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Lords amendment, as amended, agreed to [Special Entry] .
Lords amendments Nos. 43 to 45 agreed to [some with Special Entry] .
Mr. Mike O'Brien: I beg to move, That this House agrees with the Lords in the said amendment.
Mr. Deputy Speaker (Sir Michael Lord): With this it will be convenient to consider Lords amendments Nos. 47 to 53, 58 to 63, 67, 86, 87, 90, 92, 93, 97, 98, 100 and 101.
Mr. O'Brien: This group of amendments covers the changes made in the other place to a number of issues in the Bill, including the three decommissioning regimes—nuclear, offshore renewables and oil and gas decommissioning—the reporting requirements and matters relating to smart meters. There is also a minor and technical drafting amendment. I shall deal with each of them.
Amendments Nos. 46 and 47 relate to the nuclear decommissioning provisions. The other place sought greater clarification about the factors that the Secretary of State may take into account when deciding to approve or modify a funded decommissioning programme for a new nuclear power station. Amendment No. 46 creates a duty on the Secretary of State to publish guidance on factors that it may be appropriate to consider when approving a programme or making a modification to a programme in clause 51(5). Amendment No. 47 creates a duty on the Secretary of State to have regard to that guidance. That provides the potential operator with greater certainty about the factors that the Secretary of State will take into account, while not unduly limiting his flexibility.
Amendments Nos. 48, 50 and 53 relate to the definition of security and the protection of that security in the event of insolvency for the three decommissioning regulatory regimes in the Bill—the nuclear power stations, offshore renewable energy installations and offshore oil and gas installations. The amendments clarify the meaning of the term “security” as it is used in relation to the three regulatory regimes. Under the Bill as it was previously
drafted, there was a risk that if an operator became insolvent, the courts could construe the term “security” by reference to the narrow, legal nature of any arrangements in place, rather than to their broader economic effect. In such a situation, there would be a high risk that the taxpayer would have to meet any resultant shortfall in decommissioning funds. The amendments will help to ensure that the courts take a broad definition of security when considering insolvency cases, thereby helping to protect the taxpayer better.
Amendments Nos. 51 and 52 relate to the oil and gas decommissioning provision in clause 69. The other place debated an amendment aimed at more closely linking the liability for decommissioning an offshore installation to companies that have received benefits from the installation. The amendments are technical in nature, and make it clear that liability will apply to licensees only when they are entitled to benefit or have benefited from the principal purpose for which the installation is maintained or is intended to be maintained. The amendments will create a precise link between the benefit and activities on the relevant field. The liability will not extend to licensees on a different field even if they receive a secondary service from the installation. The amendments will extend further clarification to gas unloading and storage and carbon sequestration activities. The Government believe that these amendments add to the clarity and practicality of the respective frameworks while maintaining their robustness.
Amendments Nos. 58 to 62 reinstate a requirement for the sustainable energy report to cover a specific reporting period. We propose that this period should run from January to December instead of retaining the current 12-month reporting period ending with 23 February, which was arbitrarily based on the publication date of the energy White Paper in 2003. That change will enable our report to align with the carbon budget reporting cycles that will be established through the Climate Change Bill. The change of reporting period to a calendar year also necessitates a change in publication date. We have therefore added a requirement that the report for a particular calendar year should be published no later than October the following year. That would commit the Government to report by a certain time in the year but will still enable the appropriate analysis to be completed shortly after all the latest data become available, which is generally between April and July. Finally, we are reinstating the requirement in section 172 of the Energy Act 2004 for the Secretary of State to report separately to Parliament on security of energy supplies. Lobby groups have expressed concern that we might be seen to be rowing back from reporting, but that is not our intention.
Amendment No. 49 relates to nuclear decommissioning. The other place debated the offence under clause 57 of knowingly or recklessly supplying false or misleading information to Ministers in relation to nuclear decommissioning programmes, and whether that should apply in all cases. Lord Jenkin of Roding believed that that was too onerous. Amendment No. 49 therefore creates a materiality threshold so that only information that is false or misleading in a material respect falls within the scope of the clause. That makes clause 57 consistent with equivalent offences in other areas of legislation—for example, sections 117 and 201 of the Enterprise Act 2002.
Some of the other Government amendments cover a variety of smaller technical matters and consequential issues related to legislation.
Let me turn to amendments Nos. 63, 86, 87, 90, 92 and 93. The House will be aware that the Government recently confirmed that we will move forward with smart metering for all households in Britain. I believe that we all recognise that delivering 47 million smart meters to homes across Britain in an efficient and well managed way will be an enormous challenge. On Report in the other place, Lord Dubs proposed an important amendment related to the type of market model that will underpin the roll-out of smart meters. As we develop the detail of the project, it may become apparent that there are advantages to moving away from our current competitive metering market and considering centralising some or all metering services. At the moment, smart meters could be got to six houses by six different suppliers, who could send six different sub-contractors to those houses, which could be all in a row next to each other. We should look for a better way of doing things. At this stage, our objective is to ensure that we have a legislative basis on which to deliver a range of future options to ensure an effective roll-out.
