HL Deb 15 July 2004 vol 663 cc1362-7

  1. Clause 1, Leave out Clause 1
  2. Clause 2, Leave out Clause 2
  3. Clause 3, Leave out Clause 3

Lord Whitty

Mr Lords, I to move that the House do agree with the Commons in their Amendments Nos. 1 to 3. I shall refer also to Amendments Nos. 8 and 8A, which logically go with them. I shall start by addressing Amendment No. 1, which deletes what was Clause 1 in the Lords Bill, and Amendment No. 31, which the Commons have proposed to replace it. There has been considerable debate in both Houses during the passage of this Bill about security of supply—and rightly so.

It is fair that I should pay tribute to the efforts of some who participated in the debates, particularly the noble Lords, Lord Ezra and Lord Jenkin, whom I see here today, for making contributions on that topic, and who were behind the original amendment on security of supply, which would have placed a requirement on the Secretary of State to, ensure the integrity and security of gas and electricity supplies. The Government recognised that that amendment, which was carried against our advice, was well intentioned, but it would have had unintended harmful consequences, creating uncertainty in the market and would have undermined firms' incentives to invest in a timely manner. It would also have had an effect on the independence of the regulator and so on. That was not only our view; it was also the consensus in the industry. We could not therefore accept the noble Lords' amendment.

However, we listened carefully to the concerns expressed in both Houses. In Commons Committee, the opposition parties came forward with an alternative amendment, which we considered a good way to address the concerns expressed and to reflect in legislation the Secretary of State's ultimate responsibility for security of supply and her accountability to Parliament for its delivery, without causing unintended consequences in the existing regulatory framework. So, we tabled an amendment on similar lines, which was accepted on Report in the Commons and appears as Amendment No. 31 today.

Amendment No. 31 requires the Secretary of State to publish an annual report on the availability of electricity and gas for meeting consumer demand in Great Britain and to lay that report before Parliament. As we signalled in the Commons, it is our firm intention that there should be a debate on the report in Parliament each year. The report would have to cover energy security in both the short and the long term. By "the short term", we mean the next year or so, and by "the long term" we would talk generally about a span of the next 10 years or so, although different aspects of the report may lend themselves to different timescales. For example, the NGC currently forecasts plant margins seven years ahead in its seven-year statement, whereas there are government plans for the renewables obligation, which extend well beyond 10 years.

The amendment specifies that the report must cover three areas in particular: generating capacity—the plant margin—the availability of gas infrastructure, which we have defined as including pipelines and terminals; and the availability of electricity and gas networks to get the supplies to consumers. That list is not exhaustive. It is subject to the more general requirement that the report must deal with the availability of gas and electricity. This will necessarily mean that we have to consider some wider issues.

The amendment also specifies that the report is to be prepared jointly by the Secretary of State and Ofgem. This reflects the complementary roles that the Secretary of State and Ofgem have in relation to security of supply. There are some areas—for example, the enforcement of licence conditions which are properly delegated to the independent regulator, and the necessary expertise therefore lies with Ofgem.

Amendment No. 31, which replaces the previous amendment, is a proportionate and appropriate way of emphasising the Secretary of State's ultimate responsibility for security of supply. It would enable Parliament, industry and the public to scrutinise that assessment and to call the Secretary of State to account. It has the support of industry and had the support of all parties in the Commons. So, we have come a long way since the original discussions to something like a consensual position on that.

Amendments Nos. 2, 3 and 8 would impose various reporting duties on the Secretary of State. Your Lordships will remember that during our first debate on Clauses 2 and 3 I pointed out that it was not necessary to impose reporting requirements in legislation. I seem to make that point in most legislation that I deal with in this House. The Government are in fact already required to publish a yearly report on progress made towards meeting the energy White Paper's objectives.

