When my right honourable friend the Secretary of State announced the early closure of the renewables obligation to onshore wind, she also proposed a grace period to protect investor confidence, as I think noble Lords are aware. The proposal was to offer a grace period to those projects which, as of 18 June 2015, already have relevant planning consents, a grid connection offer and acceptance of that offer—or confirmation that no grid connection is required—and access to land rights.

At the time of her announcement, the Secretary of State also said that she wanted to hear the views of industry and other stakeholders before framing the terms of the legislation. As such, my department has been conducting an engagement exercise to understand whether our proposed grace period draws the line in the right place. This means balancing the interests of onshore wind developers with those of the wider public. That is what we are considering at the moment. We are still reviewing the feedback and evidence provided by stakeholders in order to inform our final policy position.

I am not in a position today to frame the final terms of the grace period, and it is not right that I should trail a running commentary on where we are, as I have been invited to do by noble Lords who, as I can understand, want to hear more. I must wait until the final terms of the grace period are fully thought through, following the conclusion of the department’s analysis.

I appreciate the understandable wish that all this had happened earlier. The noble Baroness, Lady Worthington, the noble and learned Lord, Lord Wallace,

14 Sep 2015 : Column 1682

the noble Lord, Lord Cameron, my noble friend Lady Byford and the noble Lord, Lord Foulkes, all expressed frustration at the fact that we do not know what the grace period proposals will be. I understand why I am being pressed on this, and I will ensure that the House has reasonable notice of the Government amendments.

I agree that 48 hours is insufficient and hope and believe that we can do better than that. If I may, I will provide a commentary on where we are on this by the usual letters if there is any difficulty with bringing the amendments forward in a timely way. I quite understand that the House wants to know exactly what the Government are doing or seek to do in this area. I confirm that we will endeavour to give appropriate, reasonable notice of the amendments ahead of the day and recommittal in the Moses Room.

5.30 pm

On the comment made by the noble Lord, Lord Foulkes, about it being in the Moses Room, it is interesting that there is a division on this within the House. When I discussed this with other noble Lords in trying to ensure that we got that extra day, some noble Lords—not on my side of the House—said that they would prefer it in the Moses Room. I am in a position of not being able to please everybody on that. I am afraid that, because of the government timetable on things such as the Scotland Bill, which the noble Lord will understand, it is not possible to have the extra day in the Chamber. However, I am sure that we will have a good discussion in the Moses Room on these issues.

On the specific issue of moving from planning consent to planning applications, I question whether that is the right approach—in particular, moving the grace period criteria proposed by the Government from projects that received planning consent to those that have applied for it. That would have fundamental impacts on delivering on the manifesto pledge and managing our low carbon spend—the two reasons for implementing early closure of the renewables obligation to onshore wind. Based on my department’s analysis, this change to the grace period criteria could mean that anything up to 7.1 gigawatts or around 250 projects could accredit under the renewables obligation. That equates to the amount of projects that have submitted a planning application but not yet received consent.

Based on our analysis of the time taken for a project to progress from planning application to accreditation, it is highly unlikely that any projects that had not yet submitted a planning application on 18 June 2015 would intend to accredit under the renewables obligation. Therefore, the approach taken by these amendments would not in fact constrain the number of projects coming forward under the renewables obligation in any meaningful way and so would fail to deliver on our manifesto commitment. Furthermore from an affordability angle, because this change could allow anything up to 7.1 gigawatts of additional capacity to deploy under the renewables obligation, we would remain at risk of deploying beyond our best estimate of what we would need to meet our 2020 targets and what we can afford under our low carbon spending cap, which could add more costs to consumer bills.

14 Sep 2015 : Column 1683

On providing more time for those projects that encountered difficulties in securing financing, I reassure noble Lords that the department is thoroughly considering and taking on board the matters raised during the engagement exercise, including those in relation to investor confidence and access to finance. As I said previously, I will confirm a position in relation to the terms of the grace period ahead of the onshore wind clauses being recommitted to the House in October.

The noble and learned Lord, Lord Wallace, raised the issue of aviation difficulties and the radar delays. As part of the existing renewables obligation closure arrangements, the Government confirm plans to offer projects that were subject to unforeseen grid or radar delays a 12-month grace period to enter into the renewables obligation until 31 March 2018. We expect that to remain in place for projects eligible for the grace period, but have not confirmed our final grace period proposals. I am trailing a bit of information that I hope is of use to the noble and learned Lord—and contrary to my saying earlier that I would not give a running commentary. I appreciate that this issue concerns noble Lords and I well understand that concern. On that basis, I ask the noble Baroness, Lady Worthington, to withdraw the amendment.

Baroness Worthington: My Lords, I am grateful to the Minister for his comments and for the contributions from other noble Lords. As I said, we will have the opportunity in the next debate to discuss the principle of this clause. Here, though I am tempted not to, I will keep my comments to the grace period issues. I am very grateful to the Minister for giving us an assurance that he will give us sight of those amendments with more than 48 hours’ notice. That would be absolutely correct. The noble Lord may find it annoying to keep us posted with a running commentary but it is not as annoying as we find having to respond to huge amounts of information that is very delayed and late.

Lord Bourne of Aberystwyth: I hope I did not give the impression that I find it irritating to give a running commentary. I do not. It is absolutely appropriate that I should and, as I indicated, I am very happy to do so on where we are on the grace periods. I indicated that I will seek to ensure that the House has reasonable notice of those amendments. Furthermore, I will give an indication that we are or are not on course for that. I hope it will be the former case.

Baroness Worthington: I thank the noble Lord. The grace period is incredibly important. We are talking about sunk costs of hundreds of millions of pounds that people have put in, in good faith, on the back of the Energy Act 2013, which has been changed rather intemperately with very little notice and no consultation. You can see why people are concerned about getting the detail and getting it early. We have had two months since the Bill was introduced in which to have these amendments come forward, and it is regrettable that we still do not have them.

As I said, the next debate will give us the opportunity to discuss the broader context and particularly the impact assessment and what it tells us about the logic and rationale for this more generally. Given that we

14 Sep 2015 : Column 1684

will have the opportunity to discuss these amendments in the Moses Room after we come back from recess, and that we will have good early sight of them, I am happy to withdraw this amendment.

Amendment 34B withdrawn

Amendments 34C and 34D not moved.

Debate on whether Clause 60 should stand part of the Bill.

Lord Wallace of Tankerness: My Lords, we gave notice that we would seek to oppose that Clause 60 stand part of the Bill as an opportunity—one already foreshadowed—for a general debate on the merits of the proposal that no renewable obligation certificate should be issued under a renewable obligation order in respect of electricity after 31 March 2016 by an onshore wind generating station accredited after that date, in other words a year earlier than the established timetable that coalition Ministers signed up to.

