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Lord Whitty: My Lords, I fully accept that there are signals, and decisions that have to be taken long-term or short-term. My point is that the mechanism worked in

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relation to what appeared to be—or what was proclaimed by many critics to be—a short-term margin problem. The market clearly worked in that respect. There are of course long-term effects of what the Secretary of State says, dealing with the longer term problem, and what is laid down in the energy strategy and the energy White Paper.

The noble Lord will find that, in the short to medium term, there is no problem about the capacity margin. In the longer term, there is a significant amount of new capacity coming on stream. The noble Lord may say that that is still not enough, but those market signals will indicate when investment in new plant is both needed and economically viable, in so far as the market—or anyone—actually identifies a potential shortfall. There are several projects that already have the necessary consent and which will no doubt commence when the commercial position is right. They will be encouraged in so doing by the way in which the Secretary of State and Ofgem operate their functions. New capacity is already under construction at Immingham and Spalding, which will increase the margin.

There is continuous monitoring of the market. The Joint Energy Security of Supply Working Group operates between the DTI and Ofgem and reports to the Secretary of State on the assessment of the requirements of likely demand and supply of electricity and energy generally over the forward period. Its reports are publicly available. At the end of the day, the Secretary of State has the responsibility, should alarm signals begin to ring, to ensure that the mechanism works and signals are given in the right direction, to ensure that that capacity comes on stream. I am not shirking that issue.

Lord Ezra: My Lords, the Minister has come to the point of saying that the Secretary of State ultimately must decide. That is all that the amendment says, so why not let us get it into the Bill so that there is no misconception anywhere on the subject?

Lord Whitty: My Lords, the point I am making is that the provision is already there in the electricity and gas Acts. The problem is not whether that responsibility should be there or not, because it already is there. The problem that noble Lords have voiced, which they voiced all through Committee stage, is that they do not believe that the mechanism that we have in place to ensure that that responsibility is carried out is the correct one in a large number of cases, because it is not at present reflecting a requirement for new nuclear energy. That is a difference of substance, not a difference of powers or legal responsibility.

Baroness Miller of Hendon: My Lords, the Minister is saying that the provision is already in the Act, but could he tell us where it is? Is he talking about Clause 3 in the

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Electricity Act 1989? That shares the responsibility that he mentioned before and which we said was not the same thing as our very simple amendment requires.

Lord Whitty: My Lords, it shares the responsibility because both the Secretary of State and Ofgem have direct statutory responsibilities in that area. Therefore, it has to share the responsibility.

Baroness Miller of Hendon: My Lords, they do not.

Lord Whitty: My Lords, they do. Ofgem is established in statute and the Secretary of State has certain powers in statute. Taken together, they are responsible for the delivery of security of supply.

Baroness Miller of Hendon: My Lords, that is a point of disagreement between the Minister and other noble Lords who have spoken. But if that is so and it is already there, the Government clearly have no problem with it, and the only problem is that the Government have to accept our amendment.

3.15 p.m.

Lord Whitty: My Lords, the general principle of legislation is that when legislative powers, responsibilities or duties already exist, there is no point in another Act repeating them. If the noble Baroness wants to argue that every Act should repeat everything that is in a previous Act, this House will be in business for a very long time, and the number of amendments that will have to be introduced will be rather more than the number she was complaining about earlier.

The essential point is that that responsibility already exists, but it is a responsibility in part shared with Ofgem, which also has direct statutory responsibilities.

Lord Tombs: My Lords, this seems to be continuing the same pretence. The Government have an agency in Ofgem, which it instructs. It follows therefore that the responsibility lies with the Secretary of State, whose agent Ofgem is. I cannot see why the Government cannot see that. It seems to me to be on a par with their attachment to market forces, which I must say is very strange from a Labour administration. I have never heard any political party argue quite such a blind faith in market forces.

Earl Attlee: My Lords, may I take this opportunity to remind the House that short questions of elucidation to the Minister are very effective, but also compliant with the Companion?

Lord Whitty: My Lords, I thank the noble Earl for that clarification.

I am not expressing a blind faith in market forces; I am saying that this is a market solution, subject to the statutory powers and responsibilities of the Secretary of State and the statutory powers of the regulator. Because we have an independent regulator, it is separately embedded in legislation. In that sense, the

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responsibility is shared. As I said in response to an earlier intervention from the noble Lord, Lord Tombs, if the joint surveillance committee reported concerns to the Secretary of State, it would clearly be the responsibility of the Secretary of State to take action. But also in statute are her responsibility and that of Ofgem to conduct their affairs to ensure that that contingency and danger do not arise. That is already clearly in statute.

To accept the amendment would do two things. For one thing, it would accept the rather alarmist assessment of our energy position. After all, the fact that we are a net energy importer puts us only on par with most members of the G7, which have been net energy importers for decades and in some cases for centuries—well, perhaps not centuries, but certainly decades. If managed properly, that is not a source of vulnerability. Either we are succumbing to unnecessary scares, both short term, as has been expressed here over the past few months, and long term, or we are simply trying to repeat something that is already clearly there in legislation. Neither would be a sensible decision for the House to take, so I should like the House to reject the amendment.

Lord Maclennan of Rogart: My Lords, it seems from what the Minister has said that he has confounded the existing confusion. It is not clear from what he has said about earlier statutes that he is acknowledging that the Cabinet Minister responsible for energy, or any other Cabinet Minister, has an over-riding responsibility for security of supply. Instead, he seems to be enunciating a position that Parliament has curtailed in some way, to the extent that it has delegated the responsibility for regulation, the ultimate duty to provide for security away from the Secretary of State. With respect, that is like suggesting that the security of the Tower of London rests in the hands of the Yeomen of the Guard. It is not at all an answer that will give reassurance to those concerned about the substance of the issue.

The deliberate evasion of the case, which we have witnessed this afternoon, is frankly puzzling if it is not to be interpreted as an attempt to pass the buck for future failures of supply to some body other than the Government themselves. However they may try to do that, they will not do it with the assent of the House.

Lord Davies of Oldham: My Lords, I hope that that is the last speech this afternoon that masquerades as an intervention for a short elucidation of what the Minister is saying. This is Report stage, not Committee, and we cannot have long speeches intervening on the Minister.

Lord Whitty: My Lords, this will be my final go at trying to explain. In statute, Parliament in its wisdom, and with the support of all parties, has given certain direct statutory responsibilities to Ofgem. The legislation requires Ofgem, among other things, to exercise those functions with regard to the necessity of securing security of supply. The Secretary of State—the Secretary of State is a collective term, as noble Lords will recognise—also has responsibilities. He

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cannot have a completely unqualified responsibility if there are direct, statutory responsibilities laid upon Ofgem.

Clearly, in the circumstances where a serious problem arose or was anticipated, the Secretary of State would in reality have the primary responsibility for doing something about it. But it would have to be a situation where the operation of the system as envisaged by statute had not worked. We believe that the operation that is envisaged in statute, augmented by the statements of government strategy in the energy White Paper and elsewhere, will work. Within that structure Ofgem does have certain responsibilities to exercise. Therefore, it cannot be said that the Secretary of State is responsible for everything without qualification.

Of course, politically the Secretary of State is almost always responsible for everything. But Parliament in its wisdom has by statute given some responsibilities to an independent regulator, and rightly so. To accept this amendment, in a way which undermines the independence of the regulator, does not seem to be sensible, particularly given that the main point of the interventions—the responsibility of the Secretary of State—already exists in statute. This is not an exercise in buck-passing. It is an exercise in recognising how the system works, how Parliament has determined that it will work and what is already reflected in the Energy Acts and the Gas Acts.

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