HL Deb 20 April 2004 vol 660 cc264-70

(1) The Secretary of State may by order establish a programme for clean coal technology that introduces demonstration plants for the development of clean coal technology.

(2) Such an order may also set out additional programmes that will facilitate the application of clean coal technology both in the United Kingdom and overseas.

(3) Before making such an order, the Secretary of State shall have regard to the effect of clean coal technology on—

  1. (a) protecting the global environment,
  2. (b) responding to the foresight initiative,
  3. (c) exploiting market potential,
  4. (d) ensuring the security of United Kingdom energy supply, and
  5. (e) maintaining a presence for the United Kingdom in a global energy market.

(4) In this section "clean coal technology" means specified technologies for the generation of electricity from coal that meet specified pollutant emission performance criteria."

The noble Lord said: My Lords, this is another amendment that has been through Committee and Report. I have returned to it because of my long association with the coal industry. It relates to clean coal technology. I moved a similar amendment in an attempt to persuade the Government to introduce some form of obligation to stimulate the development of cleaner coal technology. However, it was rejected. Therefore, this amendment, like the previous one, is much more permissive. It follows the lines of what was said to about clean coal technology in the energy White Paper, which indicated that the Government were minded to have a programme for clean coal technology that would lead to the introduction of demonstrator plants.

That is precisely what the amendment proposes. It follows the lines of the White Paper. It is therefore not a new development. It would give great encouragement to the coal industry, which is worried about its future. It would enable us to do a great deal of additional export business through having demonstrator plants showing how this technology could work, as the Energy White Paper indicated. Therefore, I very much hope that, in this revised form, the Minister will be prepared to accept the amendment. I beg to move.

Lord Whitty

My Lords, although I accept that there is an important role for cleaner coal technology, I am afraid that I cannot be quite as helpful on this amendment in its precise form as I was on the previous one. That is principally because, although we are involved in trying to draw up a carbon abatement technology programme for fossil fuel-based power generation—which we are doing in collaboration with the industries and which will build on existing DTI support for cleaner coal technologies—and cleaner coal technologies will play an important part in reducing carbon emissions and maintaining a source of power that minimises those emissions, the amendment relates to the demonstration of cleaner coal technologies and the case for the Government to support a demonstration plant.

Experience around the world, particularly in the United States, suggests that cleaner coal technology demonstrators do not fulfil their objective of moving the technologies into the marketplace. Therefore, in a value-for-money sense, a legal obligation to engage in such a demonstration plant is not a useful option. The Government therefore acknowledge the importance of cleaner coal technology, but the intention that would arise from the amendment is not the most effective way forward. We would rather engage with the industry over the next few months and, indeed, with the noble Lord and others who are interested in this matter to see how cleaner coal and carbon abatement technologies should develop. I am sure that my colleague Mr Stephen Timms at the DTI, the Minister with executive responsibility in this area, would be happy to meet the noble Lord and others to see whether they could take the matter further. However, I cannot accept the amendment.

Lord Ezra

My Lords, I find that extremely disappointing. In fact, it seems to go back on what the Government wrote in the energy White Paper, in which they said: With this in mind, we have already put in place a programme of support for advanced traditional cleaner coal technologies which is intended to bring forward demonstrator projects that may help to showcase the relevant technology more widely". That is in cold print in paragraph 6.64 in the energy White Paper.

It seems to me that that is very far away from what the noble Lord, Lord Whitty, has just told us. Is he therefore saying that the Government are going back on the intention so clearly stated in the Energy White Paper? If so, it is an extremely sad day for coal. It is, I would suggest, an extremely sad day for the Labour Party, which traditionally has had the closest possible historic connection with the coal industry. I should have thought that it would have been the first party to have grasped at any way in which the future of coal can be provided for.

I am really disturbed by what the Minister said. He said that he would be open to further discussion. with himself and with Mr Timms. I would certainly like to take that up. However, I want to emphasise that what he has just told us is at extreme variance with what is written in the Energy White Paper. I do not wish to say any more about the matter and, at this late hour, I certainly do not want to divide the House on it. although I would have done so if we had discussed it earlier. I shall take up the Minister's offer of talks. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 151 [Applications for energy administration orders]:

[Amendment No. 21 not moved]

Clause 153 [Energy administrators]:

10.30 p.m.

Lord Lea of Crondall moved Amendment No. 22: Page 117, line 5, at end insert— () salaries, other contractual terms of employees, and their occupational pension provision, including rights conferred under Schedule 14 to the 1989 Act (the electricity supply pension scheme):

The noble Lord said: My Lords, I am moving the amendment now because it was not possible for any of the noble Lords who put their name to it to be present to move it at Report stage.

