, we struggled with a number of issues in January and February 1974. Noble Lords may well remember that time. I certainly would have greatly valued the presence in that newly started Department of Energy of someone who could have drawn on his expertise from a professional standpoint. We had very wise civil servants. Sir Jack Rampton was a Permanent Secretary and a man for whom I formed a very great respect but, with the greatest respect, he was not an engineer. Although no doubt there were some engineers in the department, they did not begin to carry the status and standing that is embodied in my noble friend's amendment this afternoon.

When I reached the Department of Industry—I have already mentioned the Department of Health, where I was for a time and where we had the Chief Medical Officer—I had a very top ranking former industrialist who was the chief industrial adviser to the Secretary of State. His name was Davies and he came from ICI. I found his advice of enormous value. It was different from that which came from the civil servants, from the permanent secretary, the second Permanent Secretary and so on. Essentially it was professional advice on the industrial issues with which, as industry secretary, I was confronted. Of course, that was a post that covered the whole area of what was then the Department of Industry; it did not include the Department of Trade, as at that time it was separate.

In this case, I am looking for someone within the DTI, but not for someone who covers the whole area for which the Secretary of State has responsibility. I am looking for someone to cover the aspect of energy that currently is part of the responsibility of Mr Timms in another place, a responsibility that he carries out together with a number of other responsibilities such as the Post Office and e-commerce. I believe that there would be considerable advantage to the Government in being able to call on the services of a senior engineer with a lot of experience, whose expertise was in the area of energy, who could advise the Government and, as the noble Lord, Lord Ezra, said, who would have the influence and status to be able to bring along the energy institutes that have expressed such interest in the subject in recent months.

I ask the Government to think again on this point. I believe that this is a good idea and all my experience as a Minister in various departments suggests to me that it would be a good idea. It is rather cavalier of the noble Lord, Lord Triesman, to read out his notes, that no doubt have been prepared under the advice of the able people sitting behind him, but which to my mind—I shall read Hansard carefully when it is published tomorrow—contain a number of contradictory arguments. One sensed a draftsman dragging at every possible argument. We were asked to look at all the lovely letters that one sees in the Times, for example—we were told that we get lots of advice. Many of the letters in the Times are utter rubbish and I hope that the Government do not pay too much attention to them, although some of them are very good, such as those from Professor Ian Fells. A colleague recently had a very good letter printed in the Times to which I drew attention at Question Time. But that is no substitute for having someone with whom one is in regular touch, who himself keeps in regular touch with all the industry and energy institutes around the country and all the professional bodies that are concerned with energy, whose wisdom the Secretary of State can gather. With the greatest respect, no Minister begins to have the time to do that for himself, nor is it easy for a non-professional civil servant to do that.

I have seen such a situation in a variety of different activities and I am convinced that there is a case for the appointment within the DTI of a chief engineering adviser to deal with energy. I shall read what the noble Lord, Lord Triesman, has said, but at the moment I am wholly unconvinced by his arguments. I hope that when my noble friend Lady Miller withdraws the amendment she will make it clear that this is not the last of the argument. We shall return to the matter.

Baroness Carnegy of Lour

Is my noble friend prepared to say that he agrees with me that such a person could help the public to understand what was going on and help their confidence in understanding the implications of energy development?

Lord Jenkin of Boding

I am grateful to respond to my noble friend's question. Of course. Anyone who read Sir David King's address to the Seattle conference, which was subsequently published in Nature, about the threat to global warning, would recognise that that was an immensely powerful piece of advocacy for the Government's policy. I have heard Sir David talk on this subject on a number of occasions. He speaks with enormous authority. I say this with the greatest respect to the noble Lord, Lord Whitty—neither the noble Lord nor any of the DTI Ministers could possibly emulate that authority because the Ministers would inevitably be delivering lectures, large parts of which will have been prepared by other people. I have no doubt that when Sir David King talks about climate change, its dangers and the need to meet them, he does so on the basis of his own experience as a scientist. So I am sure that my noble friend Lady Carnegy is absolutely right.

I shall not mention other examples, but there were certainly examples of that in health. In trying to get some public appreciation of the threats of AIDS and HIV, the Chief Medical Officer was able to get not only the profession but also the public to recognise that the problem really had to be grappled with. My colleague and noble friend Lord Fowler, who was Secretary of State at the time, played a notable part in that. But he could not conceivably have done that without having top-quality professional advice at his elbow to guide and to steer him. I am sure that he would the first to admit that. So, can Ministers think about this issue again?

Lord Triesman

I want to respond briefly to some of the points made by noble Lords. Some forceful arguments have been put. It is probably as well on an occasion such as this to make at least a little distinction between the things about which I suspect we might all agree and those about which we might not.

It is unquestionably true that we have not perhaps paid as much attention to the enormous benefits that world-class engineering can contribute as we have to other disciplines in the general areas of the sciences. The promotion of those areas and disciplines in which there are great skill resources in the United Kingdom would no doubt benefit us all a great deal.

My contacts over the years with the institutions representing the civil, mechanical and the chemical engineers have taught me that they are—each of them in their disciplinary range—very proud advocates of their parts of engineering. They do not always, incidentally, readily concede to each other the real authority that might be needed to speak about the whole of engineering. I am not an engineer, but I respect the specific sorts of knowledge that they reflect in their dealings, and in the advice they give. It is of course highly specialist. Even if there are elements within engineering which bridge all areas, there are unquestionably aspects which require that kind of specialist knowledge and preparation which I can only look at and admire, because of course I cannot take part in it in the sense of real knowledge.

There are other institutions, as noble Lords will be aware, which deal with the examination of engineers in a more general sense. They are equally proud of their particular niche and particular tradition.

Baroness Carnegy of Lour

I do not want to hold the Committee up, but precisely the same thing applies in the royal colleges, in medicine and the people who examine. That does not mean that there cannot be a Chief Medical Officer.

4.15 p.m.

Lord Triesman

When I get to the latter part of what I want to say, I hope that that is one of the distinctions I will be able to make.

When your Lordships had the debate in July—I was not, at that time, a Member of your Lordships' House, so I, too, have to rely on the record to be certain about what was said—the noble Lord, Lord Beaumont of Whitley, made the point that we needed to appoint a chief government engineer to ensure that there was a co-ordinated, long-term and sustainable approach to the renewal of national infrastructure. I believe that the contention here is that while that point was cast rather broadly, the proposal today is cast more narrowly, so the objections that were made on that occasion should not apply on this occasion.

With the greatest respect, I think that this amendment is also cast in very broad terms, as it relates to, matters pertaining to the supply of all forms of energy". It is very hard to see where that remit might be limited. It could be interpreted not only in relation to the industry—and it is an industry; it is not, like medicine, a set of disciplines which come together and are not, themselves, integrally related to any industry as such. We are talking not only about different elements of the industry but also about how they might impact on the economy and how each different source of energy might impact on the economy. It is quite possible, without being fanciful, to see that this could also be a very broad proposition.

That is why I think the words of the noble Lord, Lord Gray, are so wise. Whoever was in that role would have to have, in the eyes of all those who had heard the advice, an impeccable distance between themselves and the advocacy of any one element within it. Were it to be believed that it was advocacy on behalf of any one element within it, that would inevitably not only reduce the impact of the advice and make people suspicious about the purpose for which it was given but would also be a direct impact on a highly competitive industry which has many contesting elements. I am not seeking to put words into the noble Lord's mouth, but I think that was one of the great elements of force of his argument.

I feel that when I first spoke, I did not draw the point out adequately. That is the difference I see between the role of the Chief Scientific Adviser, who may well come from a discipline but has a whole set of disciplines, and the role of somebody who would be inserted in an industry where everybody would be attentive, moment by moment, to whether that person was favouring one element of the industry over others.

Lord Jenkin of Roding

We have had mention in this brief debate of the Chief Scientific Adviser, Sir David King, who, as I said, has made no secret of his views about the future of the nuclear industry. That did not stop Sir David putting his name to the White Paper, which took an entirely different view and merely said that we should keep the nuclear option open. I do not think that that in any way lowered his esteem in anybody's eyes; it was extremely helpful to the Government that he had an input into the White Paper. He is an extremely wise man—we may not have liked everything in the White Paper, but there it is.

I do not think the fact that Sir David had a strong personal view on the matter in any way interfered with his broad advice to Ministers about what might or might not go into the Energy White Paper. With the greatest respect to the noble Lord, Lord Triesman, I just do not follow his argument.

Baroness Byford

I wonder if I can throw a couple of extra points in, although I do not mean to be disruptive. I followed the noble Lord's first response, when he said that advice was already available. My question, naturally, was: who from? He then talked about it as a cross-departmental responsibility. Who pulls it all together?

This is an enormously important part of the Bill, which deals with the future of all forms of energy. The noble Lord will be well aware that throughout the debates we have had over these 10 days, we have expressed our concern that the Bill is not about energy. It deals with a very narrow part of our energy needs—it is about the decommissioning of nuclear, offshore wind installations and trading. I follow my noble friend's line of thought in that we do need somebody there, particularly if the responsibility goes across government. In that case, who pulls the bits together and whose advice is taken?

I say to the noble Lord, Lord Whitty, as he will know very well, that when we had the dreadful outbreak of foot and mouth we needed someone at the helm who was an authority. Obviously, the Chief Medical Officer is employed directly by the Government but I should have thought that other arm's length expertise would have been of additional benefit. My question takes me back to the noble Lord's original answer; namely, that such advice is available. However, it seems to come from different areas. Who does what? Who is responsible at the end of the day? If it is cross-departmental advice, how many departments are involved and who pulls it together? I very much support my noble friend's amendment.