In response to my noble Friend’s amendment, the Government tabled amendments Nos. 63, 86, 87, 90, 92 and 93. We believe that the new clauses and new schedule will enable us to deliver a range of market model options in future. They amend the Secretary of State’s powers under the Gas Act 1986 and the Electricity Act 1989 to create new licensable activities and ensure that, by affirmative order, he can create new licensable activities in connection with providing, installing or operating smart meters or the related communications infrastructure. The power also provides that the Secretary of State may make regulations so that he or Ofgem will be able to award those licences following a competitive tender process, the detail of which is outlined in schedule 4. We believe that that type of power is the best way to ensure that we can deliver a range of market model options to ensure that, whatever model we choose, we retain an appropriate element of competition. This is about ensuring that we deliver the smart meters effectively and that we have competition that is not obtuse or bizarre but effective, and a model that enables it to be delivered.
6.15 pm
Mr. Weir: Will this allow the Secretary of State to ensure that the same type of smart meter is installed in an area so that if someone wishes to switch they are able to do so without needing to have a meter removed and a different type refitted?
Mr. O’Brien:
We want to ensure that people are able easily to switch. We do not necessarily want to ensure that all the smart meters are provided by exactly the same supplier—we want an element of competition. In terms of delivery, we must work out how we ensure that we have smart meters that enable effective switching so that people do not need to swap them if they decide to switch suppliers two or three times a month to get the best price. I do not have a straight answer to the hon. Gentleman’s question whether there will be one standard meter, although I think that there probably will not be.
On whether we can frame a system of smart meters that will facilitate the sorts of circumstances where people are able to switch, I think that we should be able to do that. However, we need to consult those who will be delivering this stuff to ensure that the mechanics of doing it are right.
Amendment No. 67 is minor and technical. It clarifies the fact that the regulation-making as well as order-making powers set out in clause 94(2)(a) are subject to the affirmative resolution procedure. I hope that the House will agree to these Lords amendments.
Charles Hendry: Between the first and second Divisions, the gap between the Government and us narrowed by three votes, so if we had gone on for another couple of hours we would have got it down to zero. However, we decided not to inflict that on the House, and I am glad that we can now move on to the next group of amendments.
The Government will be aware that we have supported the approach taken in the Bill towards encouraging nuclear new-build. We think that they have got the framework broadly right. We have to examine the changes proposed in the Bill in conjunction with some of the other initiatives that the government are taking to encourage people to consider nuclear new-build.
Whatever one’s approach to nuclear new-build, we should recognise the work that is being done by the office for nuclear development, which is an outstanding example of proactive government in seeing where there are problems and how to get round them to ensure that people looking to invest in this country feel that the Government are trying to remove the obstacles. That is a good example for other areas of energy policy. I single out for praise the work of Dr. Tim Stone in trying to identify where the obstacles may be, looking specifically at the nuclear installations inspectorate and seeing what needs to be done to provide it with additional resources and more skilled personnel so that it can move forward more quickly with the work of assessing the role that different reactor types might be able to play.
We welcome the changes that the Minister has announced today. We strongly support the obligation to publish the decommissioning guidance and the requirement on the Secretary of State to take account of that guidance. We also welcome the clarification of the definition of what would constitute information that is false or misleading. In fact, we proposed that in Committee, so it would be rather churlish not to support it now.
We welcome the clarification of reporting requirements. There had been a strong sense in and outside the House that the Government were using the changes to remove the requirement to report regularly and in a way that people could understand. The Minister has tackled that most helpfully.
There was particular concern about the vagueness of the time scales that would have been permitted and could have resulted in reports that did not reflect the same period of time. For example, one report could have covered 15 months, with the next covering nine months, and we could not easily have gained a clear picture of what was going on. We could not compare like with like. We therefore welcome the Government’s change of heart and the decision to state specifically the definition of the reporting period, which will relate largely to the calendar year.
We also welcome the requirement to publish the sustainable energy report before the end of October in the year following the year to which it relates. Perhaps that approach could be taken to other Government reports, for example, on the number of people in fuel poverty. The figures always appear to lag approximately three years behind the actual figures. They probably do not lag when the numbers are going down, but when they increase, there seems to be more of a lag. Nevertheless, the requirement is a welcome step forward and we are pleased to support it.
One of the most significant changes of heart that the Government had during the Bill’s passage was about smart metering. We are pleased that they will mandate the installation of smart meters. It will make a huge contribution to resolving fuel poverty, removing for ever the need for estimated bills. It will enable people to choose the cheapest tariff much more constructively and give the customer much more information. It will also help meet the environmental goals, which we share, encouraging people to use energy outside peak times. It will also be a key element in encouraging microgeneration by measuring two-way flows of electricity: that which is brought into a house and that which is exported from it. It will be essential if feed-in tariffs are to work.
