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Session 2007 - 08
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General Committee Debates

Energy Bill

The Committee consisted of the following Members:

Chairmen: Mr. David Amess, † Mrs. Joan Humble
Baron, Mr. John (Billericay) (Con)
Binley, Mr. Brian (Northampton, South) (Con)
Hendry, Charles (Wealden) (Con)
Horwood, Martin (Cheltenham) (LD)
Iddon, Dr. Brian (Bolton, South-East) (Lab)
Ladyman, Dr. Stephen (South Thanet) (Lab)
Main, Anne (St. Albans) (Con)
Owen, Albert (Ynys Môn) (Lab)
Palmer, Dr. Nick (Broxtowe) (Lab)
Reed, Mr. Jamie (Copeland) (Lab)
Robertson, John (Glasgow, North-West) (Lab)
Seabeck, Alison (Plymouth, Devonport) (Lab)
Swire, Mr. Hugo (East Devon) (Con)
Tipping, Paddy (Sherwood) (Lab)
Webb, Steve (Northavon) (LD)
Whitehead, Dr. Alan (Southampton, Test) (Lab)
Wicks, Malcolm (Minister for Energy)
Chris Shaw, Committee Clerk
† attended the Committee

Public Bill Committee

Tuesday 4 March 2008


[Mrs. Joan Humble in the Chair]

Energy Bill

Clause 44

Modification of approved programme
Question proposed [this day], That the clause stand part of the Bill.
4 pm
Question again proposed.
Charles Hendry (Wealden) (Con): Welcome to the Chair, Mrs. Humble, for this afternoon’s proceedings.
My concerns about clause 44 and subsequent clauses centre on the extensive power that they will give to the Secretary of State, and I hope that the Minister will shortly be in a position to give us greater clarity on the proposals.
Our principal concern is that companies that will be asked, or will volunteer, to build nuclear power stations will want as much clarity as possible. The clauses give the Secretary of State tremendous powers to alter what is required of those companies. Will the Minister give us information on the possible time scales? Do the clauses relate to programmes before decommissioning starts, or will the power relate to changing the decommissioning programme once it is in place? There could be a major difference in how it is applied.
What if significant extra costs are involved which the decommissioning fund is not initially set up to cover and the programme becomes very expensive? That comes back to the Liberal Democrat amendment proposed this morning. How will those extra costs be factored in when the Secretary of State requires those companies to be involved in the fund? How much notice will the Secretary of State have to give of the changes that are being proposed? If the notice is given while the decommissioning is under way, is there provision whereby he can say, “This must start tomorrow or next week”, or will he expect those arrangements to allow for many years of planning before they come into force?
The Minister for Energy (Malcolm Wicks): Welcome to the Chair for this afternoon’s sitting, Mrs. Humble.
With your permission, Mrs. Humble, I would like to correct for the record a response that I made this morning, as it might be helpful to the Committee. In answer to the hon. Member for Cheltenham, I explained that the Paris convention, to which the UK is a signatory, sets out a financial limit for operator liability in the event of a nuclear incident above which public funds may be used to meet third-party liability. I should have referred to the fact that the convention, not EU law, sets a minimum level rather than a limit. That was my error.
Under the Paris convention, the usual limit is currently 15 million special drawing rights, which is about £12 million. The UK has gone further than that; we have chosen to exceed the normal maximum limit per incident in our implementing legislation by setting the normal level at £140 million.
The Government are currently analysing options for nuclear operators to obtain financial security for new heads of damages set out in the amending protocol to the Paris convention. We intend to publish a consultation document on the amended convention later this year. I apologise to the Committee for getting that wrong. Nevertheless, I hope that what I have said further satisfies the Liberal Democrats in relation to taxpayer protection.
The hon. Member for Wealden raised the issue of what we mean by “unreasonable delay”. Again, I would like to be as helpful as I can in answering, but I cannot be arithmetically precise. First, the time involved in considering the proposal will depend on its quality and complexity. If it is of a lower quality, we will understandably wish to seek clarity, which will necessarily involve additional time. If the proposed programme involves complex financial arrangements, for example, that will also be likely to involve a longer period of consideration.
Secondly, there are statutory procedures that we must follow, such as consulting the Health and Safety Executive and the Environment Agency, or its equivalent in Northern Ireland. In addition, we would expect to consult the new board, which might also need to obtain expert advice. Thirdly, if the Secretary of State was minded to require a modification, he must give the operator and others with obligations under the programme an opportunity to make written representations.
To try to give a more precise answer to the hon. Gentleman, we might be talking about three to six months for the straightforward cases. For more complex cases, it could take a month or two more than that estimate. Estimates will necessarily be linked to the particular case under consideration. However, it is in no one’s interest for that process to be either rushed, or unnecessarily or unreasonably delayed.
The hon. Gentleman also asked whether the Secretary of State’s power unilaterally to modify an approved programme might create uncertainty for the operator. When the Secretary of State approves a programme, he does so to ensure that prudent provision has been made for the technical matters and for the financing of designated technical matters. Where he approves a programme, the Secretary of State is saying that it meets this requirement and that it adequately addresses the matters set out in the guidance, currently out to consultation, to be issued under clause 50.
It is important that the Secretary of State retains the power to modify an approved programme because it is an important part of the enforcement regime. In such circumstances, the Secretary of State might exercise the power to modify or impose an obligation to ensure that the necessary actions were carried out to bring the programme back into line with the approved programme. He might impose obligations to ensure that the breach did not occur again. It also enables him to respond to changes in circumstances such as a change of control of the operator, as set out in more detail in the funding guidance as part of the funded decommissioning programme guidance consultation currently under way.
The Secretary of State might make a modification or impose an obligation where it is felt that the programme no longer meets the principles set out in guidance, or perhaps where the robustness of an associate body’s provision for financial security is reduced. That would be one answer to that question.
The procedure for making a modification is set out in clause 45 and, for example, we must consult the interested bodies before making a notification. Ideally, we would work with the operator to make a modification. However, in a quick change in circumstances, such as when there is a change in the control of the operator, the modification might have to be very quick indeed. The hon. Gentleman will understand that I cannot be precise, but I hope that is a helpful answer.
Question put and agreed to.
Clause 44 ordered to stand part of the Bill.