Lord Triesman

I promise that I shall be very brief. I wish to make two points, one of which will be an answer to the question. First, I refer to the role of Sir David King and, indeed, to his predecessor, Sir Robert May, now the noble Lord, Lord May. They are eminent scientists drawn from particular disciplines not in any way associated with any element of the energy industry. They are not easily identifiable as having an interest in any sense because they are wholly independent of all of it. In my judgment that was what gave force to the Seattle speech. No one could say that it reflected any interest that could be said to be associated with something in a competitive industry that might give rise to any advantage. Whether we liked or did not like the content of the speech, it was completely cocooned from any kind of suggestion that there was an interest involved in it. That gave the speech its force.

Secondly, I say to the noble Baroness that the Sustainable Energy Policy Advisory Board which was appointed in December is the body that pulls all the advice together. It is independent and offers independent advice on all energy matters and reaches across the whole of government in doing so.

Baroness Byford

I am sorry. I understood that, but I trust that I did not put the matter as simply as that. At the end of the day, does the buck stop with the DTI, with trade, or where? At the moment it is a cross-departmental matter, as the noble Lord said.

Lord Triesman

Happily, I do not have to read this out. The answer is the Cabinet and the appropriate committees that deal with the relations between the departments that are concerned with any particular set of decisions. I hope that it is a proper example of joined-up government.

Baroness Miller of Hendon

This has been a very interesting short debate. I should like to thank all noble Lords who have contributed to it. My noble friend Lord Jenkin and, indeed, the noble Lord, Lord Ezra, both spoke with great authority and experience in these matters. It was useful to hear their comments. My noble friend Lady Carnegy tried to put forward the view that the advice we are discussing from a person of authority would be helpful to members of the public and not just to the Secretary of State.

I thank my noble friend Lord Gray of Contin for his remarks. Of course, I do not agree with what he said but that does not mean anything other than that I am glad he raised the point that was well answered by my noble friend Lord Jenkin in referring to the Chief Scientific Adviser. The latter is perhaps an advocate of nuclear energy but, on the other hand, he was very happy to put his name to the energy White Paper which appeared not to mention that at all. In fact, it definitely did not mention it at all.

I thank the Minister for his answer. I did not agree with any of it but that does not mean that I do not thank him for stating it as it was interesting. We believe that the matter is much more focused than the Minister suggested. The Minister quoted Amendment No. 142 as stating that: The Secretary of State shall appoint a suitably qualified person to be his Chief Energy Engineering Adviser on all matters pertaining", and so on. However, the word "all" does not appear in the amendment. The amendment states: The Secretary of State shall appoint a suitably qualified person to be his Chief Energy Engineering Adviser on matters pertaining", and so on. It is as if the Government made up their mind beforehand that the measure was too wide and too diverse. Of course, the Minister must have his speech prepared before he hears what we have to say; otherwise, he would have an impossible job to do. However, that was very much a speech that was known before we began. I think that that is quite inappropriate.

As I was saying, the adviser is to advise, the Secretary of State on a long-term sustainable co-ordinated approach to infrastructure planning". We need someone to bring that all together. There is no question about that. We need someone who is independent of government but answerable to the Secretary of State. There is no doubt about that.

The Minister started off by saying that he hoped that I would withdraw the amendment in view of his comments. I shall withdraw it. However, I shall do so not in view of what he said but because we are in Committee. We will most certainly wish to bring it back. In return for my withdrawing it, I echo the words of my noble friend Lord Jenkin in suggesting to the Minister that he should go back to the drawing board and have another think on this one. The provision is a very important and necessary addition. Having said that, and not so much with pleasure, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Miller of Chilthorne Domer moved Amendment No. 142A: Before Clause 154, insert the following new clause—

"SUSTAINABLE DEVELOPMENT DUTY FOR GAS AND ELECTRICITY CONSUMER COUNCIL

(1) The Utilities Act 2000 (c. 27) shall be amended as follows.

(2) In section 2 (Gas and Electricity Consumer Council) after subsection (2) insert— (2A) The Council shall exercise and perform its power and duties so as to contribute to the achievement of sustainable development."

The noble Baroness said: This is a small amendment which seeks to update the Utilities Act 2000 by giving the Gas and Electricity Consumer Council a duty to have regard to sustainable development. It also provides that the council's powers and duties shall, contribute to the achievement of sustainable development".

I did not take part in the passage of the Utilities Act, but I have gone back and read the debates on it at some length. If that legislation were being considered by your Lordships' House today, I believe there would be far more discussion about the meaning of sustainable development and about whether that legislation is an appropriate way of achieving what the Government say they want to achieve in energy policy and sustainable development.

The noble Lord, Lord Whitty, will recall that at the end of our recent debate on the countryside, he and I agreed completely, I think, that sustainable development was a three-legged stool and that all legs had to be of equal length if sustainable development was to be effective. The problem with the Utilities Act is that it places the emphasis on the economic and social aspects of the council's duties and not at all on the environmental aspect.

Section 14 contains provision that the Secretary of State may give guidance on social and environmental matters. I ask the Minister to tell us what guidance has been given on environmental matters in the three years since that Act came into being. Updating the Utilities Act as we propose would strengthen the arm of the council. I am sure that the council would wish to pursue its objective with an eye to the whole of sustainable development. As currently drafted, the Act restrains it from doing so. I beg to move.

4.30 p.m.

Lord Whitty

I completely agree with the noble Baroness about the importance of sustainable development and with her assertion that the environmental dimension of energy policy is no less important than any other, because the whole of our energy policy is directed at reducing the carbon and climate change impact of energy use.

However, one has to look at who is the deliverer of each of those different aspects of sustainable development. It is no great secret that a substantial amount of discussion has taken place about what Ofgem's responsibilities would be, as distinct from those of the Secretary of State, and we are now considering the consumer council's responsibilities. The decision about that, in both the Utilities Act 2000 and in discussions about the energy White Paper, was that Ofgem shall primarily be the economic regulator and that the Secretary of State, as the noble Baroness has just said, shall give guidance on the environmental and, to some extent, social policy.

Of course, Ofgem will have to take account of that policy, but it is primarily an economic regulator. That is why, when we had a similar discussion on sustainable development in relation to Ofgem, I resisted the relevant amendment there. As far as the consumer council is concerned, that looks after the interests of the consumers. It is not its job to force the other people in the jigsaw to take a view on long-term environmental matters. It will be responsible for consumers present and future and, in that sense, it is responsible for sustainability as well as for other matters. But it is the job of government departments to ensure that environmental matters are taken into full consideration.

In answer to the question about guidance, a considerable amount of guidance has been given to Ofgem and to other operators in the field about environmental and social policy since the Utilities Act 2000. That guidance will be rather more clear as a result of the changes in the structure of GEMA/ Ofgem, but the role of the consumer council, which is much wider than that of some consumer councils that have been established, is to look after the specific functions set out in the Utilities Act 2000. It is to obtain and keep under review information about consumer matters and the views of consumers; to make proposals or provide advice about consumer matters and represent consumers' views on them; publish information about consumer matters; and investigate and resolve complaints and other matters relating to the interests of the consumer. I understand that it handles 100,000 formal customer complaints a year and 1 million inquiries.

That is not the same role as having to instil sustainable development into the other players in the game. Clearly, it will have to have regard to those policies in what it does. However, the amendment states that the council, shall exercise and perform its power and duties so as to contribute to the achievement of sustainable development". In other words, everything that the consumer council does would have to be geared towards sustainable development. That is not the primary duty of the consumer council. It has a duty certainly to take account of those matters, but not to ensure that all such decisions on individual complaints and matters of policy are geared to the achievement of sustainable development. That is the role of the department and it is built into many of its legislative responsibilities. Ofgem has to take account of the guidance given by the department, but that is not the role of the consumer council.

The relativities of responsibility differ from utility to utility. The noble Baroness may challenge me on the Water Act 2003, during discussions on which I eventually agreed with her about the Water Consumer Council, but it is the water regulator who has direct responsibility for environmental matters and sustainable development. That is not the case in relation to energy supply, where the department has those responsibilities. We are dealing with a different situation. The wording of the amendment would put the consumer council into some difficulty in carrying out what is its more mundane, but important, function of representing the millions of energy consumers.

Baroness Miller of Chilthorne Domer

What guidance has been given on environmental matters since the passing of the Utilities Act 2000?

Lord Whitty

Apart from intervention on individual matters, draft social and environmental guidance in respect of the Utilities Act 2000 was given to Ofgem. That guidance was set down at the end of last year and was followed by a consultation process. The overall guidance appears in that code. It is guidance to Ofgem and not to the consumer council.

Lord Ezra

My noble friend is quite right. When we debated the Utilities Bill—I was very much involved in that, as was the noble Lord, Lord Jenkin—we did not pay so much regard to environment and sustainability matters as has subsequently been the case. Therefore, it is not unreasonable that we should seek to put that right when opportunities arise, such as are presented by the present Bill.

I understood from the Minister's remarks that he agreed that the consumer council should have regard to sustainable matters. Indeed, one could go further and say that it should have regard to them in the interests of consumers. It would be possible to reword the amendment to reflect that, although that would be up to my noble friend, who may return to the matter. The Minister was right to emphasise the specific role of the consumer council and its responsibility to consumers. However, the concept of sustainability is now very widespread, and it does not seem unreasonable that that concept should be brought into the terms of reference in some way that recognises that the council should have regard to it in the interests of consumers, whom it is its primary duty to serve.

Baroness Miller of Chilthorne Domer

It will not surprise the Minister to know that I appreciated his remarks about the Water Bill. We were very pleased that the Government had a Bill on which, by the end of its passage through this House, both the regulator and the consumer body had a duty to regard sustainable development. It surprises me considerably, and I still do not understand why it is, that in the instance of this Bill the Government are resisting that move.

