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One thing that I have learnt already is that, while much of the action has to take place internationally in the agreements that we reach, in relation to the energy industry and those who are concerned about the impact of climate change, there is also a job to be done within government in ensuring that there is commitment to this agenda and that it is driven by all departments. Again, I thank the noble Lord, Lord Teverson. I have a personal interest in this matter, although I bring no expertise. I remember being appointed the Department of Health’s green Minister in 1999. I attended meetings of green Ministers then and have continued to take an interest in the role that other sectors and other government departments can play in this hugely important agenda.
“Keeping the lights on and saving the world” is a very apt description of what we are trying to do and I do not think I can better it. I shall bear it in mind when we come to debate the Energy Bill, the Climate Change Bill and no doubt the Marine Bill in a future Session of Parliament. I appreciate the welcome given to the decision to go for an 80 per cent target and the welcome for the feed-in tariffs. I suspect that we will still wish to hear what noble Lords have to say on Report before coming to a final decision about what amendment to put forward, so our debate—if it is not next week, it will be the week after—will be very important to us in that respect. Although I have not participated in the Energy Bill, I know that there have
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Fuel poverty is a very important matter. Although we have seen considerable progress and a reduction in the number of fuel-poor households, rising energy prices have had an undue impact on that number. As I said, my right honourable friend the Prime Minister announced a series of measures to provide some support in this area, together with support in terms of energy efficiency in individuals’ homes. I recognise that there is a long way to go but, in signalling his intent to the industry, I think that my right honourable friend has shown his determination to keep a very close eye on what is happening.
The noble Lord, Lord Teverson, welcomed the decision to move from a 60 to an 80 per cent target. Certainly, it puts us in a stronger position to lead the debate internationally, where I am sure this country has a huge role to play. He said that the definition is all and that there was a risk that, if the definition was not right, there would be ways of getting round the target. I assure him that that is certainly not our intent. This is a very important Statement in respect of the Government’s determination to deal with these matters effectively, and we will want to ensure that a robust mechanism is put in place.
I know that international aviation and shipping emissions have been the subject of considerable debate. I reiterate that our commitment to a long-term climate strategy includes aviation and shipping. The interim advice of the Committee on Climate Change included a recommendation that the scope of the Climate Change Bill should not be extended to international aviation and shipping. I think that that was very much to do with the problem of agreeing measurements, and therefore our approach is to exclude international aviation and shipping from the Climate Change Bill. However, I come back to the point that both noble Lords raised: of course we must keep the target under review in the light of emerging circumstances. I also understand that from 2012 international aviation is to be embraced within the European Emissions Trading Scheme. I hope that noble Lords will take that as an indication that it is not our intention simply to put aviation to one side; it is a very important factor in all of this. I thank both noble Lords for their very constructive comments on the Statement.
1.08 pm
Lord Cunningham of Felling: My Lords, I warmly congratulate my noble friend on his appointment to what is a crucial new post. I also warmly welcome the Prime Minister’s decision to create this new department, bringing together energy policy and policy on climate change, which, as we all recognise, are inextricably linked. We must hope that this decision will bring greater clarity, focus and coherence to these important areas of policy for our nation, for the economy and, not least, for individual consumers of energy. Is it not
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Lord Hunt of Kings Heath: My Lords, I thank my noble friend for that instructive comment. I recall the days of the Department of Energy and certainly agree that it is important to have appropriate focus within government on energy questions. I would not wish to undermine the work that has been done on energy in BERR, but the new department allows us to give considerable focus to these pressing matters on energy policy alongside the challenge of climate change.
My noble friend rightly referred to the importance of nuclear energy, and I know that noble Lords generally share that view. Clearly it is a low carbon-emitting energy source and has an important role to play in the future, as has been signalled by the Government. Of course, the takeover of British Energy by EDF is a signal of positive future investment in the nuclear energy programme. I understand that we are on track for electricity to go into the grid from a new build by 2017. Clearly that will be an important signal and contribution to energy supply in the future.
