When you have the indebtedness we have it is unrealistic to say that when you are spending money to keep the economy going to meet the needs of social services and so on that somehow if we spend the revenues from something such as shale gas we are squandering it. However, there may come a time, as happened in Norway, when it would be right to set up a fund. My noble friend’s new clause says that the Government “may”—it does not say “must”. I have already indicated that I have some doubts about the figures he has put in at the end but the principle seems to be very sound and I hope that the opportunity may come when we shall do something about it. Like him I look forward to the reply from my noble friend on the Front Bench.
Lord Whitty: My Lords, I have also added my name to this amendment. This is for two reasons—partly, I was swept away by the rhetoric from the noble Lord, Lord Hodgson, in Committee; it is such an obvious strategic decision that I thought I must support it. The second reason is purely historic. Somewhere in the archives of the TUC, from about 1973, there is a paper with the initials “LW” on it. In that paper I argued that we should set up a fund to invest in upgrading into the new technologies of the manufacturing industry and acquire assets at home and abroad to meet the interests of the state and of the British economy out of the tax revenues which we anticipated would come from the North Sea. We had no idea how much revenue would be coming in from North Sea oil at that time but it would clearly be substantial. I do not think anybody thought at that point it would be as substantial as it turned out, altering the terms of trade of the UK, with the level of sterling rising to the detriment of the competitiveness of the British manufacturing sector which was, of course, already a bit deadbeat and uncompetitive.
If only they had listened to me then. I am afraid that I never got my paper to the noble Lord, Lord Jenkin, while he was still in office but the next Government took no notice of it nor, indeed, the one after that. It stayed through all that period of North Sea oil revenue the Government received—I would not use “squandered”. I disagree with a lot of the priorities of the Government of the 1980s as noble Lords know, but that revenue was not used for the long-term benefit of the British economy when at least a fraction of it should have
been. I thought the noble Lord, Lord Hodgson, had an important point here. If this industry develops to the extent that many of its proponents are saying, although none of us knows that yet, there will be a serious tax revenue that is in a strict sense a windfall for future Governments and a windfall for the British economy. We should not make the same mistake and we should take a lesson from our Norwegian cousins by investing in a fund that can provide some degree of security and improvement of the British economic situation for future generations. I am very happy to support in principle the noble Lord’s amendment.
Lord Teverson: My Lords, I welcome this amendment and I was pleased to add my name to it both in Committee and now on Report. The important point to make is that my noble friend Lord Hodgson is absolutely right: if we do not put this on to the statute book as something that can happen, the temptation will pass and it will be as if it never happened. That is why I am keen that it should be done now.
I should say just as an observer, if you like, that it is very easy to expand government expenditure and very difficult to pull it back. It is easy to find uses for income if it is there, but perhaps those uses are not always the best for our long-term future. It is easy when there are financial and fiscal constraints of the kind the country is confronting at the moment, but that is not always the case. It is hoped that we will get over the current deficit at some point in the not too distant future. That is why it is important to prepare for a sovereign wealth fund so that we can build it up in an intergenerational way, as has been advocated already.
The other aspect is completely different and not at all the most important. In the last parliamentary Session this House set up a Select Committee to investigate the nature of soft power. I was not a member of the committee, but it seems to me that countries with sovereign wealth funds exercise considerably more soft power in global affairs. That is not surprising because money talks—not just within the family or in business, but across nations as well. Why does Norway enjoy its stature? It is in part because of its sovereign wealth fund. The same can be said for a number of Gulf states and for China. In terms of Britain’s status in the future, we would gain quite considerably if we were seen to be a country that is able to save, invest and exert influence financially beyond our borders in this way rather than one that just keeps its current account going through non-renewable resources that cannot be brought back. That is why I feel strongly that we should at least take the step of this enabling legislation and then let future Governments decide how it should be used.
Lord Forsyth of Drumlean: My Lords, I did serve on the soft power committee and I have to say that the countries with sovereign wealth funds are not exercising soft power; they are exercising hard power because they are lending us money to keep going. Every year we are spending roughly £100 billion more than we have income. The leader of the Opposition forgot about the deficit in his speech at his party’s conference. I have to say that I have very considerable respect for
my noble friend, but he seems to have forgotten about it too. He did mention at the end of his speech that there is the issue of debt, which might be a reason why people would oppose this policy. It is certainly why I would oppose it.
The national debt will have doubled during this Parliament. The coalition Government are absolutely determined to reduce it, but it is still growing. We are not meeting our targets in terms of bringing the deficit under control. The idea that we should pre-empt resources that may or may not come from shale gas is like going along to the bank manager and saying, “I would like to borrow £1.4 trillion and, by the way, I would also like to open a savings account into which I shall put the proceeds from shale gas”. This is a noble thought. It would be great to have a sovereign wealth fund, but it would perhaps be a first step to live within our means and pay back the debt that we have accumulated.
8.45 pm
My noble friend has talked about the importance of recognising our obligations to future generations and the finite nature of the resources. However, this national debt that we are growing is a charge on those future generations. It is a millstone around their necks. At the very least our priorities should be to pay that down and not to think of new ways of spending money that we do not have.
I agree with my noble friend Lord Jenkin of Roding. When we discovered North Sea oil, inflation was running at something like 24% and interest rates were not much below that. I suppose that we could have argued that we would have got quite good interest, but the inflation would have taken away any benefit. We had a country that was haemorrhaging billions from the nationalised industries and that was dependent on industries with a great past but no future. That money, particularly in Scotland, was used to transform the economy, and create new industries and new opportunities. At that time, Scotland had more public housing than the communist countries of central and eastern Europe.
The economy was transformed in the 1980s. The blessing of North Sea oil provided for that. To use the word “squandered” is grossly irresponsible. That money was invested in building a new future for our country. As we have just heard repeated over and over again by the leader of the Scottish nationalists, Scotland is now the richest part of the United Kingdom outside the south-east, and that is not just because of the Barnett formula. It is because of the way in which the prosperity from North Sea oil was invested and developed by the private sector. There is an argument that we could have achieved even more if the tax burden on those in the private sector who took the risks had not been so high.
We have just won a referendum in which we discredited the nationalist leader, Alex Salmond, for wanting to set up a sovereign wealth fund with the proceeds of North Sea oil while at the same time spending the money from North Sea oil. We are not in a position to be taking any tax revenue, whether from shale gas or anything else. We should not be doing anything other than paying down the debt that is due to us.