The Minister said that it would be unbalanced for the council to have the duty, given that Ofgem did not have it. However, as he acknowledged, I have argued that Ofgem should have the duty. With the greatest respect, I do not believe that in anything that the Minister said in his reply I heard one sound reason why those bodies should not have regard to sustainable development. As my noble friend Lord Ezra said, it is in the consumers' interest that they should.

I expect to return to the matter on Report. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Miller of Chilthorne Domer moved Amendment No. 142B: Before Clause 154, insert the following new clause—

"ADVICE AND INCENTIVES

The Secretary of State shall—

1. (a) ensure that all households in the United Kingdom shall have easy access to advice and demonstration models of both energy conservation and generation innovations; and
2. (b) develop a programme of fiscal incentives for households to ensure they can minimise their consumption of power for heat and of electricity whilst maintaining or improving their standard of living."

The noble Baroness said: Of all the amendments that I have moved in Committee, this is perhaps the one that interests me the most. We have just heard that there is no role for the consumer council in promoting sustaining development among individual householders. It is a matter of great disappointment to me that the Energy Bill offers no opportunity for furthering the prospect that individual households can make a considerable contribution, not only to energy savings but also through microscale renewable generation, to the targets that the Government have set. I am most surprised that we could have got through the entire Bill without a discussion of that point.

My amendment is in two parts. The first part aims to explore whether the Government feel that the access that households have to energy advice is sufficient. In moving the amendment, I pay tribute to the Energy Saving Trust, which has done its best to promote the idea of energy efficiency against the background of a lack of real enthusiasm from the Government to help it. I tried to think of a polite way in which to word that point!

I can best illustrate my point by saying that there are indeed energy advice centres located throughout Britain. However, when one visits the website, as I did when tabling the amendment, one finds that there is no energy advice centre in Somerset—to use an example of someone who lives in the west country. My nearest one would be in Bristol; otherwise, I have the choice of Plymouth, Devizes or Poole. None of those are very convenient. All of them will involve a journey. When I arrive in Plymouth—for example—the energy advice centre is, according to its website, located on the fourth floor of a building somewhere. I have to admit that I have not visited that one, the one in Bristol or indeed any of them. I think that that illustrates the point that unless one lives very close to a centre, one is unlikely to know where it is, to have visited it and to have profited by any advice it can offer.

The fact of the matter is that if we are really going to get households to take a great deal of interest in the possibilities available to them, we need an outlet for this kind of advice. We need demonstration models of what is available in every high street—probably next door to or indeed even in places selling electrical appliances. We need advice centres that are easy to access, that are exciting places to go to and that offer very practical advice. And they need to be extremely widespread.

I would like to take a moment to explain to the Committee that a couple of weeks ago in Somerset there was a very interesting Homes for Good Fair, which was launched by the presenter of Channel 4's "Grand Designs". It was a "green homes" fair. It was held at the Somerset College of Arts and Technology. It featured about 60 key companies, which are not only making great strides in terms of innovation both in energy efficiency and natural building materials but also in the sorts of micro-generation that could be of great interest to people. There were small-scale windmills that can be put on one's house which feed into one's electricity system. photovoltaic systems and advice on CHP—a matter which of course we have discussed in your Lordships' House.

The fair attracted a large number of members of the public. It was a very successful example of the interest in the matter. The public came from all over Somerset and indeed, I think, from other counties. A great deal of enthusiasm could be generated where one has a practical demonstration of what is available. I think the Government should be promoting and encouraging that kind of thing.

The Energy Saving Trust's website talks about potentials. One article on it from November last year explains that UK households could generate £2.5 billion worth of solar energy every year. That is a staggering sum. I believe that the trust has not lightly arrived at that figure. It has taken into account that there are cloudy days and that on those days the photovoltaic system would not create as great an output as it would on a sunny day. Nevertheless, that kind of potential simply is not being realised, and not just in relation to new build. New build is very important and with that kind of potential it is amazing that we are still roofing houses in slates and tiles and not using photovoltaics widely. Of course we have a huge amount of housing stock that is already built in this country. We really need to encourage householders to look at investing in photovoltaics, in wind energy and in micro-CHP for themselves.

I turn to the second part of the amendment. It talks about developing, a programme of fiscal incentives for households to ensure they can minimise their consumption of power for heat and of electricity whilst maintaining or improving their standard of living".

I know, because I have tried it, how difficult it is for householders who make a certain capital outlay, for example, on photovoltaic equipment, to know how long it will take to pay hack, taking account of the fact that they will, I believe, get a cheque every year because of the renewables obligation. Is it a worthy investment, because they are consuming less electricity? The Government need to give far more advice on balancing a household budget in this respect. Is the Minister sufficiently satisfied that the right sort of fiscal incentives are in place to encourage householders to invest in all the possibilities that are becoming quite widespread in the market?

There are two problems addressed by the amendment which I hope the Minister will answer. First, there is a lack of energy advice available. Secondly, there is a lack of advice for households when it comes to understanding that if they make an investment they will, in the long term, make a saving. I beg to move.

4.45 p.m.

Baroness Byford

I support in principle the amendment of the noble Baroness, Lady Miller of Chilthorne Domer. She is quite right: we laboured hard and long to get some form of conservation provision put into the Water Bill. If the Minister says the wording of the amendment is not right or suitable, I hope that she will return to it again at a later stage.

Let me follow on from what the noble Baroness said. In the old days—certainly in my misspent youth—there used to be gas and electricity showrooms which, I think, no longer exist. The Minister will correct me if I am wrong, but I think they have all gone. Nowadays, people selling gas and electric appliances want you to use them—they are not there for conservation purposes.

Secondly, the Minister may come back to this point—although I am not sure and that is why I am challenging him—saying that other schemes for house improvements are already in existence, as I know there are. They may be outside the Bill's remit, but I do not think that that detracts from the need to have in the Bill a direct incentive or encouragement for members of the general public and for those in business as well. When I go around the House late in the evening I find lights on galore, which makes me think that we could conserve much more energy here. However, that is a minor matter.

I am aware that there are conservation and financial schemes to help keep houses warmer for older people, for example, for which one can qualify. The noble Baroness gave examples of the many different schemes. I, too, encourage the Government to think positively, even if they do not like the wording of this amendment, about putting some words in the Bill to encourage conservation and the lowering of consumption. If we each did our hit, it would make a huge difference.

I cannot add any more to what the noble Baroness has said, and at this stage of the Bill I do not wish to do so. But I would be very sorry if a Bill technically called the Energy Bill did not deal with conservation and innovation. Several Members on this side of the Committee have complained that this is not an energy Bill—that is partly the problem. Even if the Minister does not feel that the wording of the amendment is suitable, I hope that he will consider bringing forward something constructive at a later date. I support the amendment.

Lord Ezra

In presenting their views on the future development of energy, the Government have put particular emphasis on the development of renewables and on the development of energy efficiency. So far, relatively little has been done in that area, particularly in the domestic sector.

The Treasury launched two consultative documents in the past year or so looking at various fiscal instruments; however, certainly in the Pre-Budget Statement, none of them were applied. It remains to be seen whether anything can be done in the Budget. The problem about all this, which my noble friend's amendment highlights, is that it has all been done piecemeal. No doubt quite a lot is being done. However, if we really are to galvanise the domestic sector into doing something quite dramatic about improving their use of energy, which is going to be required if the 20 per cent improvement in the White Paper is to be achieved, then there has to be a major combined effort on the part of government, bringing together the various existing initiatives and adding a number of new ones in order to achieve this objective.

I believe that this amendment should figure in a Bill dealing with energy at this time and that it is indeed fully reflective of what we are told is one of the Government's main policy objectives.

Lord Whitty

I agree with quite a lot of what all the speakers have said. However, I do not agree with the amendment. As the noble Lord, Lord Ezra, has just said, it is clear that achievement of energy efficiency improvements—effectively doubling the underlying rate of energy efficiency improvement—over the next 20 years is an absolutely key part of the overall calculations in the energy White Paper and of the Government's policy. Clearly, the household sector—in terms of both the efficacy of heating and lighting houses and the appliances they use within the house—has a major effect on whether we can achieve that energy efficiency.

As Members of the Committee said, important measures are already in place. Perhaps we should emphasis the importance and availability of those measures. For example, there is an energy efficiency commitment that requires energy suppliers themselves to provide support to their domestic consumers to improve energy efficiency. Such support concerns the household. One does not have to visit a centre in Plymouth, Bristol or Devizes to obtain that support; the supplier is now obliged to provide consumers with information on how they can obtain energy efficiency support.

The energy White Paper envisages that, in the next phase, the energy efficiency commitment will probably be doubled. Therefore, the supply companies will place an even greater emphasis on energy efficiency improvements among individual consumers. Other schemes include the Energy Efficiency Advice Centres—to which the noble Baroness referred, and which are important. There may be an argument for extending them.

The noble Baroness, Lady Byford, criticised the disappearance of electricity and gas showrooms. There are electricity and gas showrooms, but they are owned by individual companies. Unfortunately, many of the old ones have been closed. If the previous Conservative government had intended to preserve those at privatisation they would probably have done so. We would have supported them in that. They have undoubtedly closed. Some of the energy advice has, therefore, to be provided in other ways and not by individual companies and appliance sellers.

We have other schemes such as the DTI's £10 million clear skies initiative so that households can become more familiar with renewable energy of the kind referred to by the noble Baroness, Lady Miller. Home owners can obtain grants of between £500 and £5,000 towards such schemes. Community organisations, similarly, can receive grants of up to £100,000 for grants and feasibility studies to develop renewable energy as a contribution to energy efficiency and low carbon. Both the Energy Saving Trust, which has been mentioned, and the Carbon Trust receive government funding to undertake—in the case of the Carbon Trust—field trials and innovations such as micro generators and micro CHP, which was referred to earlier in Committee.