Lord Jenkin of Roding: My Lords, I have three questions but I preface them by saying that bringing together the energy aspects of Defra and of BERR into this new department is wholly to be applauded. I say that as the first Minister who ever had the title Minister for Energy. We have waited a long time for it. I was surprised that the Prime Minister did not do it on appointment in his first reshuffle, but it is happening now.
My three questions are simple. First, there is some doubt about this outside the House, but the Nuclear Decommissioning Authority is hugely important with an enormous budget stretching over many years. While the news release about the responsibilities of Ministers refers expressly to offshore decommissioning, it does not talk about nuclear decommissioning. Will the Minister give an assurance that the Nuclear Decommissioning Authority will be one of the agencies that comes under the new department?
My second question, which will not altogether surprise him and to which we will no doubt return in the Bill, concerns fuel poverty. Huge emphasis has been placed on the need for much better targeting from the point of view of social tariffs and the CERT obligation. We have had only a tiny change—for pension credit in the Pensions Bill—so far, involving a very small group of people who could be within fuel poverty. Can the Minister say anything more about the targeting and whether that will be improved?
My third question is again perhaps a more technical one. When the Office of Nuclear Development was set up within BERR, one of the points made to me was
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Lord Hunt of Kings Heath: My Lords, the noble Lord said that they were three simple questions, but they were pretty fundamental questions, as I would expect from someone so experienced in this hugely important area. I must say how much I welcome his comments about the establishment of the new department. I have listened to him with great interest over the years on many matters, not least in your Lordships’ House on the question of the need for an effective energy policy.
On targeting, the noble Lord’s point is well made. Since my days at the DWP, I am not as well informed on that question as perhaps I ought to be, but I take his point that in dealing with fuel poverty we have to ensure that the money that is available is spent most effectively. I think that that was the point he raised. He will have understood from my comments and from the Statement of my right honourable friend that we understand clearly the importance of dealing with fuel poverty, particularly in these very difficult times.
On the question of the Nuclear Decommissioning Authority and the other question the noble Lord raised, he will understand that the department has been established for only 10 days and matters still have to be decided. I would rather not attempt to give him a definitive answer at this stage, but perhaps I might report both to him and to the House when we have finally established the whole set of responsibilities. It is fascinating to be at the creation of a new department with all the excitement and potential, but one or two practical issues must be dealt with.
I can tell your Lordships that the role of the NDA is critical. It is a non-departmental public body that was set up under the Energy Act 2004. The question is the sponsorship of that body, but it is a matter to which we are giving close attention. It is important, too, in relation to the fund that has been established and the future investment in our nuclear policy.
Lord Turnbull: My Lords, there are advantages in bringing together two intertwined issues such as energy and climate change, but there is an important proviso, which is that no one faction within a department becomes dominant and drowns out the voice of the other. I regret that this happened once in my experience in the early days of the Department for the Environment, Transport and the Regions. The roads voice was largely suppressed, and it took many years before we returned to a more balanced policy.
Secondly, I welcome the creation of feed-in tariffs as an additional instrument, but with the caveat that care will be needed with the price that is set. Otherwise, in the metric of cost per tonne of CO2 avoided, we could find ourselves paying a lot more than we need, compared with other instruments that we could be using.
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My third observation is about the 80 per cent target. Because we are expecting GDP to be growing over this period, the reduction is not 80 per cent but, in terms of grams of CO2 per dollar of GDP, we will need to reduce carbon by something like 95 per cent. In other words, we will have to run our whole society on about 5 per cent of the carbon that we use at present. That is a massive task, so it is essential that we bring others along with us. Otherwise we will have the double jeopardy of paying to decarbonise our economy and paying to raise our sea defences.
Lord Hunt of Kings Heath: My Lords, I welcome those comments and certainly agree that is a hugely challenging target. I shall not trade figures with the noble Lord but he is right to suggest that it will be very tough indeed. I also accept that dealing with climate change can work only if there is international agreement. Given our wish, which I believe is shared by the whole House, that this country should take a lead, we have to be a good example. That means having a tough target and the determination to reach it.