Clause 45

Procedure for modifying approved programme
Question proposed, That the clause stand part of the Bill.
Malcolm Wicks: The clause sets the procedure for modifying an approved programme whether the modification is proposed by the Secretary of State or by other parties such as the operator. It sets out who should be informed of the proposed modifications, ensures that the Secretary of State is informed in writing of any proposed modification, if not made by him, and approves all modifications.
It is important to have the ability to modify a programme once it has been approved. The power will provide the necessary flexibility for approved programmes to take account of the kind of changes I mentioned in relation to clause 44. Requiring the Secretary of State’s approval to any modification will ensure appropriate oversight of operators’ programmes.
Regardless of who puts forward the proposal, the clause allows for any costs associated with the consideration of the proposed modification to be passed on to the operator. These costs might arise from seeking verification of the impact of the proposed modification on, for example, the cost of managing waste. We will set out in regulations how the charges will be calculated and when they will be payable.
There is a duty on the Secretary of State to give the operator, any other person with obligations under the programme and any person on whom the proposed modification will have an impact the opportunity to make written representations. That will mean that all those who have or will have obligations as a result of the modification will be given a chance to express their views on the impact the proposal might have on their activities. He will also need to take into account those representations, of course.
Anne Main (St. Albans) (Con): Will the Minister clarify something? Will there be a right of appeal against decisions that were made despite representations?
Malcolm Wicks: I hope to cover that important question in due course.
When deciding whether a modification is to be made, this clause, like clause 41, requires that the Secretary of State must exercise his power only with the aim of securing that prudent provision is being made for the technical matters, the financing of the designated technical matters and the cost estimates of those matters.
If the Secretary of State proposes to make a modification, he will have to determine that the programme originally submitted no longer makes prudent provision for those matters. In determining that, the Secretary of State will make reference to the guidance in force. Additionally, the Secretary of State will take into consideration comments made by the interested parties.
On the appeals procedure, as is the case with all issues across Government where the Secretary of State has the power to make the final decision, disputes between the operator and the Secretary of State can be settled by recourse to administrative law procedures. Therefore, an appeals procedure is not necessary. I am advised that that is also consistent with analogous legislation such as the Nuclear Installations Act 1965 and also in terms of legislation for offshore renewables.
Question put and agreed to.
Clause 45 ordered to stand part of the Bill.