I think that the Government are taking a number of steps which will be brought together very soon, after the Easter Recess, when we publish our Energy Efficiency Implementation Plan. The plan will set out all those steps in relation to households, commerce and business.

So I do not think that it is right to say that the Government have not delivered. It may be clearer when the implementation is before us and it is all brought together. I do not think that that complaint is valid. Nor do I think that the amendment as it stands would do what the noble Baroness seeks to do. Certainly the Government would have some serious problems with the second part of the amendment. I assume that the first part relates very much to energy advice centres. The noble Baroness made it clear that the term "easy access" meant physical access to energy advice centres. That will not be possible for all households.

As I say, one of the better means of communicating is to do it through the supply companies with whom everyone at least has an often fraught quarterly relationship when the bills are delivered and when advice on energy efficiency in terms of cutting the next bill can be provided to every individual household. Not everyone will have easy access to demonstration models or to advice centres but I accept that it is important to get the information across to households.

Paragraph (b) of the amendment takes us into different territory. It refers to "fiscal incentives". As the noble Lord, Lord Ezra, said, we have had a number of consultations on fiscal incentives. There was a reference to it in the PBR, but not a definitive one. Either in the forthcoming Budget or in some future Budget the Chancellor of the Exchequer may take action in that regard. Certainly, there is great potential for both positive and negative use of fiscal incentives in order to guide consumers to more energy efficient products and processes. Whether by adopting such incentives we could ensure that everyone took notice of such products—as is proposed in the amendment—is another matter.

We have given substantial signals in favour of energy efficiency through the fiscal system—I refer to car tax and the price of fuel—but many people, including some noble Lords, still buy large cars that consume expensive fuel. One cannot ensure by means of introducing fiscal measures that people will follow certain signals. The wording of that part of the amendment would cause difficulties but, in any case, there is a problem as regards legislating for a programme of fiscal incentives in a non-finance Bill. It would be unprecedented to state in an Energy Bill how the Chancellor should establish new forms of taxation, which is effectively what we are talking about here. Therefore, I have a problem with both the wording and the principle of the second part of the amendment.

However, I agree with much of what has been said in the debate and I have to admit that it is already government policy. The matter may become clearer soon after Easter when we issue the energy efficiency implementation plan.

Lord Jenkin of Roding

I am interested to know of the Government's energy efficiency implementation plan. We look forward with some interest to seeing that.

Last year I chaired an event organised by the Westminster Home and Community Safety Council. That body studies different subjects each year. The one that I particularly remember concerned housing. A great deal of the discussion concerned how you can improve the quality of the environment internally for residents through various forms of efficiency measures. I am not saying anything very original but one of the points that emerged was that a great deal more can be done with new housing than with the huge stock of existing housing. With new housing there ought to be all sorts of opportunities, whether through fiscal incentives or, as I would prefer to call them, economic instruments—because that is what they are—to try to encourage particular policies. That is something that I hope the department is looking at very closely.

Some of the measures mentioned by the noble Baroness, Lady Miller of Chilthorne Domer, are very much more easily done with new build than with a row of terraced houses or semi-detached houses on a suburban housing estate.

If one looks at existing housing, one would probably find that in all but the poorest households, many of the measures have already been taken—for example, roof insulation. There was a great phase of cavity wall filling some years ago. It was not always successful; it had to be done properly. Double glazing was put into windows. Many of those measures have been taken. They tend not to save energy, but to improve comfort. That is what people are going for. At the margin, there may be some saving of energy, but, for the most part, those measures are taken to improve the quality of living. The question of how that can feed through to a more economical use of energy needs also to be addressed.

As far as new housing is concerned, the Government have a considerable opportunity to effect new build. I have no hesitation in saying that the biggest obstacle they face is the very traditional way in which most UK housebuilders are accustomed to operating. I read in the Financial Times a few weeks ago that some of the big developers are bringing in foreign construction companies. One particular developer had brought Australian construction companies into this country because they were prepared to look at new methods of building that would have all the advantages of the kind mentioned by the noble Baroness, Lady Miller of Chilthorne Domer.

The Government have an opportunity there. It may be a long, hard push, because we all know how conservative housebuilders are in wanting to keep their costs down by doing the same as they have done in previous years. That is where one must somehow begin to have an impact on the domestic front.

I was slightly surprised to hear the Minister disparage the question of new equipment. One has only to look now at the pattern of new car buying and the incentives—they are economic instruments—offered in terms of lower licence fees to cars with more efficient fuel consumption and to cars that have dual propulsion, by petrol or diesel and by electricity. There are substantial advantages to be had.

The information that I have been able to glean is that a large number of those vehicles are being bought. That points to the fact that if one gives incentives of a sufficient value, which are properly publicised, people will come forward in large numbers and take advantage of them. I would have thought that the number of small cars one now sees on the roads represents a vastly larger proportion of road traffic than it used to. I am happy to say that a considerable social stigma is now attached to people who insist on driving around cities in large, four-wheel drive SUVs with bull bars at the front. They are the most inefficient vehicles of all. I hope that one would go on thumbing one's nose at them, because they are awful.

That kind of measure can be brought to bear. People can drive little run-abouts with a very economical use of fuel. Fiscal incentives can make that happen and it is actually working. I hope the Minister will take a slightly less jaundiced view of people's response. It takes a little time. One does not buy a new car until one is ready to dispose of the old one. One does not move into a new house often for a generation or more. That is when the changes can be made. That also applies to household appliances. Many of them are designed to last. The new ones are much more efficient than the old ones, but the energy saving is not enough to advance the purchase by five or 10 years. One waits until the old one wears out. One then gradually achieves a greater efficiency in the use of power and electricity in the home.

I hope Ministers will not be too pessimistic. A lot of the things that we have discussed can actually happen, provided that one is not too starry-eyed and expects it all to happen tomorrow, because it will not.

5 p.m.

Baroness Miller of Chilthorne Domer

Before the Minister replies to the noble Lord, Lord Jerkin of Roding, I should like to build on one aspect of his comments on older housing stock which is everything but new. As the Minister will know, as he was the keynote speaker at the conference, the role that local authorities can play in promoting energy efficiency—through their role as planning authorities and in housing and economic regeneration—should make them key players. As he said at the conference, the Government are looking at how to include energy in the Audit Commission's comprehensive performance assessments of local authorities and how to incorporate energy within the shared local priorities.

Given the strong role that local authorities could have if all that were achieved, I wonder whether the Government are pursuing it. Will it feature, for example, in the Energy Efficiency Implementation Plan? I expect that other Members of the Commit tee are as frustrated as I am that we will not see the plan until this Bill has left your Lordships' House. As the Government well know, unless they make those two moves local authorities will have absolutely no latitude in their work as they are so closely circumscribed by Government. The measures in the comprehensive performance test focus them on those matters so specifically that there is no room to deal with other matters.

If the Government want local authorities to achieve their potential as regards energy, they must speak with urgency to the Audit Commission, and energy must be included as one of the key measures for local authorities. Those that are performing in a good or excellent way should be recognised for that. I would welcome the Minister's comments on that. His comments to the conference indicate that he has given thought to the issue.

Lord Whitty

I am deeply grateful that the noble Baroness reads my speeches. I hope that everyone involved in that particular discussion will read those speeches. It is important that local authorities, in relation to their own and to social landlords' housing stock, take energy building renovation and energy efficiency as a central point. We are looking at how we can best build that in by means of, for example, the decent homes programmes and the local authorities' refurbishment of their own stock. It is important also that local authorities act as a beacon for advice and as an example for the rest of the building in their areas. They can do that through the planning process and the advice that they provide.

At that conference I was attempting to get local authorities aboard en masse. Meanwhile, however, the Government have done an awful lot both on older buildings and on new buildings—to which the noble Lord, Lord Jenkin of Roding, referred. The building regulation change we have just gone through is a major step in the right direction in improving the quality of new build. The changes coming in next year—for example, on replacement boilers—will affect old houses as well as new. Those changes will bring in condensing boilers to replace old-fashioned ones.

I partly agree with the noble Lord, Lord Jenkin of Roding, that the conservatism of householders has not helped. I would cite also the conservatism of many who purport to advise householders—the installers themselves, who come in and say, "That is far too complicated; I'd stick with the old one". We have therefore engaged with the installation, heating and insulation industries in an education programme for their own operatives and sales persons to ensure that better messages are put across to householders on the building side.

As Members of the Committee will know, as a result of the Better Building summit the Sustainable Building Task Force is looking at other measures—in building regulations, advice and research—as regards the fabric of the buildings themselves to ensure that we maximise their energy efficiency. It is attempting to get schemes together that uprate the performance of those buildings.

The noble Lord misunderstands me as regards the argument on cars. I am very much in favour of the changes in taxation that have taken place in recent years, guiding the market to smaller cars and guiding manufacturers to making more fuel-efficient cars. That has made a very substantial change. Part of the consultation on fiscal incentives elsewhere is built on that principle; we are trying to extend it to household appliances and other users of electricity to ensure that the shift that has been achieved with cars, fridges and various other subsectors of the market occurs across the board. We are aiming for a decoupling of the use of energy from the growth in the use of those machines, which goes with an improvement in the quality of life.

The point that I was making earlier was that, albeit the bulk of the market may shift to respond to those signals, one cannot in the terms of the amendment ensure that all households follow those signals. The noble Lord's example of new 4x4s driving around west London indicates that not everybody makes the rational choice, however blatant one makes the fiscal incentives. One cannot ensure through the market that everybody does the rational thing, but one can give people an offer that most find difficult to refuse.