We said clearly in the White Paper that the Government would not achieve the targets without a wide degree of support and participation by a range of stakeholders. So we have a vested interest in ensuring that this is all open to public scrutiny. Therefore, we welcome the general duty in the Sustainable Energy Act 2003. I believe that we now have a more informed debate on energy. We shall not necessarily agree on everything, which I suspect will become apparent in the course of today, but we have had a more informed debate since the publication of the White Paper. The report will provide a further basis for that discussion, as will subsequent reports. As a result of concerns expressed here and in the Commons, we proposed a new clause that would encapsulate the essence of Clauses 2 and 3. The main difference is that our new clause amends the general reporting requirement in the Sustainable Energy Act, so that the relationship between new and existing duties is completely transparent. It will require information to be provided on precisely the same list of low-carbon energy sources as is set out in existing Clause 2, with the addition of coal-mine methane, which I know the noble Lord, Lord Jenkin, and others have been concerned with. The new clause goes further, with item (k) broadening the remit to include any other source of energy that may help to reduce carbon emissions.

The new clause departs from the previous Clause 2 in other ways, but only to ensure that the provision is workable. As it stands, Clause 2 would impose unreasonable demands on information requirements, but as reconstituted it is a more realistic basis for that report.

As regards Clause 3, the original amendment regarding energy efficiency has been incorporated into the new clause. The text has been adjusted to make the strongest possible link with the Sustainable Energy Act, again for transparency and consistency. The report will set out steps to meet the energy efficiency aims for residential accommodation in England and Wales that have been published as a result of the requirements of the Sustainable Energy Act.

I am sure that some noble Lords will point out that the statutory energy efficiency aim is 3.5 million tonnes of carbon to be saved from household energy efficiency in England. In practice, we will of course report back on measures taken throughout the UK. So we shall be looking at the overall UK aim, which we have set at 4.2 million tonnes of carbon. That is different from the 5 million tonnes of carbon stipulated in the original clause, the justification for which was argued by the noble Lord, Lord Ezra, and others, on the basis that that was the figure in the White Paper. In fact, the White Paper suggested around 5 million tonnes of carbon, based on the carbon savings that we expected to be delivered by measures already in place. More detailed assessment has changed that view. In terms of the amount deliverable under existing measures, we think the figure of 4.2 million tonnes of carbon is more realistic.

I say in passing that the total amount that we now believe is deliverable in energy efficiency subsuming that 4.2 million tonnes of carbon, is actually 12 million tonnes of carbon, rather than the 10 million tonnes that was in the White Paper. Therefore, adjustments have been made more than compensating in other parts of energy efficiency, for example, as a result of the energy efficiency commitment being extended through to 2011.

The new clause proposed by the Government covers the key issues that were in the pre-existing Clauses 2 and 3, and it will provide a more comprehensive and understandable reporting framework. I hope that noble Lords will be prepared to accept these amendments. Moved, That the House do agree with the Commons in their Amendments Nos. 1 to 3—(Lord Whitty.)

Lord Jenkin of Roding

My Lords, I am grateful to have an opportunity to come in early in the debate. I will comment later on some of the points that the noble Lord, Lord Whitty, has made.

I begin, however, by offering an apology to Ministers and to the House. On Monday 12 July, there was a Question about the Prime Minister's policy on nuclear energy. I asked: Why have DTI Ministers removed from the Energy Bill the only two words which would have made that a reality? The words `including nuclear' do not appear in the government amendments".—[Official Report, 12/7/04; col. 1013.] I confess that I was wrong. Amendment No. 8, before Clause 84, subsection 2(1A)(b) contains the words, including sources of nuclear energy, that should be addressed in annual reports under Section 1 of the Sustainable Energy Act 2003.

The noble Lord, Lord Whitty, has reminded the House of what took place when the Bill was in this place, and we added Clause 2 with the reporting obligation and it was passed after a Division. It expressly included nuclear power as one of the energy sources on which research and skills should be reported annually. The noble Lord, Lord Whitty, and his colleagues will remember that throughout the Committee stage, noble Lords repeatedly came back to the question of the nuclear option.