If we embark upon this idea that we need to set up funds for future generations, why should we limit it to shale gas? Why do we not have other sources of revenue? My noble friend said that the Treasury was concerned about hypothecation. This is not hypothecation. The definition of hypothecation is surely to take a certain quantity of revenue and apply it to a certain purpose. That is what his amendment does. It says that,
“the fund shall receive no less than 50% of any revenue received by the United Kingdom Government”.
I have another objection to my noble friend’s amendment. He said that we need to put down a marker because, if we do not, when the money starts coming in the Treasury will not want to hypothecate it for this purpose. If we put a marker down with 50% of the revenues given to this purpose, the Government will have every incentive to raise the tax on the people who are developing the shale gas and the industry. But with a new industry, we should be ensuring that as much of the available revenues as possible are used to invest and develop and take the thing forward. I very much regret that this is a proposal that we should not accept. I was slightly dismayed to see the Chancellor over the weekend appearing to smile upon it, and to describe the alternatives as squandering the money at a time when we do not have the money we need to fund public services may have been a slip of the tongue.
I very much hope that my noble friend will reject this amendment and put to one side any thought that we should do anything over the next five or 10 years other than to reduce our deficit, eliminate our deficit and eliminate the debt. I do not know quite how we can do that: £1.4 trillion is an enormous sum and if we are not going to have inflation eroded, it is a superhuman task to pay it off. I hope and pray that shale gas will help to provide some of the revenue that we need to do that for the sake of those future generations that my noble friend has spoken of.
Lord Davies of Oldham: My Lords, I am delighted that the noble Lord, Lord Deighton, has joined us for this debate. I had anticipated that perhaps he would have a slightly more comfortable ride than he did earlier this afternoon in trying to justify the Government’s position on the European issue. But the noble Lord, Lord Forsyth, has made this debate pretty challenging as well and I hope therefore that the noble Lord, Lord Deighton, will enjoy sailing between the shoals of difficulty in this proposal.
We all enjoyed the contribution that the noble Lord, Lord Hodgson, made in Committee. I very much enjoyed reading his piece in the Telegraph this morning—not a journal I go to for enlightenment very often—which was an excellent explanation of the sovereign wealth fund and its benefits. But someone had to point out its problems and the noble Lord, Lord Forsyth, has certainly done that.
I would like to add a dimension to this question. Of course, it looks attractive because it looks as if we are acting like benevolent grandparents—after all, we are the right age—trying to ensure that the future for our grandchildren is reasonably rosy. I am in favour of
that. I am sure we all are. But the problem is, of which decade in the 20th century, or in the 19th century, would you have said, “The resources that that society commanded in that decade ought to have had an element of hypothecation not to be spent at that time but to be looked after for the succeeding generations”? The problem with that is if you were able to anticipate the periodic crises in the capitalist society in the 19th century and also get the 20th century right, then you could make appropriate judgments. Otherwise, what we are facing is a situation where, one decade after the next, the society gets considerably richer.
We have been used to 2.3% growth. Of course I recognise the crisis that we all face at present. In fact, I have from time to time upbraided the Government’s Front Bench for seeming to portray it as a British crisis, quite unable to recognise that the whole of Europe and the advanced world, particularly the United States, are under the same strains. But we are having a period of very significant constraint upon growth at present; in fact, of course, we have had a negative position for a number of years. That is why it is right, surely, that all the resources we have available are directed towards improving the balance of this society, as the noble Lord, Lord Forsyth, has indicated. But in previous generations, such as the one after the Second World War, when it was quite usual to have 2.3% growth a year, within a quarter of a century this country had doubled its wealth. That generation would have looked pretty silly to have hypothecated money for those 30 years down the line when the growth in society ensured that the later society was so much wealthier than it was. We have to rehabilitate—and I am glad I am not the first person to actually try to do this—the word “hypothecation”. After the noble Lord, Lord Hodgson, had spoken in Committee I went and had a little chat. I probably indicated in Committee that I took issue with my colleagues at the other end who have got some responsibility for the Opposition’s position on the economy.
Hypothecation is a real problem. Once any area is hypothecated, in effect the flexibility that attends a Government is inevitably reduced and we are all operating—at this time of all times—on the tightest of margins. I think it was said by the outgoing Government at the last election that there was no money left. The incoming Government after the next election are not exactly going to be rolling in vast resources which they can allocate as they wish, hence the reason everybody is reining in the ambitions of potential Governments for the next few years.
I hope that the noble Lord, Lord Deighton, will address himself to what I think is a complex debate. He starts off, of course, from a very strong base because he is the Minister responsible for infrastructure and, after all, will always need to look a decade or more ahead rather than the immediate five years in order to get infrastructure that is effective and accurate at a location. I am not sure the noble Lord, Lord Deighton, can spend too many warm words on the enthusiasm that the Chancellor has shown over the weekend towards this idea. It is an idea worthy of exploration because the noble Lord, Lord Hodgson, has got a concept that could well capture the public mood and would encourage people to say that in fact
we need to look to the longer term future in our investment plans. However, I hope that is what Governments intend to do in any case.
Therefore I have no doubt that when the Minister responds he will have warm words to say towards the noble Lord, Lord Hodgson, for the work that he has done and the speech that he has made this evening. However, I hope that he will explain why it is so very difficult for a Government to accept what is—in fact—a majestic argument for hypothecation.
The Commercial Secretary to the Treasury (Lord Deighton) (Con): My Lords, as the noble Lord, Lord Davies, has pointed out, superb cases have been made for each side of this argument by my noble friends Lord Hodgson and Lord Forsyth.
Shale gas represents a huge economic opportunity for the UK. It could create thousands of jobs, generate business investment and in future provide substantial revenue for the Exchequer. A sovereign wealth fund would create a legacy for the long term and ensure the benefits are shared with future generations, and we have heard a lot about intergenerational fairness and the issues around that. It is a complicated issue to get right.
As a Government we support the idea and want to explore—I think those were precisely the words used by the noble Lord, Lord Davies—creating a sovereign wealth fund with the money that comes from shale gas. It would be a way of making sure that this money is invested in the long-term economic health of the north of England, because of course that is where most of the reserves are located, and in other areas hosting development to create jobs and investment there. My right honourable friend the Chancellor found this an appealing concept because for him it is all part of building a northern powerhouse, which is at the heart of the Treasury’s current economic strategy. As my noble friend Lord Hodgson pointed out—
9 pm
Lord Forsyth of Drumlean: Given what my noble friend has said, what answer would my right honourable friend the Chancellor give if Alex Salmond suggested that we should set up a sovereign wealth fund now using the proceeds from North Sea oil so that Scotland would benefit from it? Where does this hypothecation end?