Schedule 14 to the Electricity Act 1989 empowered the Secretary of State to make regulations, which would protect employees then in the industry from detriment in respect of their pension provision. These were enacted as the Electricity (Protected Persons) (England and Wales) Pension Regulations 1990. Similar protection was provided for employees in Scotland under Schedule 15 to the Act and the Electricity (Protected Persons) (Scotland) Pension Regulations 1990. The regulations impose a duty on the relevant employer to maintain or provide its protected employees and protected beneficiaries—together called protected persons—with pension rights, both on an ongoing basis and, in particular, in the event of the partial or total winding up of the scheme; the restructuring or change of ownership of the participating employers; or the transfer of employees from one employer to another within the electricity industry.

This clause appears to lay a duty on the administrator to prioritise the interests of creditors and, subject to them, the interests of members of the company. Through the amendment we are seeking confirmation that the arrangements for a special administration regime do not, and are not intended to, override the statutory duties on employers of protected persons under the Electricity Act 1989. I beg to move.

Lord Whitty

My Lords, I believe that I am able to give such confirmation and confirm that, in the event of a special energy administration, the duties in this respect of employers of protected persons under the Electricity Act 1989 and the protected persons regulations will not be overridden by the duties of the energy administrator. The fact of the company being in administration, whether ordinary or energy administration, will not in any sense terminate the company's duties in this respect. In both cases, the trustees of the pension fund, if the fund is owed money by the company, will be treated as an unsecured creditor of the company.

The provisions of this clause follow the precedent of existing insolvency law, adapting it only where necessary for the purpose of energy administration. Therefore, the rights of employees and pension rights are unaltered as compared with any other administration situation. I hope that that goes far enough for my noble friend to accept it as the reassurance that he sought.

Lord Lea of Crondall

My Lords, I am glad to have the confirmation on the record from my noble friend the Minister that that is the position. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 167 [Appeals to the Competition Commission]:

Lord Kingsland moved Amendment No. 23: Page 126, line 27, leave out "whose interests are materially affected by it" and insert "who is a party to the document designated pursuant to subsection 2(b)

The noble Lord said: My Lords, Clause 167 currently provides that persons who are "materially affected" by a decision of the energy regulator will be entitled to appeal against that decision.

In Grand Committee, and on Report, we argued that the concept of material effect should be changed to the wider concept of sufficient interest. This was not because we wish to enable additional parties to be able to appeal against Ofgem's decisions. It was because we were concerned that, on the test of material effect, there was no guarantee in law that all parties to an industry code would be equally entitled to appeal in relation to an Ofgem decision. We agree with the Government's policy, which is set out in the Bill's Explanatory Notes, that those persons who are able to appeal should include the parties to the relevant codes. However, what is unclear is whether, as a matter of law, all code parties would, in fact, qualify as appellants under the "materially affected" test.

The Minister objected to what he called the "dilution" implicit in our proposed change of test. He feared that this would open the floodgates to appeals from persons whose relationship to a particular code might be indirect or purely tangential. This concern seems exaggerated to us, given that an indirect interest or a tangential interest is by no means the same as a sufficient interest.

In any event, there is an easy way to resolve this matter. That is to ensure, by express drafting, that the parties to the industry codes—in other words, the market participants who are on the receiving end of Ofgem's decisions—are a distinct category of persons who unambiguously have appeal rights, separately from the test applied to other persons. These two amendments achieve this. They provide beyond any doubt that all parties to the industry codes have a right of appeal, while also bringing in as materially affected persons Energywatch and other representative bodies who are not formally parties to the codes.

These amendments should resolve many of the concerns that we have had about the Bill's approach to the test of the right to appeal, while not putting Ofgem's decisions at risk of appeal by persons who have no substantial relationship to the industry codes. On that basis, I find it hard to conceive of any good reason why the Government would not welcome these amendments. I beg to move.

Lord Whitty

My Lords, while we have made a number of amendments in relation to the appeals procedure, we clearly have not swayed the noble Lord's position on this one. I hope that that is not because of some misunderstanding. I accept that he has adapted his amendment in an attempt to address our concern about the use of a sufficient interest test but nevertheless he is persisting in the view that we have too narrow a basis for parties to appeal.

The Government's view is that parties to the code in question will be able to appeal but only provided that they meet the "materially affected" test in particular circumstances. Not all parties to the code will meet that test in every instance and bodies such as Energywatch may be materially affected in certain respects and, although not party to the code, would therefore also be able to appeal certain decisions on the same basis.