Clause 46

Power to disapply section 45
Question proposed, That the clause stand part of the Bill.
Malcolm Wicks: The Secretary of State can make regulations so that the procedure set out in the clause does not apply to certain modifications. Regulations made under the clause could set a material financial threshold for operational and technical changes in terms of their impact on decommissioning and waste management cost estimates, so that any changes below that level—or, indeed, any cumulative changes over a certain period—would not need the Secretary of State’s approval.
The tiered approach is consistent with that of the Health and Safety Executive and its enforcement of safety standards under licence condition 22 of the nuclear site licence. This power is important because it allows the operator to concentrate on running the station without having to seek approval for modifications which, for example, do not impact significantly on the costs of waste and decommissioning.
To ensure that the clause does not have negative implications for health, safety or environmental matters, the Secretary of State is required to consult interested bodies prior to making the regulations. Regulations made under the clause will also set out how the operator is to inform the Secretary of State of such modifications. That will ensure that the Secretary of State is made aware of any changes to an approved programme, even if he does not have to approve them. The Secretary of State has other powers in the Bill and the programme to obtain information about such changes.
Steve Webb (Northavon) (LD): I have just a brief question in response to the Minister’s comments. We are in the strange situation of deciding that although clause 45 has decent provisions and sets out how things should be done, clause 46 states that the Secretary of State does not have to do any of that if he does not want to.
When I first read that, I imagined that it was an emergency provision—something changes which means that it is important that the funded decommissioning plan is suddenly changed. I can understand why we would then disapply the careful safeguards set out in the previous clause, but the Secretary of State—I mean the Minister; I am getting ahead of myself—is saying the opposite, in that the proposal is de minimis and these are piddling, if I may use that word, little changes. He says that the Government do not want big paraphernalia because they are only changing small things, but that is not remotely apparent from reading clause 46.
My hon. Friend the Member for Cheltenham will try to catch your eye, Mrs. Humble, to raise slightly separate issues, but my worry is that the proposal is so vague and all-embracing that, essentially, we have agreed a set of procedures that seemed reasonable in clause 45, but we are now giving the Secretary of State carte blanch to rip them all up—albeit after consultation—on unspecified grounds which may be specified later. It seems so sweeping. Will the Minister reflect on whether the power is too broad and will rip up what we have just agreed to? The clause might say that it is to be used only in cases in which the regulatory burden of applying clause 45 is excessive and so on, but we do not even have any clues on that. I think that clause 46 is far too broadly drawn.
Mr. Brian Binley (Northampton, South) (Con): May I say what a pleasure it is to see you in the Chair, Mrs. Humble?
I want to raise a question which I asked earlier on consultation. I am equally concerned about the rather broad terms of the clause and that changes might be made that would have an impact on the local population almost without it knowing about them. Will the Minister describe the changes that could occur and give us an inkling about their size? Does he think that there might be a need to consider consulting on the matter, in the way that he promised earlier?
4.15 pm
Martin Horwood (Cheltenham) (LD): May I say how nice it is to be serving under your chairmanship again, Mrs. Humble?
We discussed a number of amendments under clause 42 this morning, one of which we will later press to a vote. We will not press amendment No. 42, but it seems appropriate to refer to it in the context of this clause. It is about the right to consultation of the nuclear liabilities financing assurance board and whether that body will be consulted or informed when changes are made. The Health and Safety Executive, the Environment Agency and others are listed and will be consulted by the Secretary of State. However, the very body that is supposed to deal with the financial arrangements of a funded decommissioning programme will apparently not be consulted because it is not specified.