Lord Deighton: I think the difference between the two opportunities is that, in one case, we are right at the beginning and, in the other, we are right at the end. Now is the time to explore the opportunity with respect to shale gas.
My noble friend Lord Hodgson pointed out that a sovereign wealth fund was implemented successfully in Norway, but that fund was established in 1990, which was nearly 20 years after oil was first produced. The fund was set up when the levels of revenue were already well known—this was a point that my noble friend Lord Forsyth was also getting at. The UK shale gas industry is still in the exploration phase. We will not be able accurately to forecast the scale or timing of shale revenues until more work is done to determine the extent of gas that can be technically and commercially
recovered. Therefore, coming up today with a clear plan for how this might fit into issues related to determining how we reduce the deficit and how we invest in the long term is extremely difficult without understanding what the revenues will be—I fully take on the point made there by my noble friend Lord Forsyth.
It should therefore be for future Governments to think about how such a fund could be designed, but we commit to the principle. The Chancellor will demonstrate his commitment to bring forward a proposal in the next Parliament in his Autumn Statement. With respect to the request made by my noble friend Lord Hodgson for a peg in the board now, and for those others who support this idea, I think that the right timing is when we have better information and are able to look at this matter properly. On that basis, I trust that the noble Lords, Lord Hodgson, Lord Whitty, Lord Teverson and Lord Jenkin, will agree not to press their amendment.
Lord Forsyth of Drumlean: Perhaps I might follow up on my noble friend’s point about the Scottish position. He said that we were right at the end and not at the beginning. What would his response be to a proposition that said, “Well, for new fields that are discovered, we should have a sovereign wealth fund”? Let us bear in mind that there are considerable potential resources to the west of the Shetland Islands and so on. Surely this is a very dangerous argument given the delicate situation that we are in, where we appear to be saying that, for some parts of the country and for some energy resources, a different view will be taken of the long-term future. Is this not a very dangerous proposition which could unravel rather badly?
Lord Deighton: That is one of the reasons for our anticipating that this subject would be explored in the next Parliament rather than this one.
Lord Hodgson of Astley Abbotts: My Lords, I thank all those who have taken part in this debate. I am grateful to my noble friend Lord Jenkin for his experienced view. I accept his stricture that it would have been hard in 1970 to foresee the flows from North Sea oil. I thank the noble Lords, Lord Whitty and Lord Teverson, for their support.
There was a characteristically combative speech from my noble friend Lord Forsyth from which I drew four things. The first was that the priority must be debt repayment; otherwise, it is a charge on future generations. That is fine, so long as you do not think that there should be any intergenerational fairness and you think that the assets that flow from shale gas are ours to use to repay the debts that we have created. That is a philosophical question. Secondly, he said that we should not spend money that we do not have. However, a sovereign wealth fund is not spending; it is saving. It is not actually spending but making sure that we do not spend it. Thirdly, he said that it is like going along to your bank manager and asking to borrow £1.4 trillion. Of course it is, but what we are doing at the moment is saying, “We’re not going to take the actions to cut that; we’re going to pledge some future assets that actually might belong to future
generations”. That is the conversation that we are having with our bank manager rather than one about how we cut our coat according to our cloth. On my noble friend’s last point, this is a permissive amendment. It is not designed to set out how things are going to work; it is designed merely to say that, if things develop in a certain way—that is, profitably—then we should look at it again at that point.
In response to the noble Lord, Lord Davies of Oldham, on the question of hypothecation, when we are talking about a finite natural resource that might belong not just to this generation, we should consider whether there is a special case for dealing with it in a particular way, which you might or might not call hypothecation.
Finally, I turn to the Minister’s reply, for which I thank him greatly. It is interesting that, given institutional concern about this, the Kuwait Investment Authority, which is the sixth largest sovereign wealth fund in the world, is worth about $600 billion. It was set up in the 1950s, at a time when Kuwait looked to this country for guidance and help and support, by a team entirely from the UK Treasury. So we have tried to deal with the sovereign wealth fund idea, but not here—only with people who were looking for our advice.
I recognise, and am grateful for, what is at least half—probably more than half and possibly two-thirds—of a loaf tonight. I think that I heard my noble friend say that he wholeheartedly commits to the principle of a sovereign wealth fund, a commitment which he said the Chancellor will reaffirm in his Autumn Statement. Further, the Chancellor will at that time commit to bringing forward a proposal for a sovereign wealth fund in the next Parliament.
There is of course many a slip between principle and practice. I equally have to recognise that my amendment is a pretty rough and ready one on which to hang such a radical new departure for British public policy. Weighing all of these factors up, I am going to trust that practice will follow principle, and watch developments closely. In the mean time, I thank my noble friend for his reply, and I beg leave to withdraw my amendment.
119: After Clause 38, insert the following new Clause—
“Part 4AImpact of infrastructure spending on costs for consumersImpact of infrastructure spending on costs for consumers
(1) The Treasury may by regulations make provision for the regulators to provide data, in a manner prescribed by the regulations, about the anticipated impact of infrastructure spending on the cost of products for consumers.
(2) Regulations made under subsection (1) may prescribe—
(a) the type of infrastructure spending about which data must be provided;
(b) the nature of the data to be provided;
(c) the methodology for collating and manipulating the data, including assumptions that should be made;
(d) the form in which the data should be presented;
(e) the persons that should receive a copy of the data.
(3) The regulations may make different provision for different regulators where necessary.
(4) The Treasury must scrutinise the data provided under subsection (1) and assess—
(a) the impact of infrastructure spending on the cost of products for consumers;
(b) the affordability of any anticipated increases in the cost of products for consumers, taking into account factors other than infrastructure spending that are also likely to significantly impact the cost of products; and
(c) differences in affordability between different groups of consumers, if any.
(5) The Treasury must publish the data provided under subsection (1) and the assessment made under subsection (4) in such manner as it reasonably deems appropriate.
(6) The Treasury must take into account the assessment in subsection (4) in making decisions about the extent, prioritisation or timing of infrastructure spending.
“consumer” means any individual or household of individuals that purchases a product or products;
“product” means a good or service the provision of which is regulated by a regulator;
(a) the Northern Ireland Authority for Utility Regulation;
(b) the Office of Communications;
(c) the Office of Gas and Electricity Markets;
(d) the Office of Rail Regulation;
(e) the Water Industry Commission for Scotland; and
(f) the Water Services Regulation Authority,
and “the regulators” means all of them.”
Lord Jenkin of Roding: My Lords, I thank the two noble Lords who added their names to the amendment. We turn from the question of spending the proceeds of shale gas to the question of who is paying for the infrastructure investment on which the country has embarked and for which there is a great deal of support.