Baroness Miller of Chilthorne Domer

I thank the Minister for his reply, and I thank noble Lords who have spoken in the debate—my noble friend Lord Ezra, the noble Baroness, Lady Byford, and the noble Lord, Lord Jenkin.

The second part of the amendment does not seek to ensure that households do something; the wording would simply ensure that they could minimise their consumption of power. It is an enabling amendment. I probably will not feel so strongly about bringing that amendment back on Report, but there are important issues that we have still not completely resolved with regard to access to advice and demonstration models, in particular. While the Minister has said that suppliers can give some of that advice, which of course they can, I feel that there is still a big gap in terms of a forum for all those companies that are offering innovation to come together where households can easily find them. That is something that I shall want to return to on Report.

In conclusion, I apologise to the Committee. Having talked about local authorities, I should have declared an interest as a Somerset county councillor. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 154 [Power to impose charges to, fund energy functions]:

[Amendment No. 143 not moved.]

Clause 154 agreed to.

[Amendment No. 144 not moved.]

Clause 155 [Power to modify Petroleum Act 1998]:

[Amendment No. 144A not moved.]

Clause 155 agreed to.

5.15 p.m.

Lord Ezra moved Amendment No. 145: After Clause 155, insert the following new clause

"GAS SUPPLY: CONSEQUENCES OF NON-PAYMENT

(1) The Gas Act 1986 (c. 44) is amended as follows.

(2) For paragraph 7 of Schedule 2B (recovery of gas charges etc) substitute—

"7 (1) Where a consumer has not, within the requisite period, paid all charges due in respect of the supply of gas to the consumer's premises, or to any other premises previously owned or occupied by him, the relevant supplier may install a prepayment meter on the premises, and the supplier may recover any expenses incurred in so doing from the consumer.

(2) The power of a supplier under sub-paragraph (1) may not be exercised—

1. (a) as respects any amount which is genuinely in dispute, and
2. (b) unless not less than seven working days' notice has been given to the occupier of the premises (or the owner of the premises if they are unoccupied) of his intention to exercise it.

(3) In this paragraph, the "requisite period" means the period of 28 days after the making by the supplier of a demand in writing for payment of the charges due.""

The noble Lord said: The amendment deals with the consequences of non-payment for gas and electricity. Disconnections gained a lot of publicity as a result of the tragic deaths of Mr and Mrs Bates, elderly users of gas and electricity who were able to afford to pay their hills but clearly did not understand what was going on. Because of a misunderstanding on the part of BG about the Data Protection Act, they did not communicate their plight to social services, which led to their deaths.

In relation to the total number of people using gas and electricity, the number of disconnections per annum are relatively small. Nevertheless, they are large in themselves. In 2002, there were 22,000 gas disconnections and nearly 1,000 electricity disconnections. The same is expected to arise from the figures for 2003 and this year. The average debt is relatively small—in the case of electricity it was £204, and in the case of gas it was £155. The period during which people were disconnected for gas was 33 days, which could be an extremely serious situation, and 13 days for electricity.

The object of the amendment is to see whether there is some other way in which the suppliers of gas or electricity can minimise and, indeed, recover their debts without disconnection. It is felt that this can be done. If disconnections were banned because of the so-called harsh social consequences in some cases, companies would still be able to negotiate a debt repayment arrangement with consumers which might include the voluntary installation of a pre-payment meter. Failing this voluntary agreement, they would still be able to apply for a warrant to install a pre-payment meter to recover existing debt and prevent future debt building up.

Currently, there are around half a million pre-payment meters recovering electricity debt and 750,000 collecting gas debts. So this is already being done. It seems to be a much more socially acceptable way of dealing with this issue than through the process of disconnection, which can have extremely harmful and, in some cases, as we know, tragic effects.

Energywatch has quoted examples to me and, no doubt, to other noble Lords, of what has happened to some customers. In some cases, people have been disconnected by a company with which they were not dealing anyway; it broke into their premises, removed their meter and then refused to replace it because they said it was not dealing with them. These are cases quoted by Energywatch. We cannot have this sort of thing going on, and as there is an alternative to disconnection, I strongly recommend that the amendment in the name of my noble friend Lady Miller of Chilthorne Dourer and myself be accepted. I beg to move.

Lord Jenkin of Roding

Nobody can listen to this argument without a good deal of sympathy for those who find themselves faced with very difficult circumstances due to the non-payment of bills. I am advised that the Bates case should not be regarded as in any way typical. It was entirely sui generis and on its own facts. Indeed, one of the problems, which is now the subject of investigation in an entirely different context, is the effect of the Data Protection Act. That was one of the factors that resulted in the breakdown of communications in the Bates case between the energy supplier and the social services. In parenthesis, let me say that I believe the retail gas and electricity industries would very much welcome a much clearer statement of what their duties are in relation to the Data Protection Act so as to avoid any repetition of the very tragic case involving Mr and Mrs Bates.

Having said that, lam cautious about advancing the proposition put by Energywatch that, in effect, disconnections should be banned. One has only to look at what happened to the water industry when it was faced with a statutory ban on cut-offs. I am told that the number of people who declined to pay their bills rose by 20 per cent. There may well be remedies of the kind that the noble Lord. Lord Ezra, described, with procedures that could result in the installation of pre-payment meters for both gas and electricity, compulsorily—although he hesitated to use the word—if necessary, in order to recover the debt. I find that a difficult concept. If people are to switch to a pre-payment meter, it should be their own wish to do so. As I said last week—or was it the week before?—when we were debating pre-payment meters, a lot of people choose to have them installed because they find it easier to budget for their energy requirements.

I therefore have some difficulty with the amendment. If the water industry's experience is any guide, it would not be helpful if a substantial number of consumers delayed or simply declined to pay their outstanding gas and electricity bills. I am afraid that one has to recognise that there are people in our community who are not very responsible and who feel that more immediate desires can be satisfied with the cash that they have. If they are not going to be cut off, that is just too bad for the electricity company. That is the reality.

Although one has much sympathy with the plight of poor people who find themselves, for one reason or another, unable to pay their bills, it is my experience—and it has been represented to me by firms in the industry—that firms are prepared to go a long way to help people in difficulties to meet their obligations. Industry codes of practice point in the right direction. Perhaps more needs to be done to bring that to the attention of consumers in difficulty so that they are able to ask for help in finding their way out of it. However, I would be cautious about going down the road of banning cut-offs of gas and electricity for the reasons that I have stated. I shall be interested in what the Minister has to say.

Baroness Miller of Chilthorne Domer

I support the amendment of my noble friend Lord Ezra. I shall be interested to find out whether the Government regard energy as an essential in the same way as they did water. A measure was introduced to forbid water suppliers to disconnect their customers because water was seen as an essential. I submit to the Minister that energy is as essential to people, particularly in winter, when it is cold, but also in terms of their being able to cook, which I would have thought was everybody's basic right.

I accept the point of the noble Lord, Lord Jenkin of Roding, that the water industry had a difficult time when that measure was introduced. However, that was partly because there was a glaring lack of distinction between the "can't pays" and the "won't pays" among water customers. We debated that at length during the passage of the Water Bill. We could probably learn much from Scotland where, I understand, a debt arrangement scheme has been introduced. I shall not go into the details of it to the Committee in the interests of time, but that kind of scheme should help to address issues for "can't pay" customers. If companies are able to install pre-payment meters, that would be a remedy for those who "won't pay".

Lord Whitty

Clearly the Bates case was a very tragic one, but, as the noble Lord, Lord Jenkin, said, we need to be careful. I have two points to make. First, the inquest into the deaths of Mr and Mrs Bates did not find that the actions of British Gas were the cause of their deaths. Secondly, while it is right that Ofgem and the suppliers need to consider the processes in the light of that case and maybe others, it is wrong for wholesale changes in the law governing disconnections to be based on one difficult case. That case—in so far as it reflects the disconnection situation—may well have been due more to misunderstandings of the Data Protection Act 1998 than to the right of disconnection as such.

The Government believe, as I think we all believe, that disconnection should be used only in very extreme circumstances as a matter of last resort. It should be hedged in with appropriate safeguards, particularly in relation to the vulnerable, and disconnections should be kept at a minimum. However, the amendment would require us to accept that at the end of the day a company should lose the right to disconnect for a customer who has refused on several occasions to pay and who has ignored reminders to do so.

Of course, there are probably better ways in which to deal with the matter, and Ofgem is in discussion with the industry to sort out how the arrangements could be improved, particularly in relation to vulnerable customers. For example, there might be a moratorium arrangement for pensioners or vulnerable households, increased access to companies' priority service registers, and so on. There are questions about the timing of disconnection; that picks up on the point that was made about the winter. There are signs that the industry is responding to that.

As for the Data Protection Act 1998, Ofgem is clarifying with the Information Commissioner the application of the Act with reference to advising social services, for example. We hope to have that as part of the procedure.

The amendment proposes that rather than go to disconnection, we have compulsory fittings of prepayment meters. Although, as the noble Lord, Lord Jenkin, pointed out, the noble Lord, Lord Ezra, referred to voluntary agreements to install such meters, that is how I read the amendment. There are cases in which fitting such a meter cannot be practical, whether because of the nature of the apartment or for safety reasons, or for other reasons, particularly in multiple-occupied premises. The practicality of using prepayment meters as an alternative to disconnection is difficult, even on a voluntary basis. When one moves to a proposal of compulsory installation of such meters, one is on new territory entirely. It may not be appropriate in all circumstances and may lead to more rather than fewer tragedies.