The noble Lord made an important point about feed-in tariffs and the pricing structure. We are considering them at the moment and are deciding how to take forward the pledge made by my right honourable friend in the other place.
The noble Lord speaks with huge authority and experience about different balances of view within a department. I take what he said to heart. We should not be frightened of policy tensions within government. Simply moving the deckchairs—moving a division from one department to another—does not solve problems overnight, but it can lead to greater focus, a determination to ensure that the twin issues of energy and climate change are dealt with together, dealing with some of the tensions and, in the end, ensuring that we reach the right policy decisions. However, with all the doubts that can always be expressed about structural changes, it is clear that this is the right path to go down. It has huge potential, and it is a huge privilege for me to serve in the department.
Lord Woolmer of Leeds: My Lords, I add my welcome to the Minister in his new position and to the new department. I also welcome the fact that aviation is to continue to be dealt with in an international environment. Is the European Union still pressing ahead with its intention to bring flights into and out of Europe within the European Emissions Trading Scheme, ignoring wider international law?
In relation to the extension beyond carbon into the six Kyoto greenhouse gases, will the climate change committee now bring forward not only carbon budgets but budgets for all six Kyoto greenhouse gases on rolling five-year programmes over 15 years? Is the remit of the climate change committee for carbon budgets now to be expanded?
On the question of the level playing field and giving a lead to the rest of the world, can the Minister tell the House his assessment of the strong resistance from Poland and other countries to the speed at which this country wishes to go in dealing with emissions and getting agreement within Europe? Can he give the
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Lord Hunt of Kings Heath: My Lords, I shall write to my noble friend on some of the details of the European negotiations.
I take his general point in relation to the discussions that are taking place. Different countries came to those discussions with a different approach. We will find ways of reporting progress to Parliament in due course. In the Statement, my right honourable friend referred to the risk that some countries will say that because of the current economic uncertainty, we should row back on dealing effectively with climate change and carbon emissions. My view and that of the Government is that it would be a disaster to row back. It has never been more important that we press on. I assure noble Lords that we will make that point time and time again. The fact that we have announced that we are setting ourselves a tough target for 2050 gives us a stronger position from which to argue with our European neighbours.
Lord James of Blackheath: My Lords, I declare an interest as a current member of Sub-Committee B of the European Union Committee, which is imminently to report on the renewable energy replacement 20 per cent reduction by 2020. While welcoming the Minister’s report, I have to dampen some of his enthusiasm about the potential for achieving his targets given the appalling state of the technical supply chain in this country. In the event that we were to depend on what is available now, the Minister would have had to commence the wind farm programme on the seventh birthday of Jesus Christ. That would fully utilise the existing resource of offshore maritime installation facilities. It takes eight months to produce one offshore wind farm comprising 34 turbines. There are only two ships available in this country with the necessary cranage platforms capable of taking the turbines out to sea, and one of those has an unfortunate tendency to sink when it gets there. In the event that the boat capability was available to generate the development of these wind farms, somebody has got to find a way of very quickly building about 50 more of them at about £12 million each. There are none in production at present, so we have very limited resources with which to go forward.
In addition, there are two further major supply chain problems on which the Government could do something urgently. There is no gearbox capable of providing the optimum generation that can handle wind shifts of between 12 and 40 miles an hour. The only one that is available is—
Lord Davies of Oldham: My Lords, will the noble Lord please ask a question? It is question time on the Statement.
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Lord James of Blackheath: My Lords, will the Government do something to obtain within the European Community a licence for a British company to manufacture the only good wind farm gearbox, which is made by Siemens and is currently not available to us? That is what we need most urgently. Secondly, can something be done to accelerate the technical development by universities of a means of storing surplus capacity to level the evenness of supply, which is the other major failure?