I take the point made by the noble Lord, Lord Howell, although my noble friend Lord Teverson effectively rebutted it. Of course one does not wish to pour money in to help profiteering or have dead weight. However, it is very clear that the coalition agreed that the renewable obligations for onshore wind and others would cease on 31 March 2017. It is bringing that forward by a year that gives rise to such consternation in the industry. It is an understatement that the announcement, made just over 10 months before it takes effect, has caused widespread dismay in an industry in which, by its very nature, there will always be very long lead times. One developer who wrote to me said,

“Unilateral changes to policy have impacted upon investor confidence and the sector will without doubt see retrenchment that will result in a loss of jobs and growth in Scotland and around the UK. The loss of clean, affordable and secure energy is coupled together with a loss of investor confidence in the UK Government’s willingness to remain as a reliable, long term partner for infrastructure developments, that often take upwards of five years merely to bring to a planning application stage.”

That reflects what the noble Lord, Lord Cameron of Dillington, said on the last amendment. It is not just with specific regard to wind power that this change at relatively short notice can have an impact. All the sources of renewable generation of electricity have long lead times. There will now be a question mark over each of them as to whether the Government, if they are capable of changing policy at very short notice in respect of onshore wind, will also change it in other developments. Inevitably, that could have a chilling effect on these developments.

It is interesting that the Renewable Energy Country Attractiveness Index published by Ernst & Young in June indicated that in terms of onshore wind the rankings for the United Kingdom had gone down from eighth to 11th. I think that was in the course of just one year. It noted that onshore wind was quickly becoming one of the country’s cheapest sources of energy. The Government’s intention to withdraw support for onshore wind therefore contradicts their pledge to reduce emissions at least cost; energy prices could be

14 Sep 2015 : Column 1685

pushed up as more expensive sources such as offshore wind are used to fill the capacity gap as onshore wind projects fall away. Of the many sources of renewable generation of electricity, possibly with the exception of hydropower, onshore wind might be said to be the most mature.

I indicated in an earlier debate that 75% of these developments are in Scotland, which directly employs more than 5,400 people. They generated more than a third of Scotland’s electricity needs in 2013 and are driving billions of pounds of investment to allow the United Kingdom to meet its renewables and climate targets. What concerns us about this clause is the threat to business confidence, to jobs and to the prospect of the United Kingdom meeting its climate targets.

With regard to business confidence, I have already indicated that what can happen in one sector can happen in others. The conclusion of the Ernst & Young survey of lender attitudes to the early closure of renewable obligations support mechanism and a survey undertaken for Scottish Renewables published over the weekend states:

“Raising project finance for UK onshore wind RO projects has become more complex, more expensive and increasingly more difficult since the early closure of the RO and supporting grace period. As a result there are fewer banks willing to lend to UK onshore RO projects. Those that are considering lending are seeking better terms and some form of mitigation against the situation with no ROC revenue; and as we move closer to the RO accreditation end date, the ongoing uncertainty makes it harder for projects and sponsors to raise senior finance”.

So there would appear to be an issue of business confidence. The Minister said in an earlier debate that the Secretary of State had met the developers and assured them that wind power would continue. He mentioned in another context that there would continue to be community developments. The sense I am getting is that this is not the cast-iron guarantee that he indicated the Secretary of State’s approach seemed to be. There is also the question of the position on onshore wind power with regard to future CFDs and, in particular, when the next CFD will be. If business confidence is damaged there is inevitable damage to jobs and the industry as a whole. RenewableUK said the changes to financial support for onshore wind threatens survival of the industry in the UK and 19,000 jobs supplied to the sector.

One cannot readily understand why a Conservative Government, who purport to be business-friendly, are threatening what has become a very important business in the United Kingdom over recent years. The purpose of this debate is to try to flush out the Government’s expectations. What reasonable expectation can the industry have that onshore wind will be included in a future CFD round? Can the Minister give an indication when that will be? We are always told that one of the reasons for doing this is to drive lower consumer bills. I cannot fathom why you would prejudice the renewable technology sector, which is likely to deliver most and is becoming steadily cheaper? If you take out onshore wind, solar and hydro, then you are looking to the more expensive options such as offshore wind, tidal power and wave power—developments that I would very much support, but which I readily acknowledge

14 Sep 2015 : Column 1686

would be far more expensive. Nuclear power is often the Government’s other option, but we hear that Hinkley Point is probably looking as far ahead as 2027 before that is actually commissioned and, again, it is more expensive than onshore wind. I believe that there is a threat to our climate targets.

The fourth carbon budget, published in December 2013, set out the requirements on decarbonisation including projections on how to decarbonise electricity by 2030, which the climate change committee says is necessary to maintain the most cost-effective path to the low-carbon economy. It set out four scenarios and it looked at the high and low scenarios in favour of nuclear and wind. If one takes out onshore wind, which is not going to reach its expected level because of the lack of developments from this measure, and if we believe that the contribution of nuclear is going to be very delayed, how do the Government think they will meet these decarbonisation targets? Uncertainty impacts on a whole range of renewable technologies and it would be useful in this debate if the Government gave the House a clear indication as to how they see the road to a lower carbon economy, given that they are taking away support for the cheapest option and will have to rely on the more expensive options.

The Government talk a good game—they talk about going to the Paris climate change talks and wanting to give leadership. But it is difficult to see how leadership can be given when the practice is to undermine some of the very measures that would allow us to move forward and meet our renewables targets. Therefore, if the Government are to give any leadership at all in Paris, and have any credibility there, they must set out very clearly how they see the components of their renewable strategy as we move forward. On the back of this particular clause I do not think that any of us have much confidence that they will do so.

5.45 pm

Viscount Ridley: My Lords, I kept my powder dry on the general points until now, which ran the risk that some of the points I would like to make have been made, particularly by my noble friend Lord Howell, and very eloquently. I would like to encourage the Minister to stick to the manifesto promise to get rid of onshore wind subsidies, to stand up for consumers and not to do the bidding of what is, effectively, a crony capitalist industry addicted to state subsidies.

The Government wish to pursue decarbonisation without making energy either unaffordable or insecure. We have heard this many times as the principle behind both the Government’s and the Opposition’s stance, but, like the Minister, I am curious to know what the Opposition’s stance will be after this weekend. Wind simply does not help in this regard; it is not solving the trilemma at all. It is putting up energy costs, reducing energy security and failing to make a significant dent in emissions.

The fact is that the increased onshore wind production of recent years has failed to make any measurable reduction in carbon dioxide emissions, due to significant, intractable problems of intermittency, location and energy density. We know that the best way of cutting emissions is for gas to replace coal and, indeed, for

14 Sep 2015 : Column 1687

coal to go to supra-critical use, which is much more efficient. That is not happening in this country because nobody wants to invest in new up-to-date combined cycle gas because wind is dumped on to the system at zero marginal cost. As a result, no new CCGTs are being built because the economics of operating them has been destroyed. I challenge those who support these amendments to give me a number in tonnes or percentages of emissions that have been reduced as a result of the wind power that has rolled out already. I cannot find such a number and it is impossible to say that it is significant at all.