We can perhaps clarify through the procedures that Ofgem is now discussing with the industry how many steps it takes and how many hoops must be gone through before the last resort is reached. However, at the end of the day, companies must have the right to cut off supply of energy to a completely and repetitively recalcitrant supplier—

Lord Jenkin of Roding

Recalcitrant customer!

Lord Whitty

Recalcitrant customer—I beg your pardon.

Lord Ezra

I have listened carefully to what has been said and I accept many of the arguments. There is a big problem in distinguishing between the "won't pays" and the "can't pays", but that has always been so in this area. I used the Bates case only because it drew many people's attention to the issue, not because it was necessarily typical. The fact that staggered me is that no fewer than 22,000 gas disconnections are made per annum—that means that 22,000 families could be deprived of gas for a month or more, with all that means for cooking, heating and so on.

We ought to find a better way to deal with the matter than exists at the moment. If the number of disconnections can be substantially reduced as a result of taking more intermediate steps, that at least would be a more desirable outcome. I wonder whether we might have an amendment on those lines, showing that we are conscious of the problem of the 22,000 people who are deprived of gas, whether for their own reasons of unwillingness to pay or because they cannot pay, and that the issue is really being considered. In due course, the figure might be reduced very substantially as a result of more intermediate steps. I shall ponder the matter. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

5.30 p.m.

[Amendments Nos. 146 and 146ZA not moved.]

Baroness Miller of Hendon moved Amendment No. 146ZB: After Clause 155, insert the following new clause—

"COSTS OF LICENCE MODIFICATION REFERENCES

(1) The Gas Act 1986 (c. 44) is amended as follows.

(2) After section 25 insert—

"25A COSTS OF MODIFICATION REFERENCES

(1) In making a report on a reference under section 24 above, the Competition Commission must make an order requiring the payment to the Commission of the costs incurred by it in connection with the reference.

(2) Where the Commission concludes that none of the matters specified in the reference operates, or may be expected to operate, against the public interest, the order under subsection (1) above must require payment to be made by the Authority.

(3) Where the Commission concludes that any of the matters specified in the reference operates, or may be expected to operate, against the public interest, the order under subsection (1) above must require payment to be made by the holder of the licence to which the reference relates, and, if there is more than one such licence holder—

1. (a) may provide that payment is to be made by only such one or more of the licence holders as is specified in the order; and
2. (b) may determine the proportion of the costs in respect of which each licence holder specified in the order is required to make payment.

(4) In making a report on a reference under section 24 above, the Competition Commission, having regard to all relevant circumstances including the conduct of the parties, may make such order as it thinks fit for requiring a party to the reference to make a payment to any other party to the reference in respect of costs incurred by that other party in connection with the reference.

(5) For the purposes of subsection (4) above, the parties to a reference are the Authority and any holder of a licence to which the reference relates.

(6) A person who is required by an order under subsection (1) or (4) above to make a payment to another person must comply with the order before the end of the period of five days beginning with the day following that on which the order is made.

(7) Sums required to be paid under subsection (6) above, but which are not paid within the period mentioned in that subsection, shall bear interest at such rate as may be determined by the Commission in the order requiring payment to be made."

(3) The 1989 Act is amended as follows.

(4) After section 13 insert—

"13A COSTS OF MODIFICATION REFERENCES

(1) In making a report on a reference under section 12 above, the Competition Commission must make an order requiring the payment to the Commission of the costs incurred by it in connection with the reference.

(2) Where the Commission concludes that none of the matters specified in the reference operates, or may be expected to operate, against the public interest, the order under subsection (1) above must require payment to be made by the Authority.

(3) Where the Commission concludes that any of the matters specified in the reference operates, or may be expected to operate, against the public interest, the order under subsection (1) above must require payment to be made by the holder of the licence to which the reference relates, and, if there is more than one such licence holder—

1. (a) may provide that payment is to be made by only such one or more of the licence holders as is specified in the order; and
2. (b) may determine the proportion of the costs in respect of which each licence holder specified in the order is required to make payment.

(4) In making a report on a reference under section 12 above, the Competition Commission, having regard to all relevant circumstances including the conduct of the parties. may make such order as it thinks fit for requiring a party to the reference to make a payment to any other party to the reference in respect of costs incurred by that other party in connection with the reference.

(5) For the purposes of subsection (4) above, the parties to a reference are the Authority and any holder of a licence to which the reference relates.

(6) A person who is required by an order under subsection (1) or (4) above to make a payment to another person must comply with the order before the end of the period of five days beginning with the day following that on which the order is made.

(7) Sums required to be paid under subsection (6) above, but which are not paid within the period mentioned in that subsection, shall bear interest at such rate as may be determined by the Commission in the order requiring payment to be made.""

The noble Baroness said: The provisions of paragraph 13 of Schedule 22 to the Energy Bill, which deal with the treatment of costs incurred in connection with appeals to the Competition Commission under Section 144, are a useful reminder of the long outstanding need to make equally sensible legislative provision for the allocation of the costs of disputed licence modification references to the commission under the Gas and Electricity Acts.

The current situation, in which the energy regulator Ofgem, which is both a party to and the prime mover of any such reference, has discretion over how to allocate the costs, is flawed in terms of its lack of both fairness and predictability. The clearest demonstration of that occurred when, following the "market abuse" licence modification references to the Competition Commission, Ofgem sought to impose all the costs of the inquiry on the referred companies, even though the commission had decisively rejected Ofgem's modification proposals and concluded that none of the matters specified in the reference would operate against the public interest.

There is clearly scope for introducing greater fairness and consistency into the way that such reference costs are allocated. It is inappropriate, and without precedent outside the world of the regulated utilities, for one of the parties to a dispute that is subject to a legal process to enjoy unfettered discretion over the allocation of the costs of the process, including its own costs. The responsibility for those decisions needs to be moved from the regulator to a more objective and independent arbiter. As with all similar processes, the logical conclusion in the case of commission inquiries into licence modification references must surely be that the appropriate body to allocate the costs incurred is the appeal body itself.

In discharging that responsibility, the commission's task would be greatly assisted by the existence of a set of transparent and objective statutory rules, analogous to those embedded in Schedule 22 to the Bill, requiring, that costs be allocated according to clear and reasonable principles which should result in a fair and efficient allocation when applied on the basis of a case-by-case assessment.

The amendment shows how the Energy Bill could usefully amend the Gas and Electricity Acts to achieve that end. I beg to move.

Lord Triesman

We agree with the general principle on which the amendment is based; namely, that it is inappropriate for one party in a reference made to the Competition Commission to have discretion over how costs are to be allocated. We have a number of reservations about the amendment in its current form which we shall seek to modify; none the less, that does not alter the general acceptance of the principle to which I shall proceed.

First, while we accept that the regulator has discretion over the costs incurred by the Competition Commission, it does not have discretion over its own costs, nor those of the industry. Therefore, we believe that any change should deal only with this area over which Ofgem currently has discretion: the costs of the Competition Commission. Secondly, while it is not explicitly referred to in the amendment, the amendment appears to be based broadly on the concept of there being simply winners and losers. In licence modification references, as opposed to those of code modification, on which this amendment appears to be based, it is often the case that there are no completely clear winners and no completely clear losers. Therefore, it would appear to be inappropriate to allocate the costs on that simple assumption.

In the context of a complex exercise, such as a licence modification reference, we are slightly concerned that the amendment may be a blunt instrument. As drafted it gives the Competition Commission no choice but to impose an obligation on the loser or losers to pay 100 per cent of its own costs. We shall need to consider carefully the implications of that.

We do not wish to move to a system in which smaller parties could feel inhibited about raising objections to a proposed licence modification on account of the fact that they may incur significant costs. Nor would we wish to see a situation develop whereby larger parties to an appeal—more often on account of the fact that they will have to pay none of the costs—feel less inhibited in doing so.

Therefore we can agree to the general principle of the amendment. We feel that there are some difficulties to overcome, but I have no doubt that they can be overcome in producing an amendment by Report stage. On that basis we agree to consider this amendment and ask noble Lords to withdraw it now.

Baroness Miller of Hendon

I have great pleasure in withdrawing the amendment. I shall leave it to the noble Lord and his advisers to come up with what they consider to be a suitable amendment to deal with the problem.

Amendment, by leave, withdrawn.

Clause 156 [Powers exercisable by statutory instrument]:

[Amendment No. 146A not moved.]

Clause 156 agreed to.

[Amendment No. 146B not moved]

Clauses 157 to 159 agreed to.

Clause 160 [General interpretation]:

Lord Jenkin of Roding moved Amendment No. 147: Page 125, line 24, at end insert— "OFGEM" means the investigating arm of GEMA;

The noble Lord said: In no way am I pegging my reputation on the form of this amendment. It is merely a peg on which to hang a discussion. I hope that Ministers will be able to clarify what to some people, and certainly to me until I went into the matter in more detail, is a very confusing situation indeed.

Everyone outside the Committee refers to the regulator as "Ofgem", the Office of Gas and Electricity Markets. In the Utilities Act 2000 the name was changed and became GEMA. As Ministers will have realised, throughout the debates on this Bill the amendments and new clauses that have been debated and various proposals that have been put to Members of the Grand Committee from associations, companies and other bodies have required that something should or should not be done by Ofgem. Indeed, when one is provided with a written amendment to make the point made in the representations, one first has to strike out the word "Ofgem" and put in "GEMA". Other people may pronounce it "jemma", but I call it "jeema". That is the Gas and Electricity Markets Authority, which is defined in line 16 of this interpretation clause.

Many people are very confused by that. I took advantage of meeting Sir John Mogg who has been the chairman of Ofgem for about six months—in fact he gave me lunch. A great many years ago he was one of my advisers when I was in the Department of Industry before he went to Brussels. I asked him to explain the position. I may have misunderstood him, but I was given to understand that although the Utilities Act 2000 substituted "GEMA" for the previous name of the regulator, those in the authority chose to go on using the old name, "Ofgem", simply because it is well known. Sir John Mogg did not use the phrase but I have since seen it described as a brand name.