It is crucial that smart meters will apply to gas, electricity and, potentially, water. That is an important step in fulfilling a range of different goals. It is a step towards what would be called a smart grid—a much more intelligent grid—and being able to control the way in which people’s electricity is used and manage demand much more effectively.
We are glad that the Government have overcome their reservations and accepted in principle the case for smart meters, which energy companies, consumer groups, environmental groups and Members of Parliament of all parties advocated. We are also glad that they have been persuaded of the need to accept a time scale for introducing smart meters.
The 10-year roll-out is not significantly different from the current rate. Typically, in a year, 8 per cent. of meters are replaced and, just on that natural rate of churn, one would expect the whole country to be done in 12 or 13 years. Ten years is, therefore, not especially ambitious, but we recognise that it has much support in industry and with other groups outside.
We could shorten the two-year consultation period. Let us revert to the concept of a locked room, especially with my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer) there to badger people to reach a conclusion. That would have been effective. We could achieve agreement in a much shorter time, but we are not prepared to make a big issue out of it because we are genuinely pleased with the Government’s approach and the fact that they have taken on board many representations that we and many others have made.
“We anticipate a period of around two years to resolve the issues and to design the full detail of a domestic roll-out. Our aim is then to ensure that the subsequent roll-out happens over a period of 10 years. This would see delivery of smart meters by the end of 2020 to align with our renewables targets.”—[ Official Report, House of Lords, 28 October 2008; Vol. 704, c. 1515-16.]
Will the Minister give us assurances or tell us the legal status of Lord Hunt’s comments? Will he clarify whether the Government would be inclined to move more quickly
on the installation of smart meters in new-build properties? A case could clearly be made for saying that it is easier to install them when a property is being built and that that should be done before replacing the stock. Can he give us assurances about the way in which the Government wish the roll-out programme to proceed?
Having said all that, the amendments are sensible and we are happy to support them.
Martin Horwood: It is the first time that I have spoken in today’s debate, so, first, I congratulate the Department on moving some way with the amendments that it has tabled. We all acknowledge that the Bill is much better than the measure we started debating.
I am grateful to the Department for providing a briefing on some of the amendments that we are discussing today, partly because some are complex. I was encouraged by the heading, “Nuclear energy—false and misleading”, but, sadly, it was only an introduction to amendment No. 49. For one moment, I thought that the revolution in the Department of Energy and Climate Change had begun—sadly, it has not.
I am surprised by amendment No. 49. I accept the Minister’s comments that Members in the other place felt that clause 57 was onerous, but it is strange to punish knowingly false and misleading information, yet excuse it if it is slightly false and misleading, even if it is “knowingly or recklessly” provided. If even a small amount of false information is provided knowingly and recklessly, a small fine might be appropriate, but there should still be a penalty. Although we will not make a huge issue of that, there is a good case for retaining clause 57 unamended.
By contrast, we unreservedly welcome amendments Nos. 46 and 47 to clause 51. More frequent use of “must” in legislation that applies to Ministers is a good thing. Some of the duties that the amendments would explicitly create helpfully strengthen clause 51. The Minister understandably gave the amendments a slightly understated welcome, but he should be congratulated on accepting them. If they mean that the Department has to take into account the advice of, for example, the Health and Safety Executive and the Environment Agency, and that it must publish the way in which it has taken that advice, it will be less tempted to balance health and environmental considerations with those dictated by short-term political convenience—or, as is more likely, political embarrassment.
Let me deal with amendments Nos. 48 to 53—the most interesting set of amendments, which the Minister portrayed as somewhat technical—which cover the slightly controversial subject of the nuclear decommissioning programme. The hon. Member for Wealden (Charles Hendry) is right that there was considerable debate, which I shall not revisit, about them in Committee. However, it was good to hear the hon. Gentleman making it crystal clear that the Conservative party is now enthusiastically pro-nuclear and has abandoned the ambivalence that seemed to be present in Committee about whether it could be simultaneously pro-nuclear and anti-nuclear. He clearly said that he wanted to encourage nuclear new-build, and I welcome his clarification of his party’s position. It is obviously not our position.
We are especially concerned for the amendments on arrangements for securities to do what the Minister suggested and better protect the taxpayer. What would
happen if the funded nuclear decommissioning programmes turned out not to be so well funded? That is a critical question. The amendments sensibly help define the term “securities” in a legal context. However, as we know, not all securities are as secure as others. As businesses and local authorities that are trying to recover funds from Iceland have found, some bonds and investments turn out not be as secure as they had believed.
That underlines the long-term issue with funded decommissioning programmes for nuclear power, which is whether, in the event of future economic downturns, financial crises or simply bank failures, the public purse will yet again have to subsidise nuclear power. Perhaps this is a moment for the Minister to clarify how likely he thinks it is that those provisions will be used to allow public funds yet again to bail out the nuclear industry, which seems to us to be a bail-out that we need not risk at all.
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