I, too, like the noble and learned Lord, Lord Wallace of Tankerness, had a letter from a wind company saying that wind energy is clean, affordable and secure. I am sorry, but I do not think it is any of those things. It is not true to say that it is cheap. The industry keeps saying that it is the cheapest form of renewable energy, but that is wrong. We know hydro is cheaper, as the noble and learned Lord, Lord Wallace, said.

Besides, a lot of the cost of onshore wind is still hidden. The Department of Energy and Climate Change has not used a total-systems approach in its cost modelling. In other words, it does not factor in the costs of transmission, grid integration, back-up during periods of intermittency, and so forth. The department appears to understand this as it has recently commissioned Frontier Economics to undertake a study into the true costs of energy generation by wind. It would be wise for the Government to wait for the outcome of this research before providing any more financial support to onshore wind.

The wind industry is, as my noble friend Lord Howell said, a Hood Robin industry: it takes money disproportionately from the poor, for whom energy bills are a larger proportion of spending, and gives it largely to the rich, in the form of landowners or investors. A lot of the money in wind is sheltering from inheritance tax through business property relief, as we learnt in this morning’s papers, which is something only rich people need to do. Does the Minister share my amazement that this monster of regressive redistribution was invented by Ed Miliband, encouraged by the Lib Dems and may or may not be supported by Jeremy Corbyn’s Labour Party? This is yet another case where the Conservatives are standing up for ordinary people, while the left looks after the interests of the metropolitan rich.

It is just not true to say that onshore wind is clean. True, it emits no smoke or effluent here, but the rare earth metals in a wind turbine’s magnets, roughly a tonne of neodymium per turbine, are mined and refined in China in one of the most polluting industries on earth, and the steel in the turbine’s tower can only be made using coal.

We have not solved the problem of adding an intermittent source of supply to the electricity grid. The very large amounts of wind generation currently being added to the system are not solving the security problem. In fact, they are the problem. In other words, the greater the percentage of electricity from wind in the system, the more some other kind of quick-response generation is needed, and this often means keeping old, fossil-fuel stations going.

14 Sep 2015 : Column 1688

It is worth reiterating that the Secretary of State has confirmed that the UK has enough onshore wind projects in the pipeline to meet the 2020 renewables targets, so there is no need to offer any further financial incentives.

Finally, the noble and learned Lord, Lord Wallace, and, with respect to the previous amendment, the noble Lord, Lord Cameron, said that the wind industry needs certainty. Like me, the noble Lord, Lord Cameron, is a farmer. Farmers would have loved some certainty about the wheat price earlier this year. It plummeted, and we had no warning at all. To argue that this industry peculiarly needs certainty when others do not is not fair. Once a subsidy is in place, it should be possible to withdraw it. Otherwise, if we say that we are going to withdraw a subsidy, people will always respond that they have not had time to adjust to that. I hope the Minister will confirm that he will stand firm against this attempt to keep electricity more expensive, more unreliable and probably no less carbon-intensive.

Lord Howell of Guildford: My Lords, I declare my interests, as I did on earlier days in Committee, as president of the Energy Industries Council, chairman of the Windsor Energy Group and adviser to industries and investors concerned with energy as in the register. I echo what the noble Lord, Lord Foulkes, said earlier. The noble Lord, Lord Bourne, has been exceptionally helpful in the way he has circulated and kept us all up to date with the evolution of government thinking. I realise that this is a changing situation, and even when we have finished with this legislation, we will be looking at further changes in the pattern of energy and energy support, and in world, European and national perceptions of how best to move towards meeting the challenge of climate change and lowering emissions globally, which is itself a matter of constant debate.

The noble Lord, Lord Cameron, was right to say that investors need certainty. Of course they do. Investors always long for maximum certainty, minimum risk and nice returns. That is nirvana for investors, but when investors or their advisers are dealing with projects and commitments of finance that depend on government support and state subsidy, a certain degree of sagacity and caution is called for. I make a distinction between specific projects where one of the partners is the state or the Government. They must go forward in a legalised, contractual form and should not be departed from. It would be an appalling act of arbitrary sequestration for such things to change. It has happened, I am afraid, but it is not something I wish to see from a British Government. One expects the funds that have been promised by Governments to be given.

When it comes to a commitment to an apparently unending pattern of subsidy heading into the future, the noble and learned Lord, Lord Wallace, reminded us that the coalition Government had an idea that this sort of subsidy should end. When it comes to investing in something where you will depend on the continual supply of taxpayers’ money, sensible investors ought to be very cautious. Governments change, as my noble friend reminded us, and technological changes change the basis on which the original subsidy policy was evolved. Moods change, and—dare I say it?—even

14 Sep 2015 : Column 1689

science changes. I would not go as far as Cardinal Wolsey, who lay on his deathbed saying, “Put not your trust in princes”, but there has to be a sensible assessment when an investment is profitable simply because taxpayers’ money is promised to it for a long period into the future. There has to be a sensible assessment by the investor, the entrepreneur and the project organiser of how it is going to stand up and how big a risk is being taken. It may be that people see that they can pop in with short-term investments and hope to get out before the policy changes, but that does happen, and a certain realism is required. I agree with the noble Lord, Lord Cameron, that ideally all investors would love total certainty about their returns for ever, regardless of the source.

The noble Lords who gave notice of their intention to oppose Clause 60 standing part of the Bill want subsidies to go on or feel that they should not have been curtailed in the way they have been, even though, as my noble friend Lord Ridley pointed out, the pipeline is full, which is language for saying that the amount of subsidy element that has been assigned for this has reached its peak in terms of political reality, common sense and our obligations, whether imposed through our Climate Change Act or through conformity with European objectives. Noble Lords think the subsidy is gone, but my question is: when will the subsidies cease? If this is a mature industry, at what point does a mature industry cease to need a very substantial degree of subsidy, quite regardless of the point we made earlier that the subsidy tends to end up in very well-lined pockets and costs a lot for those who can least afford it? As my noble friend Lord Ridley said, onshore wind electricity is still expensive. It is true that it is not expensive compared with offshore, but when you add in the roads, the system costs, the requirements for integration and balancing in a very complicated electricity system and all the other items that my noble friend itemised, we are not talking about cheap electricity. One day, it may be so; one day, onshore, and possibly offshore, will be able to get costs down to competitive rates, possibly to lower rates than anything that is likely to come out of the latest nuclear project from EDF at Hinkley, which has an enormously high rate for 35 years to come. I hope that long before then wind power electricity will be considerably cheaper than anything that EDF is planning, but that still will not make it cheap. We are heading for a major glut in gas production; we can already see that from the fall in oil prices. As gas prices are related to oil prices, the barrel of oil equivalent of the gas price will, for many years to come, be not at all expensive and probably low. Compared with all that, these renewable sources, which have their place, which must contribute and which I support, will remain expensive. In other words, someone has to pay for them.

