Baroness Whitaker (Lab): My Lords, I must confess that I am rather puzzled by this amendment, as indeed I was by the Prime Minister’s announcement more

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than a year ago that he and Mr Hollande would both sign up to EITI. EITI was, of course, an initiative by the previous Government with the very commendable aim of ensuring, as the noble Baroness said, that oil industry companies are obliged to disclose their financial transactions and treasuries are obliged to disclose the revenue. It was very commendable because it was initiated for countries where the oil industry was extremely corrupt and made clandestine payments to the Government in exchange for concessions and where taxpayers—if indeed they paid much tax at all as they were too poor—had absolutely no sight of these financial transactions. Now, even the most extreme critic of British capitalism would not, I think, say that anything like that regime obtains here so I am curious as to why we need to sign up to this system, which was entirely meant for developing countries where their resources have proved inimical rather than helpful to their development. It is also my understanding that the revenue obtained from oil companies is easily available from the Treasury in any case, so why this amendment?

Lord McKenzie of Luton (Lab): My Lords, I put one small question to the Minister. We discussed in the previous amendment a new levy that will be introduced as a consequence of the Bill. Is it envisaged that that levy would be includable in EITI reports and, if so, is it a tax for the purposes of the proposed new Section 8A of the Commissioners for Revenue and Customs Act 2005?

Baroness Verma: My Lords, I am very grateful to noble Lords for their intervention. I shall respond to the noble Baroness, Lady Whitaker, first. We are transparent, but we want to show clear leadership and be part of the growing group of countries signing up to the EITI, which sends a very clear message across the industry globally that we need to have transparency in the oil, gas and mineral sector. By being part of the growing group, we are indicating that UK companies based overseas are committed to the transparency that we expect on our shores here. I do not think that there is any other purpose than to be able to show clear leadership and that it is the right thing to do. We have always tried to be transparent but, as the noble Baroness said, there are countries that need nudges. Perhaps by showing leadership and being part of an ever-extending group of countries wishing to sign up to the EITI, we can show globally that this is a direction that countries that want to show transparency are taking.

I may need to write to the noble Lord, Lord McKenzie, with a more detailed response on his point.

Amendment 95 agreed.

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(1) In this Part the “principal objective” is the objective of maximising the economic recovery of UK petroleum, in particular through—

(a) development, construction, deployment and use of equipment used in the petroleum industry (including upstream petroleum infrastructure), and

(b) collaboration among the following persons—

(i) holders of petroleum licences;

(ii) operators under petroleum licences;

(iii) owners of upstream petroleum infrastructure;

(iv) persons planning and carrying out the commissioning of upstream petroleum infrastructure.

(2) The Secretary of State must produce one or more strategies for enabling the principal objective to be met.

(3) A strategy may relate to matters other than those mentioned in subsection (1)(a) and (b).

(4) A strategy may not impose an obligation which relates to the powers of a person to make commercial arrangements unless—

(a) the strategy imposes the obligation on relevant participants in the petroleum industry, and

(b) the Secretary of State considers that the obligation will—

(i) stop commercial arrangements made by those relevant participants, or associates of those relevant participants, from having a significant adverse effect on the principal objective, or

(ii) reduce the extent to which such arrangements have such an effect.

(5) In this section—

“associate” has the meaning given in section 91 of the Energy Act 2011;

“relevant participant in the petroleum industry” means—

(a) the holder of a petroleum licence,

(b) an operator under a petroleum licence, or

(c) an owner of upstream petroleum infrastructure.

(6) For provision about producing and revising a strategy, see sections 9F and 9G.

9B Exercise of certain functions of the Secretary of State

The Secretary of State must act in accordance with the current strategy or strategies when—

(a) exercising functions under the other Parts of this Act (except Part 4),

(b) exercising functions under Part 4 to the extent that they concern reduction of the costs of abandonment of offshore installations and submarine pipelines,

(c) exercising functions under Chapter 3 of Part 2 of the Energy Act 2011 (upstream petroleum infrastructure),

(d) exercising any function or using any power under a petroleum licence, and

(e) exercising any other function or using any power—for the purpose of enabling the principal objective to be met.

(i) to provide advice or assistance to another person, or

(ii) to acquire, use or supply information,

for the purpose of enabling the principal objective to be met.