When my noble friend Lady Kramer wound up the debate on the new clause in Committee, she was kind enough to suggest that I might approach my noble friend Lord Deighton to discuss this matter as it was entirely a matter for the Treasury. It was therefore no surprise that a day or two later I received an invitation from my noble friend’s office to go to a meeting. It was a very helpful meeting and I will refer to it later. However, I was most grateful for his readiness to meet me on that occasion, and for his presence here this evening to respond to the debate. I recalled his splendid speech when he opened the second day’s debate on the Loyal Address last June. He demonstrated his deep commitment to the Government’s major programme of renewal and expansion of Britain’s infrastructure.
The new clause concerns one important aspect of that. I refer to the absence at present of any systematic system for calculating and publishing what part of the costs will fall on consumers and have to be paid for in their bills. I suggested in Grand Committee that it was time for the Treasury to “lift the veil”. But we are not the first. Last year the National Audit Office produced an interesting report. I will quote two passages from it. First, in paragraph 16, the NAO said:
“Government has made no assessment of the overall impact of infrastructure on future bills or whether those bills will be affordable. Therefore government and regulators are taking decisions on behalf of consumers in the absence of full information about the situation for consumers”.
Later on, on page 11 of the report, it recommended:
“The Treasury should ensure that there are mechanisms in place to assess the cumulative impact of infrastructure investment on consumer bills and the affordability implications, particularly for low-income households”.
I say straight away that I have accepted the arguments that to try to do this cumulatively right across the whole range of infrastructure is at this stage probably unrealistic. In the present new clause, we have removed any reference to the cumulative assessment that we had in the version of it in Committee.
The NAO report was taken up by the Public Accounts Committee, which made a number of recommendations. One of them was to pick up that point made by the National Audit Office. On the same day, the Government published their response to the PAC report. That was really quite an interesting document. They accepted most of the recommendations but rejected the PAC’s recommendation that the,
“Treasury should ensure that an assessment of the long-term affordability of bills across the sectors is produced and published”.
However, at the end of that response, the Government added:
“Nonetheless, the Government agrees that there is scope to improve understanding of affordability in this important area and will continue to work with the regulators on these issues, including through the UK Regulators Network which is considering affordability as a key element of its work-plan”.
I regarded that as a very important pointer to a possible way forward, in particular the reference to the UK Regulators Network. I was unaware of this body, so explored its origins with Ofgem and learnt that it is indeed a more formal and authoritative body than the previous informal association of regulators. Here I come to my meeting with my noble friend Lord Deighton. He told me that the Treasury was in full support of the UKRN. Indeed, its creation was on the initiative of the Treasury itself. I also gathered that that paragraph in the response had actually been approved by my noble friend. I was delighted to hear that. As I said, I have taken on board what I think was the most difficult aspect of the proposal—the question of aggregating consumer impacts across several different programmes. We are now looking at just assessing the impact on consumers of each individual industry.
My noble friend told me at our meeting that the Treasury regarded the regulators network as the right body to take this initiative forward and that the Treasury would take very seriously any recommendation which it might make. There is no doubt that the impact on consumers is an issue of not only great but growing importance. This has been repeatedly acknowledged by the coalition Government, not least in the recent Statement of my right honourable friend the Secretary of State for Energy and Climate Change.
The PAC report of last July has not yet been the subject of a debate in another place. In those circumstances, I would not think it the least bit appropriate to invite the House to vote on the new clause. Rather, I see this debate as providing my noble friend Lord Deighton with an opportunity to give the House his
assessment of where we are in greater understanding of the impact of infrastructure investment on consumer bills and what his department may be able to do to advance that understanding. There is no doubt about the importance of the subject. Indeed, the presence of my noble friend to respond to the debate indicates that the Government share that view. I beg to move.
9.15 pm
Lord Berkeley (Lab): My Lords, I am very pleased to support the noble Lord, Lord Jenkin of Roding, on the amendment. My noble friend Lord Whitty apologises; he had to leave. Presumably he thought this would come up a little earlier in the proceedings. The noble Lord, Lord Jenkin, told the House a number of very useful and interesting ideas about how this issue is going to be taken forward. I shall be very interested to hear the response of the noble Lord, Lord Deighton. First, obviously, I welcome the Government’s commitment to so much new infrastructure. It is not before time. Most of it is sensible and should be good value for money. However, as the amendment seeks to point out, we need to know the effect on consumers, not just this year and next year but in the long term; some of these projects take a long time to construct. If there has been some kind of financial arrangement in the private sector to finance them, we need to know the long-term effect.
It is worth pointing out that many of the sectors mentioned in the amendment are by definition monopolies: railway infrastructure is a monopoly; water services are generally monopolies; and gas and electricity are not generally monopolies, but some of them are. I think it is true to say that all regulators have a duty to protect the interests of consumers while also ensuring that the companies they regulate are financially sound and capable of investing and delivering for the future needs of their customers.
I will take one or two examples. We have to ask how successful these industries and the regulators have been in protecting the customer’s interests. We have had much debate this year over electricity prices, resilience of supplies—are all the lights going to go out?—and people complaining that Hinkley Point EDF may be a deal that has screwed the Government. I do not know whether that is true: I am not an expert on it. Then, of course, there is the latest investigation by the Competition and Markets Authority into the big six electricity suppliers in terms of vertical integration. Where the customers come in all this is quite difficult to understand for the average payer of electricity and gas. That is something that could very usefully come as a result of discussions on the amendment.
On the railways, to take another example, the Office of Rail Regulation’s role is not directly to help the customer—it does, because the charges relating to Network Rail’s costs have come down—but it is relevant because it is regulating a monopoly. Everybody said at the beginning that Network Rail was pretty efficient but it could probably do with a tweak here or there. However, the regulator over the last 10 years has succeeded in reducing Network Rail’s costs, or efficiencies, by something like 40%. If it was 40% over what it should have been as an efficient operator, that is quite an achievement for a monopoly. Now the regulator is
expecting another 20% from it in the next five years, and many people say that there is more to come. I do not think that other infrastructure managers of monopolies are probably much different, which is quite worrying. We have very efficient regulators across the sector and they have achieved a lot, but how much more is there to achieve? I just do not know.
The water industry is a different issue. We have had many debates here, some of which I have instituted, about whether the regulator has regulated Thames Water in order to ensure that it had enough assets to provide the investment it believes is necessary for its long-term operation—personally I do not believe it is necessary, but that is not the point—and whether the regulator was doing its job properly in ensuring that there was not a load of asset stripping, which appears to have gone on. More importantly, when is the regulator going to come up with some credible estimate of the effect that the Thames tideway tunnel and the other changes to the industry are going to have on the customers? There has been lots of talk about this; it would be interesting to know, but I suspect that that might require a bit of pressure.