Lastly, the noble Baroness, Lady Worthington, has alleged, I think along with others, that there is a contrast between the need to restrain further subsidies—not to halt the development of onshore wind, because if it can get its costs down and, as I mentioned earlier, if many investors believe that they see tax advantages in it, it will go on, even if the subsidies are withdrawn and we close off the renewable obligation completely—and

14 Sep 2015 : Column 1690

the Government’s attitudes to fracking. I hardly dare mention fracking because almost anything one says in this very controversial area gets wildly distorted. If fracking proceeds in the UK—I say “if” because oil is at $50 and likely to become lower, with many people now talking about $25 and $30—the investment attraction of gas or oil extraction by hydraulic fracturing will, frankly, not be great. It could become an additional gas source to the many already available to us. There is LNG, obviously, and Norway is willing to pipe us a lot more gas, while even the Russians want to sell us gas direct through their Nord Stream pipeline extension. If all those ifs fall into place, we will have gas.

6 pm

Why is that an advantage and not inconsistent with restraint on further onshore wind power? Simply because gas is needed at present to make wind power work. Without back-up from combined-cycle gas turbines, which are not being built at the pace that we want—indeed, they are hardly being built at all—wind power cannot deliver. It can get into the system when the wind is blowing at a nice moderate level, but when it is blowing too strongly or not at all the generators cannot contribute and gas has to take the load. So gas and wind live together at present. The day will come—this may be soon or a long way ahead—when storage is so effective for intermittent onshore electricity, and for offshore electricity, that we do not need back-up facilities. At the moment, though, the nation needs facilities to ensure that there is a reasonable chance that our electricity system remains reliable. There are even doubts about that; there is a very awkward story in this morning’s Financial Times about the way our margin next winter will be reduced to 1.2 gigawatts, which is the lowest margin for years of the surplus available if something goes badly wrong in the system.

So for years ahead, possibly decades, we will need an effective marriage between adequate gas supplies from somewhere and the effective operation of wind power and the wind sector. That is why I think the amendment is sadly misplaced and why the Government should certainly stick to their line and, I hope, develop a more robust pattern of energy and climate policy that delivers the emissions reduction needed to be an example to the Chinese, the Russians, the Indians and all the other places where this will really be decided, and at the same time maintain and deliver reliable electricity and what we certainly do not have at the moment: affordable electricity. We have one of the most expensive patterns of electricity in Europe, if not the world, and our industry needs cheaper power while our poorest families need lower energy bills. These are worthy social and economic aims, and we should give them a proper balance and a proper place in our energy policy.

Lord Teverson: My Lords, perhaps I may intervene on a couple of those issues. The noble Lord, Lord Howell, completely forgets about the demand side in demand response management. That will become a lot simpler and more important as time goes on. No other part of economics that works properly in this world concentrates only on supply and ignores demand. That is one of the real challenges in policy-making, and it is starting to move forward.

14 Sep 2015 : Column 1691

On investment and guaranteed returns, I agree. When people investing in renewables sometimes complain about what is going on, I often compare the energy system to the common agricultural policy, as was, and say that this is heaven: there are guaranteed prices out into the future. Why do we do that? Because it is recognised that the Government are not going to invest, CEGB-wise, as they did in the old days. The biggest component in that conversion is capital costs. The biggest way you can make a difference to the cost of high-capital-intensity energy—not just renewables but nuclear and a lot of other technologies too—is by keeping the cost of money absolutely down. That is a decision that we make for good policy reasons: to keep the cost of energy as low as possible because the capital costs and cost of financing are as low as possible.

The noble Lord asked when we will get to a point where we stop subsidising. I suppose the answer is when we start charging fossil fuels the cost of the pollution that they put into the atmosphere and what they are going to cost future generations who will have to cope with climate change—next to the migration issues that they will face in the future, what we have now is nothing—along with all the issues and costs that there will be around it. When fossil fuels count that back into the present cost, that is how a realistic carbon price can be arrived at, as is often talked about on all sides of the House. That is one way of doing it but we have not managed to do it sufficiently. The Chancellor in the previous Government decided to cap the carbon price floor where it was, so that policy has been blocked as well. Those are some of the answers to the noble Lord’s questions. Are we left with a perfect world? No, we are not. That is why we have a mixture of technologies at the moment to try to drive this agenda forward, so that we move towards a sane and safer future for us all.

There are two important points here. First, I am probably on the same agenda as the noble Viscount, Lord Ridley, on the gas side, but the way to get gas into this equation is to take coal out of it. That is the most important thing that we can do, as Dieter Helm often preaches at us as policymakers. So that whole area needs to be taken into consideration.

Secondly, it is one of the ironies that through this legislation we are throwing away one of the cheaper, though admittedly not perfect, technologies. Yes, there is variability in wind power. As I have said many times in this House, I can see many wind turbines from my own house. Do they ever stop? Hardly ever but, while it is not intermittency, I agree that there is a high degree of variability. However, I remember a government statistic from about five years ago, when we had started going through the alternative planning system for major infrastructure projects in the Moses Room. This was a time when wind power did not make up the proportion of energy generation that it does now and then the utilisation of the total UK fleet of generators—sometimes we make it sound as if it were something like 90% to 95%—was in fact 50%. So we have major redundancy even within our conventional power systems. Some of these arguments can be rather exaggerated.

14 Sep 2015 : Column 1692

Viscount Ridley: Before the noble Lord sits down, I wonder if he could answer the question that I posed: how much has wind power reduced emissions by? If you take into account the full integration costs and the fact that, as he has just said, we have been unable to drive coal off the system with gas because gas does not want to come on to the system because of wind, it is very hard to argue that there has been any significant reduction as a result of wind power.

Lord Teverson: I absolutely agree about the failure of gas to drive out coal. That is why I have been a major advocate of emissions performance standards, which we brought in with the Energy Act 2013, but we have delayed actually doing that. I wish that I had the numbers with me. My noble and learned friend is showing me a document but I do not have my glasses on, so I hope I will be forgiven for not being able to read it. I do not know what the CO2 figure is—I am sure that government documents from DECC have said what it is and I shall have to look it up—but I am absolutely certain that through the increase in the proportion of energy transmission through renewables the levels have gone down, because renewables, which are zero-carbon technologies, are a much bigger proportion of our generation. Over the same time, I am pleased to say that energy efficiency has gone up by 2% per annum, or whatever the figure is. I look forward to finding out that information and informing the noble Viscount. I do not necessarily recognise a lot of his figures within the context of what he is talking about but I am sure that they are as good as any quoted in the House.