How will the NLFAB carry out its functions if under subsection (3) modifications can be made by reference to the financial consequences of a decommissioning programme and yet there is no provision for the involvement of the very body that is supposed to exercise scrutiny over this matter? According to the White Paper, the NLFAB is supposed to provide advice to the Secretary of State on the regular reviews and ongoing scrutiny of funding arrangements. How will it do so if it will not even be informed when modifications to funded decommissioning programmes on the basis of financial consequences take place? Perhaps the Minister will clarify how that process will work in practice.
Malcolm Wicks: The hon. Member for Northavon was worried about the implications of a get-out clause. I am not sure if that was his phrase, but some might put it like that. I reassure him that we will lay out in regulations by negative procedure the circumstances in which the modification procedure under clause 45 will not apply. I will give him more reassurance on that matter later if I can. It will be debatable in the House, if appropriate, and we will look at the implications of it in regulations, taking into account his concerns.
The hon. Member for Northampton, South talked about the local community and the local authority in an earlier discussion. I think that that is more or less within the same family of questions. I said this morning that I would look at the matter and come back to the Committee. I do not think that either hon. Gentleman is saying that the local authority should have a role over the financial arrangements or the actuarial issues regarding the fund. They are concerned that there could be a change to the environment, for example because of a new building, or some traffic implications, and want to know whether the local authority should have a role. I am taking advice to see whether such things are covered under existing planning law, but I do not think that I will receive it today. If it is not covered, I will find out whether there needs to be further action and will come back to the hon. Gentlemen.
We discussed the nature of the board this morning and talked about what it is and what it is not. It will give regular advice to the Secretary of State. We do not feel that it needs the powers that the hon. Member for Cheltenham is prescribing because it will be there as part of government—with a small “g”—to advise us. I see no danger that we will not be able to benefit from its advice. I do not think that what he is proposing is necessary.
Martin Horwood: According to the White Paper, the purpose of the nuclear liabilities financing assurance board is not simply to give advice but to provide scrutiny, specifically with respect to the financial arrangements. However, the clause is about changes to funded decommissioning programmes, with specific reference to their financial consequences, and yet there seems to be no mechanism or expressed intention to involve the scrutiny body that we are just about to set up in changes to the funded decommissioning programmes as they happen. Surely that is an essential prerequisite. Indeed, it would be useful to know what kind of financial consequences the Government have in mind in subsection (3). I would be grateful if the Minister could reassure me that the body will be involved in these processes.
Malcolm Wicks: The smaller—de minimis—changes will be set out in the annual report that the operator will have to submit as part of the programme. That is part of the transparency—or scrutiny—process. The Secretary of State has powers in the Bill to obtain more information if he is not satisfied with the changes that the operator has made. There will be transparency about these changes and the board will therefore be able to hear about them and give us advice on that if there is a concern.
Steve Webb: I wonder whether the Minister can help me. I sense that what is going on here is an example of his Department’s legislative approach, which is to say, the things that one might not have thought of are in the clause but he has excluded the blindingly obvious. Is that what is going on here?
Malcolm Wicks: I would not put it quite like that. We are setting up the board to advise us. We are looking at the annual reports and if it wants to advise us on these things or if we want to take its advice, we will. I do not think that the whole chronology of every day in my Department and its interactions with a range of bodies needs to be in every Bill that we introduce. In terms of what size we mean by de minimis, we will be consulting on this level before making our regulations.
Question put and agreed to.
C lause 46 ordered to stand part of the Bill.
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