Several newspapers today say that the Prime Minister is apparently going to announce 300 new roads. Whether they are all Highways Agency or strategic road company roads, I do not know—I suspect that the noble Baroness will tell us one day—but that is not the point, really; he is going to announce them, although I do not know how they are going to be financed. Under the Bill, which some of us think is being set up for them eventually to be privatised, the roads will probably be turned into toll roads, although the Minister has strongly denied that at every opportunity. There is still a question of how these new roads will be paid for, though, so should there not actually be some toll roads? However, we are not going to go any further on that today.
The amendment is therefore very important. Having some consistent statistics and data across all these different sectors regarding how much the consumer is going to have to pay, and over what period, would be very useful. It might also put pressure on the regulators to come up with a bit more consistency than they have shown up to now. The UK regulators network is a good idea and I think it is making progress; I have also been involved in some suggestions that there should be a European rail regulator, or an association of European rail regulators, across 26 member states, though at the moment that seems to be a step too far. Still, the concept of regulation is developing, and the question we have to ask ourselves is: is it sufficient that the regulators apply self-regulation to themselves? I have my doubts and would prefer the Treasury to do that to start with, but maybe the Minister will be able to persuade us that they are capable of doing it themselves, with a good deal of Treasury supervision. It will be interesting to see what happens. Again I thank the noble Lord, Lord Jenkin, for bringing this to our attention on Report.
Lord Davies of Oldham: My Lords, this gives me the chance to congratulate the noble Lord, Lord Jenkin, on the assiduous way in which he has pursued this topic and the way in which he has clarified many of
the issues. He did so to our great advantage in Committee and has been a great strength today, so the noble Lord, Lord Deighton, knows the nature of the opposition to which he needs to respond.
We regard the noble Lord, Lord Jenkin, as entirely right to raise the key question of the costs to consumers; he is certainly right to repeat the call of the Public Accounts Committee, which argued that departments should consider very carefully the costs to consumers of the policies that they pursue on infrastructure. He is also right, of course, to raise the fundamental issue of ensuring that costs are not unfairly passed on to consumers. If we had more time, we would dwell on the number of occasions where we consider that to have been the case. It is clear that in many sectors costs to consumers have risen very significantly: one in eight households says that their water bills are unaffordable, while around one-quarter of households and 64% of the poorest households spend more than 3% of their disposable income on water bills. Those bills are 40% higher in real terms than they were in 1989. Obviously the licence agreements set a maximum price, but whether Ofwat has quite the powers that it needs to alter those agreements is still unclear. Likewise, the rise in energy bills has been very well documented. The House will of course recognise the extent to which we have been concerned about electricity bills, to the point of indicating that under the next Labour Government there will be a period of time when bills are frozen.
There is an apparent lack of connection between wholesale prices and the retail prices that hit the consumer. It seems pretty obvious to us that the consumer is often getting a bad deal. None of us underestimates the extent to which infrastructure needs to be improved. I am sure that the noble Lord, Lord Deighton, will dwell on that point. However, we need to ensure that increased infrastructure investment does not fall on the consumer, mainly because currently we are very badly in need of better infrastructure delivery. It is absolutely clear that, given that output has fallen by over 19% since May 2010, less than a third of the projects in the Government’s infrastructure pipeline are classed as in construction. Therefore there is a great deal to be done. The Government are rather better at indicating promise and intent than at acting in reality. The imperative is clear. We need to ensure that our infrastructure output increases; likewise, we need to ensure that the costs are not unfairly passed on to consumers, as they have been in some areas in the recent past. I hope that, just as the noble Lord, Lord Jenkin, indicated, the presence of the noble Lord, Lord Deighton, will guarantee that we are pointing in the right direction towards achieving the right balance and a better one than has obtained in recent years.
Lord Deighton: My Lords, I shall begin by thanking my noble friend Lord Jenkin for raising this matter in the House. As we know, infrastructure investment is a key element of the Government’s economic plan. I agree with the noble Lord, Lord Davies, that it is key to improving our long-term productivity and that delivering it effectively is a part of the Government’s responsibility in working with the industries involved. Of course, we must ensure that it is delivered in a way
that is affordable for consumers and taxpayers. That is a crucial and quite complicated issue. The way that we finance and deliver infrastructure in each sector differs. The road sector, which the noble Lord, Lord Berkeley, referred to, is of course financed exclusively through taxpayer funding, so the question of passing the price on does not exist, whereas the energy and water sectors, for example, are predominantly financed in the private sector.
I am pleased to have this opportunity to set out personally the Government’s position on this important issue. If we look at the future pipeline of infrastructure expenditure, it works out that about 60% of it is expected to be privately funded—water, energy and telecommunications are the sectors where that is the case. To ensure that such privately funded investment is affordable for consumers now and in the future has to be central to the Government’s approach, and independent economic regulation is at the heart of that. At the core of the argument I am going to make is that it is actually in our long-term interest to have the regulators primarily focused on this. That is where the expertise is. The fact that they operate independently of the short-term changes that may come from government policy is a very healthy thing in terms of both protecting the consumer and creating an environment that encourages investors to put their money into our infrastructure for the longer term.
In that respect, protecting the consumer is central to the work of our regulators—particularly in the case of Ofwat and Ofgem—and is enshrined in their statutory duties. They are able to take a long-term view free from political involvement, as I said. This is a tried and tested system. Indeed, the ability of regulators to undertake their work independently of government interference is a cornerstone of our regulatory system’s success. Our regulatory system, which has its challenges, is the envy of the world. We need to keep on improving it, but it is a strong competitive advantage for this country.
9.30 pm
The regulators have the expert knowledge which allows them to scrutinise companies’ proposed infrastructure investment plans to ensure that they are necessary, are delivered efficiently and are in the interests of the consumers we are serving. One of the concerns that I had about the amendment was that I did not think it was in the interests of getting this right to have the Government take over some of those roles. We need to focus the regulators on what is important, encourage them and ensure that they deliver on this mandate so that the impact of the investment programme is appropriately managed in terms of its impact on consumer prices.
The relationship between infrastructure investment and bills is a very complicated one. Infrastructure investment is one of many inputs into the ultimate price, and the price itself is driven by many other factors. The price of our utility bills is one component in the overall cost of living equation, so you have to look at not only the detail but the macroeconomic situation. A whole range of factors come into play in the final price paid by the consumer. Those can include commodity prices, the cost of debt and capital expenditure
and also, of course, operating expenditure. There is quite a focus now on looking at what one might refer to as total expenditure as a way of determining price settlements.