Baroness Worthington: My Lords, I am grateful to the noble and learned Lord, Lord Wallace, for opposing the Question that the clause should stand part of the Bill. It is tempting to engage on the many points that have been made about the principle of onshore wind in general, but I would rather stay focused on Clause 60 and say why I have a great deal of sympathy with the noble and learned Lord’s proposal that it should not form part of the Bill. That is mainly due to the process by which the Government have conducted themselves. I do not wish to misquote the Minister but he said that he needs time to think things through in relation to the grace period, and that is quite a telling statement. It is clear to me that this clause has not been fully thought through and that it has been put in hastily, without due consideration of the full implications and without due consultation. For those reasons, I am very supportive of the idea that we should simply take the clause out, do the thinking and consulting, and then come back with something that is fit for purpose.

With regard to things being fit for purpose, during the course of the Bill we have had exchanges about the impact assessment. We now have an impact assessment in relation to this clause, but I have to say that it was not exactly worth waiting for. It does not cover some of the most important issues in enough detail. It is incredibly lacking in proper detail in its attempt to make a net present value calculation of the implications of introducing the clause, and I find that it has significant weaknesses.

14 Sep 2015 : Column 1693

My overall impression is that the department is building the aeroplane as it takes off from the runway and that not enough thought has been given to this clause. It all seems to hinge on two words in the Conservative Party manifesto: “new” and “subsidies”. There is a great deal of subjectivity in interpreting the phrase “new subsidies”. It cannot be claimed that the RO is a new subsidy—it has been in existence for a number of years—and it cannot be argued that the RO provides, in the words of the noble Baroness, Lady Byford, subsidies for ever and ever. It does not do that. It does not create an unending subsidy. The RO is closing. It will close, as we agreed in the Energy Act 2013, in March 2017. That is not far away—in the grand scheme of things, it is about 12 months. In their haste to generate some kind of political benefit from this attempt to destabilise onshore wind, in those 12 months the Government are destabilising investment across the energy market, and that is deeply regrettable. I am very grateful to the noble Lord, Lord Cameron, for stating the wider implications of what the Government are doing here. There is a question of how we deal with industry and how we encourage people to invest in the UK.

I raised a general point about my disappointment with the impact assessment. I made it clear in a letter to the Minister and on the Floor of the House that we wanted to see the impact assessment properly make the case for the Government’s concern about the levy control framework running out of money or not having sufficient money. I am afraid that there is insufficient detail in the impact assessment. It does not give us any sight of the Government’s numbers on this or explain why they are so concerned.

More than that, the impact assessment makes me fear that the department does not even understand the energy policy that it is governing. When it comes to considering the benefits and costs of this intemperate change to policy, which was changing anyway, it considers only the positive benefit of a reduction in resources—by which I assume it means the amount of money that has been spent on onshore wind—and then it sets against that the increased cost of the EUA purchases. It makes very precise calculations over a period of 24 years to 2040. I am in the business of monitoring the carbon market in Europe and not a single analyst can give you any degree of confidence about the numbers relating to the carbon price over that period. I am afraid that the table on page 15 is really a work of fiction.

6.15 pm

Of more interest are the non-monetised impacts on pages 16 and 17. They are numerous and quite significant, and they have been completely omitted. Paragraph 4.22 raises the risk of our missing the 2020 renewables target. It gives all of five lines to an issue that is going to see us on a collision course with Europe. We have signed up to legally binding targets and we are going to miss them because we are tying our hands behind our back and removing one of our most successful industries which would help us to meet those targets. We will talk about that more when we come to subsequent clauses. The fact that the impact assessment does not

14 Sep 2015 : Column 1694

even mention that that will have a cost seems highly regrettable. It is not just the fact that we may be fined, which we may well be; there is also the fact that we have seen in the press intimations that the Government will simply purchase their way to compliance. That will incur a cost. The fact that that is not even mentioned makes me wonder whether we have officials who are across the detail of what they are currently doing. It also means that the Minister has to look at this issue in the round and put it in the wider context.

There are sufficient concerns about this element of the Energy Bill for it to be right and proper to ask for it not to be part of the Bill at the stage, and I have significant sympathy for those who oppose the clause. We now need to hear from the Minister. I will go back to my team and consult it on what we can do about the absence in the impact assessment of the information that we have requested. I have referred to the fact that there is no mention of the LCF assumptions upon which this is all predicated and to the rather partial and, I think, very substandard monetisation of costs. There is insufficient detail. At one point, the impact assessment says that there is too much uncertainty to include the impact on jobs and inward investment. There is uncertainty across every element, not least the one thing that has been monetised over 24 years.

I am afraid that the impact assessment is not a very good piece of work. I am sorry that we have had to wait so long for it. Had we had it earlier, we might have been able to raise our concerns earlier and have had more information about the clause from the department. It is a very controversial clause and it is highly politicised. This Bill is starting in the Lords and it should therefore, by convention, be uncontroversial. This is not uncontroversial and, as I said, I sympathise with the opposition to it. I look forward to the Minister’s response.

Lord Bourne of Aberystwyth: I thank the noble Baroness, at least for her very last point about how she is looking forward to my response. I thank the noble and learned Lord, Lord Wallace, for tabling his opposition to the clause, as it provides me with the opportunity to explain why Clause 60 should stand part of the Bill. I will then turn to specific points made by noble Lords during the debate.

Clause 60 would close the renewables obligation to new onshore wind projects in Great Britain a year earlier than originally planned. On the one hand, we had some noble Lords saying that it is only a year; on the other hand, we had some talking about it as though it were the end of civilisation as we know it. Therefore, there is something of an inconsistency in some of the arguments being deployed.

There are two key reasons why I believe that closing the RO is the right approach. I should say, first, that onshore wind will remain important and will remain massively deployed. We will spend more on onshore wind next year than we are spending this year, so, again, that needs to be accepted. Jobs are, and will continue to be, provided by that industry. Perhaps I may pick up on one point about jobs uncertainty. It is because we are still considering the situation in relation to the grace period that we are unable to say with any degree of certainty what the jobs position will be.

14 Sep 2015 : Column 1695

First and foremost, I am committed to delivering on the Government’s ambition to halt the spread of onshore wind while continuing to combat climate change. Secondly, it is essential that the Government keep domestic energy bills as low as possible for consumers and act when necessary to ensure that costs are contained and remain within our low-carbon spending cap. That is not to say that the Government do not recognise the need to strike the right balance in terms of taking developers’ interests into account when implementing this policy. I have indicated what we are doing in relation to the grace period and the engagement exercise that my right honourable friend the Secretary of State is engaged in. I will explain this further in due course.

Let me set out why the Government are taking the necessary steps to close the renewables obligation to new onshore wind projects. The Government’s ambition for onshore wind was made very clear within our manifesto. I know that many noble Lords understandably regret the outcome of the general election, but there was a general election; it was a manifesto commitment and, of course, we remain committed to implementing it. That is what democracy is about. The essence of that is choice and people made their decision. As such, we now have the mandate to halt the spread of subsidised onshore wind. Clause 60 aims to deliver part of this pledge by closing the renewables obligation to new onshore wind from 1 April 2016—a year earlier than originally planned.