9C Carrying out of certain petroleum industry activities

(1) A person who is the holder of a petroleum licence must act in accordance with the current strategy or strategies when—

(a) planning and carrying out activities as the licence holder, and

(b) making commercial arrangements which relate to the person’s activities as the licence holder (in so far as this does not fall within paragraph (a)).

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(2) A person who is an operator under a petroleum licence must act in accordance with the current strategy or strategies when—

(a) planning and carrying out activities as the operator under the licence, and

(b) making commercial arrangements which relate to the person’s activities as the operator under the licence (in so far as this does not fall within paragraph (a)).

(3) A person who is the owner of upstream petroleum infrastructure must act in accordance with the current strategy or strategies when—

(a) planning and carrying out the person’s activities as the owner of upstream petroleum infrastructure (including the development, construction, deployment and use of the infrastructure), and

(b) making commercial arrangements which relate to the person’s activities as the owner of upstream petroleum infrastructure (in so far as this does not fall within paragraph (a)).

(4) A person must act in accordance with the current strategy or strategies when planning and carrying out the commissioning of upstream petroleum infrastructure.

9D Reports by the Secretary of State

(1) As soon as practicable after the end of each reporting period, the Secretary of State must—

(a) consider the extent to which, during that period, these persons have followed section 9C by acting in accordance with the current strategy or strategies—

(i) licence holders,

(ii) operators under petroleum licences,

(iii) owners of upstream petroleum infrastructure, and

(iv) persons planning and carrying out the commissioning of upstream petroleum infrastructure; and

(b) produce a report on the results of the consideration of that question.

(2) The report may contain other material, including a statement of action which the Secretary of State has taken, or is proposing to take, in response to any matter included in the report (including changes to a strategy).

(3) The Secretary of State must publish, and lay before each House of Parliament, a copy of each report produced under this section.

(4) In this section “reporting period” means—

(a) the period of two years beginning with the day when this section comes into force, and

(b) each subsequent period of one year beginning with the day after the end of a previous reporting period.

9E Secretary of State’s security and resilience functions

(1) This Part does not limit the exercise of the Secretary of State’s security and resilience functions.

(2) This Part is subject to the exercise of the security and resilience functions by the Secretary of State.

(3) In this section “security and resilience function” means any function which relates to—

(a) the security of petroleum supplies, or

(b) the resilience of the petroleum industry.

9F Producing and revising a strategy

(1) The Secretary of State must produce the first strategy before the end of the period of one year beginning with the day on which this section comes into force.

(2) The Secretary of State may subsequently—

(a) produce a new strategy, or

(b) revise a current strategy,

whenever the Secretary of State thinks appropriate.

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(3) The Secretary of State must review each current strategy before the end of each relevant four year period.

(4) In reviewing a current strategy, the Secretary of State must (in particular) take account of the results of any consideration undertaken under section 9D in respect of reporting periods falling within the relevant four year period.

(5) In this section “relevant four year period”, in relation to a current strategy, means a period of four years beginning with—

(a) the date on which the strategy was issued, or

(b) if later, the date on which the last review under subsection (3) was concluded.

9G Procedure for producing and revising a strategy

(1) Before—

(a) producing the first strategy,

(b) producing a new strategy, or

(c) revising a current strategy,

the Secretary of State must prepare a draft of the strategy or revised strategy.

(2) The Secretary of State must—

(a) consult such persons as the Secretary of State thinks appropriate about the draft, and

(b) consider any representations made by them.

(3) If, after complying with that duty, the Secretary of State decides to proceed with the draft (in its original form or with modifications), the Secretary of State must lay a copy of the draft before each House of Parliament.

(4) The Secretary of State may not take any further steps in relation to the draft if, within the 40 day period, either House resolves not to approve the draft (a “negative resolution”).

(5) If neither House passes a negative resolution, the Secretary of State may issue the strategy or revised strategy in the form laid before Parliament.

(6) The strategy or revised strategy comes into force on the date specified by the Secretary of State (which must not be before the date when it is issued).

(7) Subsection (4) does not prevent a new draft of a strategy or revised strategy from being laid before Parliament.

(8) In this section “40 day period”, in relation to the draft of a strategy or revised strategy, means the period of 40 days beginning with the day on which the draft is laid before Parliament (or if the draft is not laid before each House on the same day, the later of the 2 days on which it is laid).