We should not forget that infrastructure investment, if it is done well, ultimately reduces the future costs of supply, maintenance and renewal. That will drive down prices as well as giving us other improved outcomes. Telecoms is the best example in recent history where the improvements in broadband and mobile data speed and coverage brought about by huge infrastructure investment have come alongside falling prices for consumers. So you have to be able to see both sides of the equation here. Similarly, not investing in energy generation now could be expected to increase prices further down the line if demand started to outstrip supply. Given all those complexities—this takes me back to my noble friend Lord Jenkin and his focus on this—I very much welcome the fact that, as part of its first annual work programme, the UK Regulators Network is already looking at improving the understanding of affordability pressures across the sectors and, indeed, the part that infrastructure investment plays in this.
The noble Lord, Lord Berkeley, said that it was important to achieve consistency across regulators. One of the key objectives of the Regulators Network is to transfer best practice and to look at the differences, ask whether they are justified and examine how we can improve overall performance. I think that there will be significant focus on this area of infrastructure investment and affordability. This work will include looking at patterns of household spending across sectors, characteristics of an essential service and how these influence household spending decisions and can be drivers of customer decisions. I am happy to reiterate that the Government have made clear that they are committed to supporting the UKRN in taking this work forward. In fact, we are currently consulting on how we can best support and encourage the UKRN to help to embed this co-operation more widely between the regulators.
Of course, this is not the only way that the Government can take targeted action to help with the cost of living. Sometimes it is appropriate to intervene in other ways to reduce the cost of living, through more targeted action on bills. For example, in the Autumn Statement alone, we announced a series of steps that are saving the average household around £50 on its energy bills. Only recently, we announced an extension to the freeze on rail fares; with last year’s freeze, this will save season ticket holders around £75 over 2014 and 2015. There are other ways of intervening to manage the impact of what is effectively amortising the investment spend through the pricing variable. There have also been other measures—such as increasing the tax-free personal allowance, freezing fuel duty, and helping local authorities to freeze council tax—all of which reduce the cost of living burden on our citizens.
More specifically on infrastructure, a unit of the Treasury, Infrastructure UK, is also taking forward a considerable amount of work with industry to reduce the costs of infrastructure projects in both the public and the private sector.
In conclusion, I can reassure my noble friend that the Government fully recognise the importance of ensuring that vital infrastructure investment is cost-effective and affordable. That is why we have a system of independent regulation that has the consumer at its heart. The regulators are the ones with the expertise in weighing up these complex issues, and it is better that we should look to them to do so. I very much welcome the fact that they are working together through the UK Regulators Network to further our understanding of these issues. Indeed, I can give the assurance that the Government are committed to doing everything we can to support them in this important work, at the same time as taking action to help with cost of living more broadly.
I thank my noble friend for giving me the opportunity to discuss these issues today. I hope that what I have set out reassures him, and that he will feel comfortable in withdrawing his amendment.
Lord Jenkin of Roding: Before I withdraw the amendment, may I say that I am immensely grateful to my noble friend for his reply to the debate? I—and others, I am sure—will want to study carefully what he has said, because this represents, in some respects, a new departure in trying to assess who is actually having to pay for the huge programme of infrastructure investment on which we are currently embarked.
I thank the noble Lord, Lord Berkeley, and I should also mention that the noble Lord, Lord Whitty, apologised to me for the fact that he had to leave. This has been a useful debate, and I am grateful to my noble friend for having been here to reply to it in the way that he did. I beg leave to withdraw the amendment.
119A: After Clause 38, insert the following new Clause—
“Application of duty to limit emissions
(1) The Energy Act 2013 is amended as follows.
(2) In Schedule 4 (application and modification of emission limit duty), after paragraph 1(1)(b)(ii) at end insert—
“(iii) substantial pollution abatement equipment dealing with oxides of sulphur, oxides of nitrogen, heavy metal emissions or particles is fitted to the generating station.””
Baroness Worthington: My Lords, a number of noble Lords may recognise this amendment, because this is not the first time we have had this discussion. I am afraid that I do not intend to apologise for retabling it; I shall keep retabling it until the issue is resolved. At the moment, whether because of a lack of joined-up thinking or because it is the Government’s intention, we are seeing perverse effects arising from their energy market reforms, leading to a reinvestment in old coal.
I said earlier that I would far rather we used home-grown gas to generate electricity than see imported Russian coal being burnt in stations built in the 1960s and 1970s that are now well past their use-by date. When I tabled this amendment in Committee, the Minister’s response was to say that she agreed neither
with my analysis of the current position nor with my prediction of the future, and was not convinced that the amendment, which, essentially, would bring in a backstop power to enable us to limit the operating hours of old coal, was needed.
Last week Eggborough, one of the coal-fired power stations built in the 1960s that is seeking a three-year contract to extend its life under the capacity payments mechanism, was sold to a Czech energy company which, in addition to running power, heat and energy provision services in the Czech Republic, is also the third largest coal producer in Germany. This is its first entry into the UK market. The company is EPH, whose spokesperson, Daniel Castvaj, said that there were obviously questions over the long-term operation of the plant but that the company intended to run the existing units for as long as possible.
Today a report was released by WWF with the help of Imperial College London. It made the point that I have continually been seeking to make to the Minister and the Government that just wishing old coal away is not going to work. If we want coal to come off our system and be replaced by cleaner, more efficient infrastructure, we will have to regulate to make that happen. We were told during the passage of the Energy Bill that this would be achieved by financial measures, through the introduction of a carbon price floor, which was in the Finance Bill, and that that would see an end to coal. No sooner did that Bill pass into law than that financial provision was frozen. The escalator, intended to drive off coal, was removed.
Everything that the Government told us during the passage of the Energy Bill has changed since it passed into law. More information has now come to light on the impact of the capacity mechanism. That was intended to enable investment in new infrastructure—to bring forward cleaner infrastructure and make sure that the lights stay on. However, the Government’s choices in how they have implemented that measure have meant that there is now a real possibility that we will not see the capacity mechanism bringing forward investment in new gas infrastructure. If we do, it will be on a very small scale. Instead there will be reinvestment in old coal.
Overall, the capacity mechanism and the people who have bid into it demonstrate that we have more than sufficient plans for infrastructure and supply than is demanded by the capacity mechanism. In fact, it will come down to a straight choice between investment in old coal and investment in new gas. The costs of that are such that it is my expectation—we will find out in December whether this is the case—that it will be old coal that wins and new gas will not. Essentially, the capacity mechanism favours short-term investments by allowing coal plant to continue operating unconstrained, at high load factors but lower efficiencies, than if there were investment in cleaner gas.