I would like to provide reassurance to noble Lords that by taking this step, the Government are not shying away from their commitment to tackle climate change. We are confident that we can meet our 30% renewable electricity ambition by 2020 without additional onshore wind, other than that already deployed. Indeed, we are running ahead of the projections.

Baroness Worthington: We will consider this matter later but it is simply not true that we are ahead of our European renewables target. That target relates to all energy and we are not on track in regard to it.

Lord Bourne of Aberystwyth: I hope the noble Baroness will agree that we are on track in relation to the electricity ambition.

Lord Teverson: The obligation relates not to electricity but to energy. There is no electricity obligation of any kind.

Lord Bourne of Aberystwyth: My Lords, onshore wind has deployed successfully to date and is an important part of our energy mix. Our analysis demonstrates that when we take early closure of the renewables obligation into account we still expect total UK deployment of onshore wind to fall within our Electricity Market Reform Delivery Plan projections of between 11 and 13 gigawatts by 2020. This is our best estimate of what we would need to meet our 2020 targets and what we can afford under our low-carbon spending cap. In fact, the department’s projections relating to the 18 June announcement estimated that by 2020 onshore wind deployment, in the absence of intervention, could be between 12 and 15 gigawatts. The upper end of this range is significantly higher

14 Sep 2015 : Column 1696

than the 11 to 13 gigawatts set out at the time of the delivery plan. Without any action, we could deploy beyond this range. As the 18 June announcement made clear, we therefore considered it appropriate to curtail further deployment of onshore wind, thereby balancing the interests of onshore wind developers with those of the wider public.

This takes us on to my second point: affordability. My noble friend Lord Ridley referred to the trilemma and the fact that the Government are seeking three things, as the previous Government did: to ensure affordability, security and carbon-free. That very much remains the aim. Tackling climate change must be done in a cost-effective way. We want to ensure that consumer energy bills are kept as low as possible while we cut carbon emissions.

The Government have provided vital financial support to the renewables sector, which has helped new and innovative technologies, reduced our emissions and increased the amount of low-carbon electricity that powers homes and businesses across the United Kingdom. In short, subsidy is necessary to give some impetus to development, and that is what we have done, but we have to keep the costs under review and control.

However, the Office for Budget Responsibility’s latest projections show that subsidies raised from consumer bills are currently set to be higher than expected when the schemes were set up under our low-carbon spending cap, the levy control framework. This is due to a number of uncontrollable factors, including lower than expected wholesale prices and greater than expected renewable generation. The revised levy control framework forecasts indicate that spending in 2020 is projected to be £9.1 billion in 2012 prices for low-carbon generation. The Government set a limit of £7.6 billion. As such, the current forecast is £1.5 billion above that limit. These additional costs could be met through increases in consumer energy bills. It is therefore only right that we now look at ways to protect value for money and affordability under the levy control framework. My department has announced a package of measures to deal with the projected overallocation of renewable energy subsidies. The onshore wind measures are therefore part of a co-ordinated approach to managing spend under the levy control framework.

Baroness Worthington: I am sorry to interrupt but this is an important part of the Bill. Can the Minister explain how it will be possible to spend less under the levy control framework by removing the ability for more and cheaper renewables to come forward? Either we miss our European targets or we will be using more expensive renewables to hit our targets, which will run through the levy control framework even faster. I simply do not understand how one can use the framework as a reason to remove one of the cheaper forms of renewables. If affordability is our goal—which I agree it should be—then surely we should enable technologies to compete fairly on price and not rule out some of the cheapest versions.

Lord Bourne of Aberystwyth: On that specific point, the noble Baroness will know that the costs of deploying some renewable technologies is falling. That is certainly true of onshore wind; it is also true of solar. It is

14 Sep 2015 : Column 1697

important but I have to say to the noble Baroness that, in reaching our decarbonisation targets, nuclear remains a vital part of the mix. I see that she agrees and it would therefore be interesting to hear at some stage whether the Opposition are committed to backing the Government in relation to that important point, as they have done previously.

That brings me to the issue of investor confidence. It is a fair point to make. I can understand that there is a need for certainty but it must be balanced against the need to get it right in relation to the grace period. That is why we have taken somewhat longer than expected and why we are to have recommittal to a fourth day in the Moses Room to consider that issue. We cannot rush engagement on the grace period and get the intention right in relation to investor confidence. I come back to the point that no one should have been taken by surprise that the Government were going to alter the position in relation to onshore wind; it was in the manifesto. I do not therefore accept the uncertainty argument that somehow people are taken by surprise. I have indicated that we will bring forward amendments on grace periods and will ensure that noble Lords receive them in a timely manner, ahead of the recommittal stage in the Moses Room.

I shall seek to deal with some of the points made by noble Lords. The noble and learned Lord, Lord Wallace, rightly said that business confidence was an important part. I agree and I hope that I have dealt with how we regard that as important, but we want to get it correct.

My noble friend Lord Ridley made telling points about how we have to balance interests in relation to the trilemma and our commitment in the manifesto. He reminded us of the fact that there are sometimes no easy ways in which to deliver, even in relation to onshore wind. As he said, there are carbon costs and costs in relation to the manufacture of turbines and so on. There are no easy answers.

My noble friend Lord Howell correctly reminded us of the need for back-up facilities, which takes us back to nuclear. Many renewables are intermittent in nature and we therefore need back-up to them. That point was well made.

The noble Lord, Lord Teverson, correctly said that there were things to be done on the demand side that were not in the Bill. I accept that but I can reassure him that work is continuing in the department on innovation, improvements in white goods and regulation. The important programme of smart meters, which started under the previous Government, is continuing apace. All these are important points that we take on board.

I accept the point that the noble Baroness made: this is a political position—there is no doubt of that. It was a difference between parties in their manifestos. On that basis, I remind noble Lords that it was in the manifesto and therefore respectfully beg that this clause should stand part of the Bill.

6.30 pm

Lord Wallace of Tankerness: The Minister has indicated that a justification for the position is to reduce domestic consumer bills. That is not an unreasonable thing to

14 Sep 2015 : Column 1698

try to do. However, I just want to make sure that I understand the impact assessment. On the second page, it says that:

“Reduced risk to LCF from over-allocation of renewable energy subsidies, and benefit to consumers from reductions in consumer energy bills (in 2016/17 average household electricity bills could be up to £3.40 (0.6%) lower, with a central estimate of around £0.30 (0.05%), compared to the Do Nothing option) (2014 prices)”.

I am more than ready to stand corrected, but am I right in thinking that the central estimate of the Government in this is that this measure will save 30p in an annual domestic electricity bill?