(9) For the purposes of calculating the 40 day period, no account is to be taken of any period during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than four days.

9H “Upstream petroleum infrastructure” and its owners

(1) In this Part “upstream petroleum infrastructure” means—

(a) a gas processing facility,

(b) an oil processing facility, or

(c) an upstream petroleum pipeline,

if and in so far as it meets conditions A and B.

(2) A facility or pipeline meets condition A if and in so far as it is situated in Great Britain or relevant UK waters.

(3) A facility or pipeline meets condition B if and in so far as it is used in relation to UK petroleum (including such petroleum after it has been got).

(4) But an upstream petroleum pipeline is not “upstream petroleum infrastructure” if it is a pipeline to which section 17GA applies (petroleum pipelines subject to Norwegian access system).

(5) In this section, the following expressions have the same meanings as in Chapter 3 of Part 2 of the Energy Act 2011 (see section 90 of that Act)—

(a) “gas processing facility”;

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(b) “oil processing facility”;

(c) “upstream petroleum pipeline”.

(6) In this Part, “owner”, in relation to upstream petroleum infrastructure, means—

(a) a person in whom the pipeline or facility is vested;

(b) a lessee and any person occupying or controlling the pipeline or facility; and

(c) a person who has the right to have things conveyed by the pipeline or processed by the facility.

9I Other interpretation

In this Part—

“current strategy”, in relation to any particular time, means a strategy under section 9A(2) in force at that time;

“operator under a petroleum licence” means a person who is responsible for organising or supervising any of the operations of searching for, boring for, or getting UK petroleum in pursuance of the petroleum licence;

“owner”, in relation to upstream petroleum infrastructure, has the meaning given in section 9H;

“petroleum” has meaning given in section 1;

“petroleum licence” means a licence granted under—

(a) section 3 of this Act, or

(b) section 2 of the Petroleum (Production) Act 1934;

“principal objective” has the meaning given in section 9A;

“relevant UK waters” means—

(a) the territorial sea adjacent to the United Kingdom, and

(b) the sea in any area designated under section 1(7) of the Continental Shelf Act 1964;

“UK petroleum” means petroleum which for the time being exists in its natural condition in strata beneath relevant UK waters;

“upstream petroleum infrastructure” has the meaning given in section 9H.””

Amendments 95ZAA to 95ZAD, as amendments to Amendment 95ZA, not moved.

Amendment 95ZA agreed.

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(b) that no levy is payable in respect of costs incurred in any exercise of relevant functions for which a charge is payable under the Gas and Petroleum (Consents) Charges Regulations 2013 (as those Regulations stand when this section comes into force).

(4) In determining for the purposes of subsection (3)(a) the total amount of licensing levy payable in respect of a charging period, an amount of levy payable in respect of that period may be ignored if (during that period or subsequently)—

(a) having been paid, it is repaid or credit for it is given against other licensing levy that is payable; or

(b) having not been paid, the requirement to pay it is cancelled.

(5) The “relevant functions” referred to in subsection (3) are—

(a) functions under the following enactments—

(i) the Pipe-lines Act 1962 (cross-country pipe-lines);

(ii) section 3 and the other provisions of Part 1 of the Petroleum Act 1998 (exploitation of petroleum);

(iii) Part 1A of the Petroleum Act 1998 (maximising economic recovery of UK petroleum);

(iv) Part 3 of the Petroleum Act 1998 (submarine pipelines);

(v) Part 4 of the Petroleum Act 1998, in so far as the functions concern reduction of the costs of abandonment of offshore installations and submarine pipelines;

(vi) section 4 and the other provisions of Chapter 2 of Part 1 of the Energy Act 2008 (importation and storage of combustible gas);

(vii) section 18 and the other provisions of Chapter 3 of Part 1 of the Energy Act 2008 (storage of carbon dioxide);

(viii) Chapter 3 of Part 2 of the Energy Act 2011 (upstream petroleum infrastructure);

(b) carrying out policy work on matters relating to UK petroleum and its recovery;

(c) providing advice and assistance to the petroleum industry on matters relating to UK petroleum and its recovery;

(d) collaborating with the petroleum industry on matters relating to UK petroleum and its recovery;

(e) acquiring, using and supplying information on matters relating to UK petroleum and its recovery;

(f) encouraging development of the petroleum industry in relation to the recovery of UK petroleum;

(g) carrying out, or providing advice and assistance to those carrying out, research and development in relation to technology and products relevant to the recovery of UK petroleum;

(h) functions which relate to—

(i) the security of petroleum supplies, or

(ii) the resilience of the petroleum industry;

(i) international co-operation on matters relating to UK petroleum and its recovery, including—

(i) resolution of disputes relating to the entitlements of different countries in relation to petroleum fields, and

(ii) openness and accountability in the management of natural resources.