I am sure that I will hear from the noble Baroness that she disagrees, but the Imperial College study launched today and commissioned by WWF said:
“Imperial College’s economic modelling shows that it is unwise to simply assume that coal-fired power stations will all close in the 2020s. If government wants old coal stations to close it needs to ensure that happens through legislation. We modelled a variety of scenarios and, with the UK’s existing suite of energy policies, in every instance coal still played a role in generating electricity and 2030 emissions targets were missed”.
That was picked up today by the Independent, which went one step further and said that this really showed that the coalition’s commitment to being a green Government was in tatters and that it did not have credibility in its comments on moving to a decarbonised electricity system.
I saw the noble Lord, Lord Turner, here earlier but he is obviously not in his place now. He commented on WWF’s report and I shall take the liberty of quoting him. He said:
“"The Intergovernmental Panel on Climate Change’s latest report update on climate change science makes it unequivocal that we must reduce carbon emissions dramatically to avoid major harm to human welfare. And we cannot achieve the required cuts unless we eliminate unabated coal from the electricity generating system”.
At the end of an extensive comment, he concludes:
“A clear commitment to get unabated coal out of the UK generation system is needed to provide certainty against which businesses can invest”.
The amendment has been tabled a number of times and I make no apology for that. I will keep tabling it, probably until I run out of breath, because I care passionately about achieving decarbonisation at least cost and by keeping our energy supplies secure. It is a very short-term attitude to think that if we patch up old coal and keep it running at high load factors it will somehow be beneficial for the country as a whole. Yes, it may make a small difference in the short term, but in the longer term it will be wasted investment. If we are to hit our targets, we need to get our electricity systems almost fully decarbonised by 2030. We need unabated coal to come off. These stations are old, inefficient and highly polluting. If we do not phase them out, using measures such as the EPS, we will simply see ourselves running very fast to stand still. Every coal station that stays open emits twice as much as a gas station. More renewables and nuclear have to be built to compensate for those extra emissions, at a greater cost. This is really not that difficult to work out: old coal should come off first. It is the most polluting and we are wrong to set in place a capacity mechanism that keeps it going a moment longer than it needs to.
I hope that at some point the Government will see the logic of my argument and accept that something needs to be done if we want to get these coal stations out of our system early in the 2020s. I beg to move.
9.45 pm
Lord Teverson: My Lords, I very much agree with the amendment. I have backed similar amendments to other Bills. Unfortunately, we did not manage to get any further on it. It is Liberal Democrat policy that we should get unabated coal out of the energy generation system by 2025—to me that seems an eternity. One of the key things that would do, as this amendment would do, would be to stop long-term investment of any size in unabated coal generation and facilities. That seems to me an absolutely fundamental prerequisite, not only of meeting our carbon budgets, but of ensuring we meet our international obligations, such as on air quality. It will be very difficult to continue to lead on climate change—as we do and as we want to continue to do into the future—if we have a continued electricity generation industry based on coal for the long term.
There are all sorts of other ways to do stop that reinvestment. We have rehearsed these arguments many times before. It is the Chancellor’s and the Treasury’s wish that we should have gas investment at a reasonable level in this country over the next few years. Of course, the more we take the risk of encouraging coal to reinvest into the future—we do not know how much of that will happen but some of it already has—the more we will crowd out investment in other technologies. I suspect that the Minister will not accept the amendment, unfortunately, but I know that a number of Ministers and people in DECC understand the importance of taking coal out of generation. I hope that the Government will one day come to a single view that this needs to be done.
The Earl of Caithness: My Lords, we were treated yet again to an exposition by the noble Baroness on a matter that we debated at length and voted on last year on the Energy Bill. Here we are doing it again. If the noble Baroness and her party had really wanted to meet some of the targets then they should not have flapped around like wet hens in a thunderstorm when they were in power and got on with doing something about nuclear. As a result of this Government, the energy programme is taking off in a way that it should have done a long time ago. We all agree that we want to get coal out of the system. It is about getting the timing right for that, without creating extra costs for the consumer and without switching the lights off. The coal power stations have to meet the new directive on, I think, 1 January 2016. This subject has been debated long and often and we have voted often. We will obviously continue to do so, but thankfully we are now heading in the right direction. I hope that my noble friend on the Front Bench will not accept the amendment.
Baroness Verma: My Lords, I thank the noble Baroness, Lady Worthington, for yet again bringing this subject to the attention of the House. As my noble friend Lord Caithness eloquently said, we debated this amendment during the passage of the Energy Bill less than a year ago. Noble Lords will recall that, after careful consideration, this House and the other place decided that it should not be adopted. I do not propose to set out in detail again the reasons why the Government did not support this amendment when it was last considered. However, noble Lords will recall that the Government’s main concern was that it could lead to circumstances where existing coal plants closed prematurely, leading to a need for more generation capacity to be built earlier than would otherwise be necessary, and resulting in totally unnecessary and avoidable cost to consumers.
I want to address the points made by the noble Baroness that developments since we last considered this amendment make it necessary to reconsider the conclusion we reached at the time. It is true that there have been a number of developments over the course of this year. We have set about implementing our electricity market reforms, which include taking the actions that are delivering new investment and our plans for a secure, affordable and low-carbon electricity system. That is well demonstrated by the allocation in April of the first contracts for difference to eight
renewables projects. These projects include offshore wind farms and coal to biomass conversions, which alone will provide up to £12 billion of private sector investment by 2020, supporting around 8,500 jobs and providing a further 4.5 gigawatts of low-carbon generation capacity to Britain’s energy mix.
The noble Baroness pointed to the capacity market and the fact that four of the 11 remaining coal plants are seeking a three-year capacity agreement to refurbish their plant. She said that that is evidence that these plants will upgrade to comply with the industrial emissions directive allowing them to continue operation long into the future and generating at levels inconsistent with our decarbonisation plans. She also pointed out that the freezing of the carbon price floor improves the economics of continuing to operate coal-fired power stations. The fact is that neither of these developments is expected to have a significant impact on the overall future outlook for coal.
The Government’s latest projections, which take into account recent changes to the carbon price floor, suggest that virtually all coal will have retired by the end of 2025. Only one of the four plants seeking a three-year capacity agreement has fitted the equipment needed to comply with the directive and operate without constraint when it comes into force on 1 January 2016, as my noble friend Lord Caithness rightly said. We are not aware of evidence that any of the other plants will be compliant with the directive at the time it comes into force.