Lord Bourne of Aberystwyth: The noble and learned Lord has correctly identified the part of the impact assessment that deals with this. It could be a saving of up to £3.40. I accept that that is not a massive amount, but it has to be taken account of in the context of the fact that we are seeking to keep within the deployment estimates that we put forward. I do not think it should be sniffed at: this does not appear, on the face of it, to be a massive amount, but it makes quite a considerable difference to some consumers that we are reducing bills by that amount. That is what we are seeking to do and I make no apology for it. However, that is only part of the consideration.

Baroness Worthington: As I said, the impact assessment is really rather lacking in detail. It may make those assumptions, but it does not give any detail as to what the ingoing parameters are on those numbers. If instead of onshore wind we build offshore wind to compensate for the lack of delivery on the target, there will be a net increase to customers’ bills under this clause.

Lord Bourne of Aberystwyth: I accept that obviously there is a question about what is used instead. However, I remind the noble Baroness and the House that, even with this action, we are well above the deployment estimates that were made in relation to onshore wind.

Lord Wallace of Tankerness: My Lords, I am very grateful to all noble Lords who took part in this debate and, indeed, to the Minister for his response. He has set out the position that the Government are coming from.

It is important that we look at this clause in detail. Like the noble Baroness, Lady Worthington, when I saw that there would be no new public subsidy, I took it to mean that there would be no “new” subsidy, as opposed to an old one—ROCs are certainly quite old. However, I hear the interpretation that the Minister and his Conservative colleagues place on it. One can only speculate as to whether they ever thought they would have to deliver this policy.

The noble Lord, Lord Howell, with wonderful understatement, thanked the Minister because he thought that we were hearing an evolution in government thinking. The noble Baroness, Lady Worthington, said that it was like building an aeroplane as it was taking off along the runway. Some might say that it is making it up as you go along. The lack of clarity in some areas of the impact assessment and the fact that we

14 Sep 2015 : Column 1699

do not yet know what will happen with the grace periods gives some indication that perhaps this was a policy that had not quite been fully thought through, if I can just leave it at that. However, some concerns continue.

I can understand why the Minister said at the outset of his remarks that, on the one hand, people say it is just a year but, on the other hand, people say it is the end of civilisation as we know it. I take the political point that the Government won an election, but to change an important policy less than a year—just over 10 months—from when it will come into effect is causing considerable concern in the industry and calls into question whether such a change could take place in other spheres of renewable policy.

I have always supported the idea that there should be a balance; a mix of different renewable sources. If one source is seriously challenged because there is a sudden change of policy, it begs the question as to whether others will follow.

I cannot quite yet get my head round the cost. I do not quibble with the fact that, for some people, 30p a year, or just over half a penny a week, might make all the difference—although I find it difficult to buy that. However, the other part of the equation that I cannot quite follow is this: if renewable onshore electricity generation is not going to qualify and therefore its future is more under question, and the others, including nuclear, are going to be more expensive, how can that lead to benefits in the longer term for the domestic consumer? The noble Baroness made that point in her final intervention. That has not yet been explained to us, and perhaps a reworking of part of the impact assessment might highlight some of these issues.

The noble Viscount, Lord Ridley, asked whether any use of onshore wind had led to carbon emissions. I just look at the Government’s impact assessment—I may have been slightly critical of it but I will now use it. Paragraph 4.26, on environmental issues, says that option 2, which is the proposal,

“will lead to lower levels of onshore wind deployment and hence increased carbon emissions within the UK power sector relative to the Do Nothing option”.

So the Government themselves believe that it will lead to increased carbon emissions by having lower levels. The impact assessment goes on to say that,

“these will be offset by decreases in emissions elsewhere in the EU within the capped EU-ETS traded emissions sector”.

We must polish up this sentence. Here, the Government say that what they are doing will actually increase carbon emissions but that Europe is going to come to their aid. It is not very often we see a Conservative document saying that the European Union is going to come to our aid. It is probably worth it just for that.

I will share with the noble Viscount, Lord Ridley, figures that come, I think, from a briefing by the RSPB and which make reference to this. I saw this only this afternoon and have not had a chance to check out the reference, but it suggests that a modern wind turbine has a capacity of 2 megawatts and is expected to avoid emissions of over 1,880 tonnes of carbon dioxide in an average year. I will share that reference with him and, as with all these things, we will

14 Sep 2015 : Column 1700

trade statistics. However, that and the Government’s own impact assessment suggest that there will be a reduction.

I am not going to press this, but it has been useful to flush out some of the Government’s thinking on this. No doubt we will return to some of these issues when we come to look at periods of grace.

Clause 60 agreed.

Amendment 35

Moved by Lord Grantchester

35: After Clause 60, insert the following new Clause—

“Renewable and other technologies

Within six months of the passing of this Act, the Secretary of State shall publish an assessment of the progress towards decarbonisation of energy supply, including a strategy for the development of renewables and a strategy for energy efficiency within the supply system.”

Lord Grantchester (Lab): My Lords, I rise to propose Amendment 35 and declare an interest, in that I am undertaking a planning application with regards to solar technology.

The Energy Bill is largely focused on securing the value of energy supplies of oil and gas in the North Sea through the creation and operation of the Oil and Gas Authority. It is encouraging and positive. In contrast, the final two clauses bolted on to the Bill do the exact opposite. They seek to bring onshore wind to an early closure, dismantling the least costly form of renewables technology. They undermine investor confidence, as others have stated already tonight and as Ernst & Young reports in its research. They raise alarm bells throughout the renewables sector. These clauses raise wider questions and concerns regarding how wind power, and indeed other renewables, will feature and impact on an overall energy strategy.

Just recently, the Minister’s department issued a further consultation on the feed-in tariff regime for solar power. All this is against the back-cloth of the European Commission’s report in June, which highlighted that the UK is falling behind the trajectory necessary to achieve the UK’s national renewable energy targets, which are so necessary to achieve substantial decarbonisation of the energy supply.

On transport, the aim is for 10% to come from renewable sources by 2020. At present, the UK is at only 3.5%. On heat, the target is for 15% to come from renewables; at present, the figure is only 4.9%. While the electricity sector may presently be on track, there are misgivings that its renewables element will continue slowly to fall following this Bill. Quite simply, this Bill is moving in the wrong direction on both fossil fuels and renewables. It facilitates recovery of oil and gas for generation while reducing support for one form of renewable energy, onshore wind, making more difficult the installation of the cheapest form of renewable energy. This legislation will increase consumer bills.

The help for operators recovering oil and gas in the North Sea is said to include substantial tax breaks. Can the Minister confirm that private contracts between operators and HMRC are being drawn up and include

14 Sep 2015 : Column 1701

offsetting decommissioning costs against previous tax payments? That is a worrying development set against reduced support for wind renewable technology.