Of course, they could not change GEMA back into Ofgem because by then GEMA was enshrined in the statute, so that legally the regulator had to be known as GEMA even if everyone else continued to call it Ofgem. Sir John's predecessor, Mr Callum McCarthy, whom I also came to know, was chairman and chief executive. When he moved to the Financial Services Authority the opportunity was taken by Ministers to split the role, which was good management practice, so Sir John is a non-executive chairman and the chief executive's role is held by Mr Alistair Buchanan. It was suggested to me that perhaps the change could be recognised by using the term "Ofgem" to describe the investigating arm of GEMA, leaving the name "GEMA" to describe the members of the authority in their statutory role as regulators and enforcers. That proposition was put to me.

Indeed, there has been a separation of the two roles, but it has taken a somewhat different form. In a recent press interview, Sir John drew the distinction between the role of Ofgem—the office of the regulator responsible for policy, administering that policy and making many decisions delegated to it—and the role of the authority which has more strategic functions. However, that does not seem to have been accompanied by the application of the two names separately to the two different roles as had earlier been suggested to me. So we are left with what I can describe only as a very confusing double nomenclature, Ofgem and GEMA.

This amendment has the simple purpose of hoping that Ministers will now explain the matter so that we can all understand and perhaps, more importantly, so that everyone outside this place can understand the situation. Are people right to go on talking about Ofgem when the Act talks about GEMA? Is there value in retaining the trade name of Ofgem, even though the statutory reference always has to be to GEMA? I beg to move.

Lord Whitty

When we reach the general interpretation clause we know that we are close to the end of Committee stage, for which I am sure we shall all breathe a sigh of relief. This is an important topic. Frankly, it confuses me as well. It is useful to have this amendment to try to clarify the relationship between "jeema", "jemma" or "gemma" and Ofgem. I call it "jemma".

As a name, "Ofgem" is not found in any legislation, despite it being the name best known to the public and the industry. Even before 2000, we had no legislative base for using the term "Ofgem". In a sense, it is the equivalent of the Secretary of State or the Minister and the department. I do not want to push the analogy too far. There are relatively few mentions of the DTI in legislation; references are made to the powers of the Secretary of State. To use an area with which the noble Baroness, Lady Byford, and I are familiar, one rarely saw the term "MAFF" in the legislation but everyone outside this place referred to MAFF even though the powers were vested in the Minister for Agriculture. We have a similar situation here.

Lord Jenkin of Roding

There is an added complication. If a statute uses the words "the Secretary of State" it means any Secretary of State and not just the one in the department; it could be the Home Secretary or the Foreign Secretary or anyone.

Lord Whitty

That is true. The point is that the legislative power rests with the indivisible Secretary of State; it does not rest with the department. Similarly, here it rests with the authority, not with the office of the authority. That is why the term "Ofgem" is not included in the Bill and why I would resist it being put into the general interpretation clause. In that sense, it is a trade name, a term used by the noble Lord, and it is probably the appropriate one; but it is not a separate legal body. Since 2000 the legal body has been GEMA. Before that the powers were vested in the director of electricity supply, on the one hand, and in the director of gas supply, on the other. Members of GEMA, once it was set up, soon decided not to drop the name Ofgem because by then it was a well established brand or trade name. They felt that any change would cause confusion and that the cost of rebranding could not be justified. Although Ofgem staff refer to themselves as Ofgem employees, they are in legal terms employed by GEMA. They work for GEMA just as civil servants work for the Minister. To define now two different roles—a differentiation to which the noble Lord referred in relation to Sir John Moggs—is not the correct differentiation because Ofgem is the office regarding every aspect of GEMA's responsibilities, not simply the investigative one. Although there has been some internal re-organisation, it would not be captured by that differentiation. To introduce it as a separate terminology here and try to define it here would not be appropriate. Confusing though it is in some respects, it is probably better to leave matters as they are and leave the legislative authority vested in GEMA.

5.45 p.m.

Lord Jenkin of Roding

I am grateful to the noble Lord for explaining that. I think that it rather endorsed what I said during the course of my opening speech—that Ofgem was kept as a trade name or a brand name. It is interesting that when the chief executive published on 12 February the results of the intensive and extensive review of the way Ofgem operates, the whole thing was done in the name of Ofgem. It is Ofgem writing paper and it is Ofgem all the way through. One must recognise that we shall be saddled with this difficulty. Everyone will go on talking about Ofgem, including the senior management of the body itself, and yet when we turn to Acts of Parliament we must talk about GEMA.

The draftsman of the Bill has to deal with a new authority. He has to deal with a Nuclear Decommissioning Authority as well as a Gas and Electricity Markets Authority. He has adopted the ingenious device of referring to the former as the NDA and the latter as the GEMA, so that, so far as this Bill is concerned, there is now a modus vivendi—I am sorry; one is not supposed to use Latin—a way of getting by. You can live with it. Nevertheless, it is a curious contradiction. The Minister has explained the position. I never intended to press the measure. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Jenkin of Roding moved Amendment No. 147ZA: Page 125, line 36, at end insert— ( ) In Article 9(4)(a) of the Renewables Obligation Order 2002 (S.I. 2002/914) and in Article 9(4)(a) of the Renewables Obligation (Scotland) Order (S.I. 2002/163), both of which contain a definition of "fossil fuel", the words from "except" to "biomass" shall be omitted.

The noble Lord said: One comes to what is I hope a rather more interesting case. This amendment stands in my name and that of my noble friend Lady Miller of Hendon. As it stands, it is almost meaningless in the sense that the purpose of the exercise does not spring from the words of the amendment. However, rather like a clergyman with his text at the beginning of a sermon, I shall start with a headline in last weekend's Financial Times, Flap over how to curb the shopping bag curse. The article states: They litter the countryside, they clutter up kitchen cupboards and they take generations to decompose in landfill sites. Discarded plastic carrier bags—of which UK consumers use 8bn a year—are increasingly viewed as an environmental nuisance". I do not think that anyone would much disagree with that.

The other substantial idyll that the amendment is aimed at is this enormous proliferation of heaps of old vehicle tyres. One can see them around the country. They are sometimes put to use for hanging tarpaulins over haystacks, but mostly they stack up until someone takes them away and they are destroyed.

Both plastic sheets and rubber tyres are a source of enormous problems for those concerned with the collection and disposal of waste. But there is now help at hand, on which interestingly the Financial Times has not picked up. It is actually now perfectly possible for them to be dealt with by what are sometimes called "advanced conversion technologies", which implies that it is a form of gasification. It is necessary to give the incentive of ROCs if that is actually to happen.

The renewables orders are the same for England and Scotland. In fact, as the amendment makes clear, the definition clause is the same—Article 9(4)(a)—in both orders. These orders allow for the generation of renewable obligation certificates from waste by means of "advanced conversion technologies". That is, gasification by pyrolysis or anaerobic digestion, but it disallows the production of ROCs from any substance that, is derived directly or indirectly from", coal, coal products, lignite natural gas, crude liquid petroleum or petroleum products. Therefore, that definition of renewable obligations disallows the production of ROCs from the vast majority of plastics and tyres, even if "advanced conversion technologies" are employed.

Gasification is a technology that converts carbon-based solids into gas at very high temperatures. These gases can be used to generate electricity. Gasification is not incineration; it does not produce dioxins. It produces a minimal volume of sterile inert ash, and minimises residues that require ultimate disposal to landfill.

It is understood that the production of electricity from the gasification of plastics and tyres has been excluded from the RO because of the "waste hierarchy". That is a concept with which I am familiar, and there is the principle that one should always try to recycle these materials before deciding on some other form of disposal. Companies that make recycling a priority, however, find that plastic is the one category of waste that they cannot recycle, apart from a very limited amount which can be re-used. Landfill is the only practical option. Tyres pose similarly a huge disposal problem.

Approximately 66 million tonnes of commercial, industrial and municipal waste produced in England and Wales are sent to landfill each year. That simply cannot be sustainable. Indeed, it is widely recognised that it is not. The availability of new landfill capacity has been materially reduced and prices are increasing. Much of that is due to incoming European legislation.

Municipal solid waste—sometimes known as MSW—is mostly mixed plastics and biomass. For instance, in the USA where figures are available, plastics comprise 20 to 30 per cent of MSW by volume. The renewable obligation allows ROCs to be produced, via "advanced conversion technologies" from the proportion of the MSW that is biomass. In practice, either separating or accounting for the proportion of plastics is too expensive, making landfill the only alternative. Therefore, to allow plastics to be used for the production of ROCs would tend to reduce the amount of general waste going to landfill.

If one is dealing with materials coming direct from the factory, small-scale gasification can be used to deal with plastic waste at the factory site, or at MSW collection points. That reduces haulage, road congestion, the use of fuel and pollution. Waste heat from onsite generating plant can be used for factory processes and thus contributes to the Government's combined heat and power targets.

Gasification technology is quick to roll out. Allowing the production of ROCs from plastics and tyres would help to address quickly the expected shortfall in meeting the Government's renewable energy targets. The impact of the ROC market would be relatively small—less than the Government's currently tabled amendments to extend the co-firing provisions—but the impact on landfill and on road haulage would be significant. What one is really doing there is recycling carbon.

We have had much discussion in this Grand Committee about the problem of dealing with carbon and why one cannot gasify it to produce electricity. ROCs can be generated from the biomass in municipal waste, but one has to deduct all the energy produced by the plastic mixed in with it. This is actually too difficult, and therefore it does not happen very much. How is one to calculate how much is biomass and how much is plastic?