(6) The matters relating to UK petroleum and its recovery which fall within paragraphs (b), (c), (d) and (e) of subsection (5) include—

(a) maximising the economic recovery of UK petroleum, and

(b) improving the supply chain of UK petroleum.

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(7) The amount or amounts of licensing levy payable by licence holders must be—

(a) set out in the regulations, or

(b) calculated in accordance with a method set out in the regulations.

(8) The licensing levy is payable to the Secretary of State.

(9) Schedule (The licensing levy) (the licensing levy) has effect.

(10) Schedule (The licensing levy) does not limit the provision that may be made by regulations under this section.

(11) The Secretary of State may, by regulations, amend subsection (3)(b) by adding, removing or amending a reference to any regulations made under section 188 of the Energy Act 2004.

(12) In this section and Schedule (The licensing levy)—

“charging period” means a period in respect of which licensing levy is payable;

“licensing levy” means the levy provided for in regulations under this section;

“UK petroleum” means petroleum (within the meaning given in section 1 of the Petroleum Act 1998) which for the time being exists in its natural condition in strata beneath—

(a) the territorial sea adjacent to the United Kingdom, and

(b) the sea in any area designated under section 1(7) of the Continental Shelf Act 1964.”

Amendment 95ZBA, as an amendment to Amendment 95ZB, not moved.

Amendment 95ZB agreed.

Baroness Eaton (Con): My Lords, efficiency has been mentioned rather a lot during the proceedings in this Committee today, and I propose a brief amendment that would improve efficiency and increase the opportunity for all to benefit from the government scheme to introduce renewable heat, which will improve the UK’s most important infrastructure—mentioned earlier by the noble Lord, Lord Whitty—our buildings.

The legislation set out in the Energy Act 2008 does not allow for the assignment of renewable heating incentive payments to a third party as is permitted for feed-in tariffs. Indeed, under current powers, only the

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owner of the renewable heating system can receive payments for the scheme. The result is that while those with access to finance can benefit from the government scheme, those without such access will not be so fortunate. Many of them are hard-working rural families who, by living off the gas grid, have higher energy bills and a greater tendency to be fuel poor. My amendment would give the Government options on how to open the scheme most efficiently and effectively to wider funding. It would allow the renewable heat incentive to replicate the successes that have been seen with the Solar PV that has been installed so widely.

7 pm

I have also included in this amendment two minor changes to the RHI primary legislation. The aim of both is to make the scheme more efficient and flexible so that the taxpayer and customers get the best value for their money. The first is designed to allow the Government to contest the delivery role for the administration of the RHI. It seems strange to me, when looking at the legislation, that we in Parliament would tie the Government’s hands so that they can only use Ofgem to deliver the scheme. Ofgem may well be the organisation that is best placed to do this and offer the Government the cheapest solution. However, Parliament has, with the current regulations, ensured that we will never know and that genuine accountability for the costs of delivering this scheme for the next 20 years will be the monopoly of a single organisation.

In light of this, I believe it is time for the Government to seek, and for the House to grant them, the power to open delivery of the RHI to competition in order to ensure value for money and the highest possible delivery standards for taxpayers. Secondly, I am suggesting that we streamline the existing regulatory process to allow us to make changes to the existing RHI regulations via negative as opposed to affirmative resolution. The existing legislation states that affirmative resolution must be used to make any changes to the RHI regulations. I understand that, with uncertainty over the delivery and shape of the scheme when it was initially proposed, Parliament originally required a strong say over the development of the programme. That is quite understandable. However, the scheme has now been approved by both this House and the other place, and surely now is the time to revert to a more streamlined process so that we can ensure that this House does not create a bureaucratic paper trail which means that the scheme is unable to respond quickly and effectively to innovations in the market. This change will allow the scheme to stimulate growth by reducing instability and uncertainty for the renewable heat manufacturers and installers and their supply chains, as well as for companies and consumers considering the installation of renewable heat systems.