Even were these plants to achieve compliance at some point in the future, our assessment remains that overall levels of generation from coal will decline over time as multiple factors, including age, environmental regulation, increasing levels of low carbon generation and a strengthening carbon price, act to reduce coal generation, although the additional resilience to our energy system that comes from a small number of compliant plants while they are still economic to operate would not be unwelcome.
The risks that would be created by this amendment are also more immediate. I would like to draw the attention of noble Lords to the first auction under the capacity market that will be held in December, which is our response to ensuring security of supply at the least cost to the consumer. A potential impact of this amendment is to constrain the ability of plants to generate when it is otherwise economic for them to do so. Accepting this amendment will therefore create a significant regulatory risk to those plants seeking refurbishment contracts in the capacity market. Their response may therefore be to seek a higher capacity clearing price to compensate for this possible reduction in electricity market revenue, particularly in the years preceding the first delivery year in 2018-19. Alternatively, these investments may not go-ahead. Neither scenario is desirable, with the risk that the cost of the capacity market is pushed upwards with no accompanying benefit to security of supply.
We should also consider what sort of signal it sends to investors of all types of generation, not just coal, now and in the future. They will interpret this as further intervention of a measure that has already
been rejected by this House and so close to the first capacity market auction where we will be seeking competitive commitments from over 48 gigawatts of capacity to ensure continued security of our electricity supplies over the course of this decade. It is also important to remember that over 10 gigawatts of new gas has come forward to participate in the December auction, highlighting that we have the right incentives in place to ensure security of supply at the least cost to consumers and to encourage competition through new investment. As we discussed last year, I will oppose an amendment that has the potential to increase consumer bills and increase the risks to security of supply.
There is an almost unanimous consensus on the need to substantially decarbonise our electricity system on the pathway to cutting our greenhouse gas emissions by at least 80% by 2050. There is a similar consensus that it is only with carbon capture and storage that coal will continue to play a role in that future. The measures we agreed last year to reform our electricity market are already bringing forward the investment needed to achieve this cost effectively and securely. Against this background we continue to believe that applying the EPS as proposed by this amendment is a potentially risky intervention in the market.
I hope I have gone half way to convincing the noble Baroness that the developments since the Energy Bill was before this House less than a year ago are unlikely to have the impact she assumes and I hope on that basis she will be willing to withdraw her amendment.
Baroness Worthington: My Lords, I thank the Minister for her response. It may well be true that up to 10 gigawatts has bid into the capacity market but my point is that not one of those apart from Carrington, which is already under construction, will successfully be awarded a capacity mechanism contract. They are going to be frozen out by contracts that will be given to existing coal. It is pointless telling me that lots of people out there want to build gas if in reality we are going to keep coal open at the expense of those investments in cleaner, more efficient technology.
We have spent the largest part of this evening talking about fracking rather than the need to develop the resource of gas so that we can use it as a bridging fuel. There is absolutely no point us investing in that if there are not going to be any stations in which we can burn it efficiently. The losers in this capacity mechanism at the moment are the operators of existing gas stations and those who wish to build new ones. That is because we continue to tell ourselves that the lights will go out if we constrain coal and that that will necessarily force a higher price on to consumers. The money we are spending on propping up old coal is going to be money wasted—we will have to shut these stations anyway at some point. Why we seem to be perpetually telling ourselves that we cannot do without these ageing dinosaurs in our electricity system is beyond me.
I do not intend to detain the House any longer at this stage and I will, of course, withdraw my amendment. However, I reiterate the words of Dr Gross from Imperial College that we will not see the end of old coal without government intervention. If this Government refuse to do it then it will fall to another Government. There is a future for coal; it is with CCS and only with
CCS. Unabated coal is simply not something we should be sustaining through the 21st century and no end of anyone telling me otherwise is going to persuade me. However, I will withdraw this amendment now.
Clause 39: Regulations and orders
Baroness Verma: My Lords, as part of our proposals on the right to use underground land to exploit oil and gas and deep geothermal energy, each of these industries has put forward a voluntary offer for a payment and notification system. The Government support this offer. We think that the offer is in the communities’ best interests because it ensures that the payment scheme will be flexible and tailored to the specific requirements of each community. We have proposed to take a delegated power in the Bill, both as an incentive to adhere to the voluntary agreement and, if it becomes necessary, to set out the voluntary agreement on payment and notification in secondary legislation.
For instance, if the scheme were not honoured by industry, we would look at making the notification and payment schemes a statutory requirement under secondary legislation. Any regulations made by statutory instrument to set up a payment or notification scheme will be subject to the affirmative resolution procedure. Under the sunsetting provision, the powers to make these regulations are subject to a one-off review and must be repealed if they have not been used within seven years of commencement.
The Delegated Powers and Regulatory Reform Committee recommended that regulations made under the sunsetting clause should be subject to the affirmative resolution procedure. We have agreed to this approach and therefore propose an amendment that seeks to apply the affirmative procedure to regulations made under Clause 36. I beg to move.
10 pm
Lord Grantchester (Lab): My Lords, as the noble Baroness has stated, this amendment follows from the recommendations made by the Delegated Powers and Regulatory Reform Committee of your Lordships’ House. It is clear that the availability of statutory safeguards was a matter of considerable concern to a large proportion of respondents to the Government’s consultation exercise. If these safeguards are to be repealed, the proposed regulations should be approved by Parliament after the Government have made a full explanation which has been examined and debated by both Houses. We are pleased that the Government have seen fit to agree that any of these regulations will be made under the affirmative procedure.
120: Clause 40, page 42, line 37, at end insert—
“(1A) In Part 1A (powers of British Transport Police Force)—
(a) section (Powers of British Transport Police Force)(1) extends to England and Wales only, and
(b) section (Powers of British Transport Police Force)(2) extends to England and Wales and Scotland.”
125: Clause 41, page 43, line 14, at end insert—
“(1A) Part 1A (powers of British Transport Police Force) comes into force at the end of the period of two months beginning with the day on which this Act is passed.”
129: Clause 41, page 43, line 35, leave out from “28” to “come” and insert “and Schedule 5 come into force on 1 June 2016,
The Deputy Speaker (Viscount Ullswater) (Con): I must advise your Lordships that if this amendment is agreed to, I cannot call Amendment 130 by reason of pre-emption.
131: Clause 41, page 43, line 40, leave out “section 38 comes” and insert “section 38 and section (Renewable heat incentives) come”
131A: Clause 41, page 43, line 42, leave out “or (3)(a) or (b)(ii)” and insert “, (3)(a) or (b)(ii) or (5)(b)”
133:In the Title, line 14, after “energy;” insert “to make provision about renewable heat incentives;”