We then read that Clause 2 had been taken out in another place, but it was not until I saw the full list of Commons amendments on Tuesday this week that I realised that the clause had been replaced, with some amendments, as described by the noble Lord, Lord Whitty, by what is now Commons Amendment No. 8. Without wishing to make any excuses, I do not believe that I was alone in the House in failing to have realised what had happened. When the noble Lord, Lord Davies of Oldham, replied to me, he could have clearly said, "But it is still in the Bill!" but he did not do that. I suspect that he may not have been aware of what happened in another place.

The Government's new clause, which appears now as Commons Amendment No. 8, had a curious history in the other place. It was grouped with the first group of amendments taken in the Commons Committee stage at col. 4 on 20 May. So far as I can see, there was no mention made of it at all in the debate. In another place, new clauses—which is what it was—are taken at the end of the Committee stage. This new clause came up on the last day of the Standing Committee—22 June. Because in theory it had already been debated, it was added to the Bill without debate. What happened after that is perhaps the cause of my confusion. I hope that the House might have some sympathy.

We had added the clause as Clause 2. It now comes back to this House as a new clause, the clause before Clause 84. I have made inquiries of the authorities in another place, and apparently it is Ministers, and not officials, who decide where a new clause is to be inserted in the Bill. I confess, and I again suspect that I might not be alone, that I did not read the entire Bill as it went to Report stage in another place. I certainly did not read what had then become Clause 82. That was why I accused the Minister of having removed the references to nuclear power, and I can only repeat my apology to the Ministers and to the House. Perhaps I might be forgiven.

11.45 a.m.

The words, including sources of nuclear energy, are clearly there, and I warmly welcome them. It is the first time that it has been written into the Bill. Some attention is being paid to keeping the nuclear option open, and we now know that the Prime Minister was instrumental in ensuring that went into the White Paper.

Before I sit down, I accept warmly the new "security of supply" clause, which is Commons Amendment No. 31. I welcome Ministers' recognition that security has become the number one concern. This new clause is a useful step on the road to ensuring that the lights do not go out in the UK.

I also welcome the Minister's assurance that the annual reports will be debated—in government time— in both Houses of Parliament. I hope that the Minister will give that firm assurance. The most important thing is that both Houses are able to debate the annual reports.

Baroness Miller of Hendon

My Lords, as we said the first time we had occasion to consider the Bill, we certainly never opposed what it was trying to achieve. As often, the devil is in the detail, and we had concerns not so much about what was in the Bill as about what was left out of the Bill. We were all pleased when we passed the Bill on to the other place, because we believed that it had been greatly improved by the amendments that we made and that were supported by Members from all sides of the House. I am most grateful to the Government that those concerns have been listened to and that they have made concessions to address some of the issues in question, even where they do not go quite as far as we would have liked. We are grateful for what we have achieved.

The security of supply was a particularly pressing problem, which certainly needed consideration. Through our energy debates, we have always highlighted that the aim behind energy policy should be centred on the reduction of carbon emissions. I am glad to see that Amendments Nos. 8 and 31 from the other place will ensure that there are regular reports on energy source technologies including the all-important, carbon-free nuclear option and the annual report on the security of supply. They are even more important now in view of the diminishing gas supplies mentioned by EU Select Committee B and the recent ripples through the oil prices.

I have one concern, and I hope that the Minister will be able to say whether he can assure the House that when this report comes out we will be able to have an annual debate on the security of supply and those made under the Sustainable Energy Act 2003. After all, that would be the opportunity to consider these issues by debating them on the Floor of the House. That would be a matter of great significance to all Members.

On Question, Motion agreed to.

Lord Jenkin of Roding

My Lords, can I make a point of order— The noble Lord, Lord Ezra, has an amendment down to one of the amendments in this group. I hoped to hear from him at this stage. Is that not right?

The Chairman of Committees

My Lords, that is Amendment No. 8A, which will be taken as Amendment No. 8 when Amendment No. 8 is called.