To illustrate the amount of parliamentary time the scheme has required recently, it was the subject of three debates in both Houses in 2013 and already a further two this year. Although the amendment I have drafted would move all decisions to the negative resolution process, the Government could and should look at the option of some key decisions remaining within the affirmative process, should they accept this amendment. I beg to move.

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Baroness Worthington: My Lords, I am grateful to the noble Baroness for describing her amendment and will comment briefly on the group. Starting with the last point about making administrative changes to the way the RHI works through the negative process, I do not think that is necessary—we are not there yet and I would not support it. One of the benefits we have had over the last year or two as we have been talking about the RHI is that we have had regular opportunities to discuss the issue. It is definitely not the case that everything is hunky-dory and that we can just forget about it and let it all roll on. There are still some quite important issues, and we will need to return to them and have parliamentary scrutiny over them.

Having said that, it is also true that there are some issues with the RHI that we need to see streamlined. I do not wish to sustain a bureaucratic and complex jungle of regulations, but this is a complex piece of legislation and removing parliamentary scrutiny is not going to resolve that. It is fundamentally about improving the policy over time as we become more comfortable with what the RHI is delivering. The other reason for not supporting that element of the amendment is that, unlike the RO and the FITs, this is money from the public purse and therefore requires a higher degree of public scrutiny.

I was interested to see this amendment last night, but I am afraid that I did not get a chance to speak to the noble Baroness beforehand about the background to it. Not so long ago I was at a party when someone came up to me and said, “We have just installed a renewable heat boiler”. I will not reveal any names, but the person was concerned that in order to get it going, they had had to work around the regulations as they stood because of the restriction on who can receive payments and the fact that it is not the same as self-owned or self-installed renewable technologies. I would be interested to learn about the background to this amendment and certainly I will be interested to hear what the Minister has to say in response to it. It is about flexibility around the finances that are required for what are often quite capital-intensive projects. The funding has to be arranged in a flexible way so that people who do not have a lot of capital upfront are still able to engage with the RHI through arrangements that may not be standard. There is something here that I would strongly recommend the noble Baroness to look at and perhaps come back to us. As I say, it is a simply a coincidence that someone raised this issue with me personally.

On whether Ofgem is the right body to deal with this, well, if we have a Labour Government we will not

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have an Ofgem, so we can revisit that question then. We will certainly have a regulator, but we will look again at how these things are taken care of. Again, I thank the noble Baroness for tabling the amendment and I look forward to the Minister’s response.

Baroness Verma: My Lords, I thank my noble friend Lady Eaton for her amendment and I thank the noble Baroness for her comments. I know that we have discussed these issues on many an occasion in the Moses Room. Of course we want to make sure that the scheme is as efficient and cost-effective for the taxpayer as it possibly can be. It should deliver the benefits that have been so clearly outlined, which is something that the Government are strongly keen on pursuing.

Perhaps I may respond to my noble friend on using an alternative to Ofgem. We have seen Ofgem already successfully administering a number of schemes for the department through Ofgem E-Serve, including both the domestic and non-domestic RHI, the Renewables Obligation and feed-in tariffs. Ofgem has significant expertise in the area and has experience of running these programmes. It is also frequently evaluated to ensure that lessons are learnt both by the body and the department in order to improve the customer experience and value for money in policy administration. I think that Ofgem is the right body to be the administrator for these tools. The Government want the best kind of body to reach out to consumers. However, I take the points she raised and, listening to the noble Baroness, we have discussed on many occasions how we can improve the process. It is, of course, a complex tool so we need to ensure that it does not inadvertently exclude the very people who we are trying to assist and help.

As with all things, I must look at the upsides and the downsides of my noble friend’s amendment. What I would like to do is take it away and consider it. The amendment seems very sensible, but I would prefer to give it some thought first. Perhaps I may come back to her on Report with some further consideration.

Baroness Eaton: I thank the noble Baroness, Lady Worthington, for her comments and my noble friend for responding so carefully and thoughtfully to my amendment. I appreciate the fact that it will be considered and look forward to hearing her comments on Report. I beg leave to withdraw the amendment.

Amendment 95ZBB withdrawn.

Committee adjourned at 7.10 pm.