I put this proposition to the Government as a very seriously intended way of combining the problem of reducing the amount of waste going to landfill from these two categories of product, which can be dealt with in exactly the same way as the others that do qualify, but only if these ones can now qualify for the incentive of renewable option certificates. One has to ask how the Government are going to meet their renewable targets if they do not explore every available option. I have just been reading through Ofgem's latest report on the administration of ROCs. Although it is a year out of date, there is a very long way to go if one is to meet the targets. How are the Government to meet their landfill targets if they do not use the available technology to minimise the waste volumes that are being tipped?

I believe that this is a very sensible amendment. It would add to the Bill and to the credibility of the Government's targets both for energy and for reducing landfill. It would be greatly to the advantage of this country. I beg to move.

Baroness Miller of Chilthorne Domer

I rise briefly to thank the noble Lord. Lord Jenkin of Roding, for raising an interesting point. I do not agree entirely, but it is an issue worthy of debate. I shall make just two points. First, there is another option for tyres which has just come to my knowledge, although I expect that other Members of the Committee knew of it before. Rather appropriately, one can now mix tyres with bitumen in order to create road surfacing that is particularly quiet. It is especially suitable for places where noise is an issue. I gather that it is also quite light and particularly suitable for laying over peat bases such as on the Somerset moors where the roads are constantly warping. It is very hard to put a heavy surface on such bases. It was in that context that I first came across this new use for tyres. It is particularly desirable if they produce a quiet surface.

I do not think that the gasification process has yet been sufficiently proved to the public. Nevertheless, "gasification" is probably an easier word to sell than "incineration", as no one wants to have an incinerator near them. I realise that that is not a good reason for not considering the option. However, there needs to be a whole process of proof about how clean this technology can be before it will be at all acceptable to the public.

6 p.m.

Lord Jenkin of Boding

I am most grateful to the noble Baroness for giving way. I thought I had made it clear that gasification is quite different from incineration. It is not a form of burning, but of applying advanced heat to the plastic so that it decomposes and the various constituent parts can be trapped. The process is widely used in this country through what the order calls advanced technologies and it seems that it could be perfectly well used for this plastic. I am advised that it is entirely practical and is a way of getting rid of 8 billion shopping bags a year.

Baroness Miller of Chilthorne Domer

That may well be; however, the Westbury example, where the cement plant was gasifying tyres, created a huge amount of controversy. The noble Lord may well be right that this technology has come of age but I think that several issues still worry the public. It could be gasification—it is different from incineration, but the public perception of it is very similar. I accept that the noble Lord knows much more about this than I do and while I think it is worthy of debate, I would not be able to support his amendment.

Lord Dixon-Smith

It is a small thing, but unless I am seriously adrift, if the bulk of the tyre is rubber, surely it is biomass, because it is naturally produced as a result of sap which comes from trees. This is a somewhat convoluted argument. I would prefer to see tyres used for road surfacing because in that way, the carbon in the rubber remains locked in. Although gasification will clearly produce a great deal of energy which will be extremely useful—we could legitimately argue that the process is environmentally neutral because of the biomass aspect—I still think it would be better, if possible, to leave the carbon locked in.

Lord Whitty

To reply to the noble Lord. Lord Dixon-Smith, regrettably, most tyres no longer come straight from the rubber trees in Malaya. Therefore, I do not think many of them would constitute biomass.

I can see the attraction of the creative lateral thinking demonstrated by the noble Lord, Lord Jenkin. He is trying to solve a problem in waste management by changing energy policy. The problem is that it leads to an illogicality in energy policy in a possible distortion of the targets set down in energy policy. In reality, the problem of waste plastic and waste tyres needs to be resolved by making landfill less attractive and available, and other means of disposal or recycling more attractive. The noble Baroness referred to using tyres in the roads—this breakthrough came when I was a Minister responsible for roads, and I am greatly in favour of it. I hope that the technology can develop, because that form of recycling, as the noble Lord, Lord Dixon-Smith, said, locks in the carbon better than gasification, let alone incineration of leaving items to disintegrate in the countryside.

If we were to go down the noble Lord's road, we would be redefining renewables to include something which is clearly not renewable and is fossil-fuel based. That is the thin end of a very large wedge. It also means that if this proposal were to displace the incentive to pursue other real renewables—although as the noble Lord said that the impact would be very small, it does not matter—it would not be contributing to the delivery of our energy targets. Although I do not like to keep policy entirely within the box, this is better resolved through policy on waste management and recycling than it is by distorting, however marginally but quite crucially, the definition of the renewables obligation. Therefore, I must, with perhaps a little regret, resist the amendment.

Lord Jenkin of Roding

Out of the mouths of Ministers comes the end truth. Of course, the objections to this and to a number of other amendments that we have moved relating to coal mine methane or combined heat and power have been made because, if the amendments were not resisted, they would have an impact on the attractiveness of the incentives for wind power. As I said yesterday, I find the argument distressing.

Having written a White Paper that is all about reducing carbon emissions—which is what is damaging the atmosphere and leading to climate change—and having gone on to say that the best way in which to reduce the emissions is to go for wind and tide power and so on, the Government have related all their targets not to the reducing of carbon but to the increasing of wind power. It has become an objective instead of the means. The objective should be to reduce carbon. All the amendments that we have moved on the subject, such as the ones on combined heat and power, coal mine methane and the gasification of plastics and rubber have aimed at reducing the carbon emissions into the atmosphere. That is what the Government should be doing.

Debates in Committee are valuable because one gradually untangles the arguments. In his reply to me on the last amendment, the Minister virtually admitted that the Government are rejecting the amendment because it would reduce the attractiveness of the incentives to wind power. I have to accept that that is the Government's policy, but I hope that it will not be the policy of any party that I support in government, because I believe it to be woefully mistaken. I entirely accept Sir David King's arguments, in his Seattle speech, about the imperative necessity of reducing carbon emissions. However, if one turns one's back on some of the really effective ways in which to reduce emissions to protect the incentives for wind power, I believe that policy has gone mad. Having said that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 160 agreed to.

Clause 161 agreed to.

Schedule 23 [Repeals]:

Lord Whitty moved Amendment No. 147A: Page 244, line 15, column 2, at beginning insert -Section 27(2), (3) and (6)."—(Lord Whitty.)

On Question, amendment agreed to.

Schedule 23, as amended, agreed to.

Clause 162 [Short title, commencement and extent]:

Baroness Byford moved Amendment No. 148: Page 126, line 13, at end insert— ( ) Section 81 will only come into effect after the establishment of an appropriate training course and the successful completion of same by a number of inspectors sufficient to enforce the regulations.

The noble Baroness said: Having helped the Government, I hope that they might help me. I raise a very important but very simple point. Clause 81 imposes duties on electrical inspectors to cover the territorial sea around Great Britain and the renewable energy zones. Such inspectors will, I am sure, be competent to examine the electrical installations. However, the generation of electricity at sea and its transmission from the sea to land is not likely to have been covered to date in most training courses—although the Minister may tell me that they are. Apart from anything else, the fact that they will be working from a boat must make a difference, even if each turbine is designed with a platform, adjustable or fixed, to provide a firm stance.

Is the Minister confident about the commissioning of wind turbines in the sea before there are sufficient inspectors trained to examine these installations and pronounce them both safe and legal? It may well be that there are. This is very much a probing amendment as I do not know the answer. In other words, those who are building wind turbines offshore surely cannot be allowed to go live until it is certain that there are enough inspectors to carry out the duties under the Bill. Is the Minister confident about that? How many inspectors are there, if there are any already in being? Where are they based and will they be moved around the country as and when the offshore wind turbines are built? I beg to move.

Lord Triesman

We have reached the last amendment seven lines from the end of this mammoth Bill. This is a complex matter and I see that I have an hour and twenty minutes in which to address it. That was a sad attempt at a joke and I apologise immediately for it.

I say to the noble Baroness, Lady Byford, that, of course, we agree about the need to have an adequate number of trained inspectors to enforce the Electricity Act regulations in this respect. However, I hope that she will agree with me that the amendment is not necessary to achieve that. The DTI has in place a team of trained electrical engineering inspectors for the purposes of enforcing regulations governing the safety, quality and supply of electricity. Although I am not in a position today to provide precise numbers, I am certainly willing to do so as soon as I can. However, I can say that the DTI regards itself as having an appropriate and adequate team.

The fact that the energy installation will be offshore—the noble Baroness was right to say that the situation will be different in terms of working practice—is not in the department's view likely to alter the nature of the inspectors' work. These will be operational matters for the chief engineering officer. The belief is that that is a well understood process and that there should be no difficulty. Any issue of supply is more likely to surround the onshore connection arrangements rather than the offshore connection. It' an inspector was required to visit an offshore installation as part of an investigation, that would be done by arrangement with the operator concerned and would include all the necessary health and safety training. We consider that the matter is properly covered. If there is any further detail, we shall be most happy to provide it. However, I hope that the assurance that I have given will be sufficient in relation to the amendment. For the final time, I ask the noble Baroness to consider withdrawing the amendment.

Baroness Buford

I thank the Minister for his response. I had said that the measure was a probing amendment as there did not seem to be any detail in the Bill about the matter. I await with gratitude detailed information on numbers and how it is anticipated that the measure will work. It is with great pleasure that I withdraw the final amendment in Committee. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Whitty moved Amendment No. 149: Page 126, line 19, leave out "section" and insert "sections (Modification of licence conditions for offshore transmission and distribution), (Extension of transmission licences offshore) and

On Question, amendment agreed to.

Clause 162 agreed to.

Bill reported with amendments.

The Committee adjourned at fourteen minutes past six o'clock.