Lord Hunt of Kings Heath: Alas, my Lords, in the discussions I have held within my new department the question of gearboxes has not yet been addressed. However, I take the noble Lord’s point seriously. The target for 2020 is challenging, let alone the target we have now set for 2050. We need to see considerable progress in renewables. We also need to see British companies developing technology, winning contracts and creating jobs because I am convinced that the renewables area goes hand-in-hand with investment in the UK and with developing skilled jobs. The noble Lord has brought to our attention the need to do everything we can to make sure that British companies take advantage of that, and I will take that back to the department.
Enterprise Act 2002 (Specification of Additional Section 58 Consideration) Order 2008
1.29 pm
The Secretary of State for Business, Enterprise and Regulatory Reform (Lord Mandelson) rose to move, That the order laid before the House on 7 October be approved (SI 2008/2645).
The noble Lord said: My Lords, it is a great honour to speak for the first time in this House. I want to begin by thanking your Lordships for the wonderfully warm welcome I have received from all sides of the House over the past few days and also from the staff who work here and add so much to the character of the House. It means a lot to me; it is nice to be back.
Being greeted by such a succession of noble Lords these past few days—many old friends and former colleagues—has been like replaying the last 30-odd years of my life, starting in the Wilson years and moving through the eras of Callaghan, Foot, Kinnock, Smith and then Blair. I know that a lot of people think of me as being quintessentially new Labour—indeed, who could doubt that?—but my roots go deeper. One of the privileges of being a Member of your Lordships’ House is the richness of the political experience drawn from past decades that I have benefited from over the years, and which is available to our debates today.
Of course, my greatest wish is that my parents were alive today. My gregarious father loved mixing with politicians. When I was a boy, he was not above driving his car into the precincts of Parliament, although not a Member, relying on a cheery wave and a copy of Hansard left casually on the back shelf of his car to reassure the policeman on the gate—in those days it was a single policeman on the gate. My mother had
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The House is very different from the one my that my grandfather attended. Its breadth is wider. It is more representative. It is also a House that takes its scrutiny role very seriously, as I know from my European experience. There is not only a breadth but a depth in this House—something that might be more generally acknowledged.
More than 50 years ago, my grandfather, making his maiden speech in this House, spoke of the Marshall plan and its importance in rebuilding the shattered economies of the allied countries of Europe after the Second World War. Now, as then, the world must come together to secure the future of its financial systems and the international architecture supporting them, at a time of deep uncertainty and turbulence in global markets.
A strong, stable banking system is essential to support and protect the investments, savings and loans that help us grow our economy and succeed as individuals. Further to the recent measures announced by the Prime Minister and Chancellor to put the British banking system on a sounder, more secure long-term footing, private sector mergers can play an important role in helping a financial institution in difficulty.
It is critical that in cases where a proposed merger could bolster financial stability in the UK’s economy, the overall public interest is served by a proper consideration of the need for stability, alongside the implications for competition.
I beg to move, therefore, that your Lordships consider the Enterprise Act 2002 (Specification of Additional Section 58 Consideration) Order 2008, Statutory Instrument No. 2645. The order was considered by the Lords Merits of Statutory Instruments Committee at its meeting on Tuesday.
Merger control in this country is regulated under the Enterprise Act and the European Community merger regulations, with the Office of Fair Trading and Competition Commission responsible for investigating UK mergers on the basis of their impact on competition in UK markets.
The Enterprise Act provides limited powers for the Secretary of State for Business, Enterprise and Regulatory Reform to intervene in mergers to protect legitimate public interests. Public interest considerations are currently defined under Section 58 of the Act as ensuring national security and plurality of media ownership. Section 58 also provides the Secretary of State with the power to specify additional considerations, when necessary, to protect the public interest.
As noble Lords will be aware, my right honourable friend John Hutton—my predecessor at the Department for Business, Enterprise and Regulatory Reform—announced on 18 September that he had issued an intervention notice in respect of the proposed Lloyds TSB group merger with HBOS plc. He also announced that he would place an order seeking the necessary power to enable him to take into account the vital public interest issues surrounding this merger.
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