The noble Lord's amendment would seem to lead to a situation where all parties to the codes would be able to appeal every decision. The Government cannot accept that outcome. We cannot accept that any legal persons who do not fall under a "materially affected" definition should be allowed to appeal the decision even if they might be party to the code, or if they are not. There are elements within the industry who believe that such a broad basis of appeal should be allowed, but the Government's view—I think that it will be supported by the majority in the industry—is that this would be disproportionate and contrary to the policy of having a fairly tightly prescribed right of appeal.

In our view, therefore, "materially affected" is the right hurdle. This is an important element of the balanced package that is designed to address the concern of the majority of respondents to last year's consultation and provide a degree of certainty and avoidance of delay, whereas the possibility of having a much broader-based threshold of appeal could lead to a flood of appeals which would grind down the whole of the process to no great benefit of the majority of companies involved in the industry. I therefore believe that there is a conflict here, but I am not convinced by the noble Lord's arguments and cannot accept the amendment. I hope that he will not persist with it.

Lord Kingsland

My Lords, at this late hour it is rather difficult for me to persist with it. The only way in which I could take my persistence one stage further would be to seek to divide the House tonight; and at a quarter to eleven in the evening I should like to assure the Minister that I have no intention whatever of doing that.

However, as the Minister rightly surmised, I am disappointed in his reply, especially since I believe that it conflicts with the statement set out in the Bill's Explanatory Notes. We have made substantial moves over the three stages of the Bill in your Lordships' House to try to meet the concerns expressed by the Government about our original suggestion of the sufficient interest test. I shall not accuse the noble Lord of churlishness in this matter. However, I think that the noble Lord's approach to our latest amendments is rather harsh.

I hope that, during the gap between the termination of the stages in your Lordships' House and the commencement of the stages in another place, the Minister and his colleagues will think again about this matter. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 24 not moved.]

Clause 178 [Assistance for areas with high distribution costs]:

Baroness Miller of Hendon moved Amendment No. 25: Page 135, line 43, leave out "negative" and insert "affirmative

The noble Baroness said: My Lords, this amendment is succinct, and the case for making it is also succinct.

On Report, the House agreed to amend Clause 179 to make it subject to the affirmative resolution procedure. Clause 179 enables government to introduce a scheme to subsidise high transmission costs for renewable generation sources in remote areas. The case for this power to be made subject to the affirmative resolution procedure, rather than the weaker negative procedure, was that Clause 179 dealt with more than a narrowly technical matter. On the contrary, Clause 179 is a major departure from normal regulatory practice since it contemplates a new and potentially untransparent subsidy to further the ends of what would otherwise be uneconomic renewable development. Rightly, therefore, this House thought the exercise of such a power should be subject to a level of parliamentary scrutiny higher than that which is available under the negative procedure.

Clause 178 is broadly analogous to Clause 179 in its cross-subsidising effect, as it aims to offset the adverse consequences in Scotland of the abolition of the hydro-benefit subsidy. To that end, under the clause the Government will be able to raise a quasi-taxing levy on the general body of electricity consumers. On that basis, I am sure that the House will recognise that the same arguments that justified the subjection of Clause 179 to the affirmative resolution procedure apply with equal, if not greater, force to Clause 178.

In those circumstances, I hope that the Minister can accept this simple amendment. I beg to move.

10.45 p.m.

Lord Davies of Oldham

My Lords, I am going to disappoint the noble Baroness in everything except being as brief and, I hope, precise as she was in moving the amendment. We of course recognise that the application of the affirmative resolution procedure is appropriate in certain circumstances, but we do not think it right under the clause. The Delegated Powers Committee did not raise any issues on the use of the negative resolution procedure with respect to the scheme.

The noble Baroness helpfully referred to the amendment made to Clause 179, but we also have appropriate precedents and parallels. The negative resolution is provided for under Section 72 of the Utilities Act, which amends the Electricity Act 1989. That enables the Secretary of State to lay an order that, for example, requires the holder of a supply licence to charge uniform prices in a specified area of Scotland. In that respect, there are very clear parallels between Section 72 of the Utilities Act and Clause 178 of the Bill, which seeks to protect customers in the north of Scotland.

We think the negative procedure appropriate. I hope that, in consideration of that parallel, the noble Baroness thinks that the Government are right in this instance.

Baroness Miller of Hendon

My Lords, my noble friend Lord Jenkin wrote in the Times on 14 April about the unwillingness of the Government to accept perfectly sensible amendments to the Bill. This is such a case. Clearly, I shall not do anything about it at this late stage, but I hope that my colleagues in the other place have a better response than we have just had. After all, the procedure applies to Clause 179, and Clause 178 is broadly similar. In fact, its provisions go even further and ought to be subject to affirmative resolution; there is no case for negative resolution to be used at all. However, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Triesman moved Amendment No. 26: After Clause 179, insert the following new clause—