The amendment would require the Government to give an account of how their carbon reduction programme is progressing. They must set out the pathway to achieve the 2020 targets for carbon reduction, for renewables use and for energy efficiency—the so-called 20-20-20 strategy. Discussions are continuing on the EU target for 2030, which is to be set out in Paris at the end of the year. Discussions are focused on a single target for 2030 rather than on several targets. While this is recognised, we nevertheless need to understand that strategies will still be required to meet the overall reduction in a co-ordinated way through carbon reductions in supply, heat and transport and efficiency. While the Government may claim that they can meet their 2020 target, they are certainly unco-ordinated and unclear about what happens beyond that.

The impact of recent government decisions is to reduce support for renewables—onshore wind in this Bill; solar in changed arrangements for that sector—while making it easier to use North Sea oil and gas and easier for fracking ventures. The direction of energy policy in relation to energy decarbonisation is further shown through measures on onshore shale gas and oil, giving rise to considerable doubts about the Government’s overall intentions. This is aggravated by the reported delays in bringing new nuclear power capacity into the system, given the problems at Hinkley Point with EDF. Of considerable concern is the position in relation to state aid. Existing clearance was predicated on the basis of technology-neutral auctions. As the Government no longer appear neutral, is this in jeopardy? Can the Minister confirm that DG Competition, in the Commission, could re-examine their judgment?

All this raises doubts about the trajectory of decarbonised electricity. It is therefore important that as early as possible in this Parliament, the Government make clear their decarbonisation strategy and how far it is working. Let us see their analysis and how they can be so confident that the targets will be met, while they tie the hands of very successful aspects of the renewable energy industry. This amendment would require the Government to produce for Parliament an assessment of their strategy and progress towards decarbonisation of electricity supply. The report should include the Government’s assessment, first, of the expected contribution from renewables and, secondly, of measures designed to improve the overall energy efficiency of the electricity supply, reducing demands for carbon in this manner.

Such an assessment should also cover the broader aspects of energy efficiency—commitments notably absent from this Bill and from government pronouncements since the election. I accept that this is beyond the scope of the Bill and, hence, it is not referred to in the amendment; I therefore refer explicitly only to energy efficiency within the supply system. Energy, and hence carbon, is wasted at each stage: in generation, transmission, distribution and use. In reality, to be comprehensive, such an assessment would also look among other things at the contribution of both nuclear power and

14 Sep 2015 : Column 1702

demand reduction and redistribution technologies, but this amendment confines itself to those aspects covered by the remit of the Bill.

The objective of the amendment is that Parliament receive a report within six months of the passing of the Act, which will enable us to assess the progress of and plans for decarbonisation of the electricity supply in a holistic manner. If the Government are not prepared to accept the amendment, I would expect them to tell the Climate Change Committee how they propose to report to Parliament about the impact of the Bill and other policy changes on the difficult aim of decarbonising electricity supply. I beg to move.

6.45 pm

Lord Whitty (Lab): My Lords, my name is also on the amendment, but I must apologise to the Committee for not being here during its long discussions on the previous two amendments, which relate to the contribution that renewables, in particular wind power, make to the reduction of carbon emissions and the decarbonisation of electricity supply.

This clause or something like it is necessary in the Bill because of the consternation that the changes in support for and expectations of wind power, solar power and other renewables have caused within those industries. They are concerned not that, understandably, the Government wish to reduce the subsidy as those technologies become more competitive with conventional energy, but that they should change the pace at which and the terms on which they are doing it at such short notice, and with such drastic impacts on projects conceived and put to planning long before those changes were proposed. Some of that will have been covered in earlier debates, but the fact is that the renewables industry will lose confidence in this Government’s support for and wider commitment to the objectives established under the Climate Change Act, and those we hope will be established at EU and global level, if they are not prepared to continue such support.

If the Government have a better way of reporting to this House and to the country how well they are doing on their carbon reduction targets and their overall trajectory towards to reduced carbon use, it would be helpful for the Committee to hear of it, but, in default of that and in reaction to what has been already announced, it is legitimate for us to put within this Bill an obligation on the Secretary of State to produce a report within six months of the passage of the Act. I hope the Minister can accept something like this amendment or indicate what alternative methods of report the Government are now proposing.

Lord Teverson: Although I agree in principle with what this amendment is trying to get at, I have a recollection—I cannot find it, so I may be wrong—that under the Energy Act 2013 the Secretary of State has to give an annual report to Parliament anyway. If that is the case, I just want an assurance from the Minister that that report would cover the sort of issues discussed in this debate. We could have endless reports, but the main thing is to have a key area of reporting where all these things come over at one time, and that Parliament can debate them.

14 Sep 2015 : Column 1703

Lord Bourne of Aberystwyth: My Lords, I thank the noble Lords, Lord Grantchester and Lord Whitty, for proposing this amendment, and the noble Lord, Lord Teverson, for his timely comments, which I will come to. I found some of the contribution of the noble Lord, Lord Grantchester, reassuring in that he is pushing us on the Hinkley state aid issue. I hope he is in a position to confirm that it is still the Opposition’s policy to encourage new nuclear because that is what it sounds like to me. I am able to give him the reassurance that we remain confident that the commission’s decision that Hinckley is compliant with state aid rules is legally robust. But of course, on decarbonisation in general, I return to the point that new nuclear is a vital part of the mix. Without it, we would be nowhere near achieving our goals. Therefore, I hope we can get some sense of what the Official Opposition’s policy is on new nuclear—and on new coal. Some things that the new leader has said indicate that he is in favour of regeneration of the coal industry in the United Kingdom, which would undermine what we seek to do. Some clarity on that would certainly be welcome.

The Government are already obliged and will report in the coming months on their progress towards decarbonisation of the energy supply, the development of renewables and the development of energy efficiency. We have obligations under the Climate Change Act, the EU renewable energy directive and the EU energy efficiency directive to report on these topics in the coming months. Therefore, the Government cannot support the amendment, which could lead to unnecessary duplication. You do not fatten a pig by continuously weighing it and we already have these three obligations, which I will refer to in more length.

The Committee on Climate Change reports annually on the Government’s progress towards meeting carbon budgets, which includes an assessment of progress towards decarbonisation of the energy supply. Under Section 37 of the Climate Change Act, we are obliged to respond to the Committee on Climate Change’s annual progress report by 15 October each year. That remains true this year. We will publish our response to the Committee on Climate Change’s 2015 progress report by that date, and that will specifically address progress towards decarbonising the energy supply.

On renewables, the 2013 Electricity Market Reform Delivery Plan—which I think is what the noble Lord, Lord Teverson, was referring to—set out our ambition of achieving at least 30% of electricity from renewables in 2020. We are on course to achieve that, with renewables representing almost 20% of generation in 2014. We will also report by the end of this year on progress against our 2013-14 interim targets as part of the EU renewable energy directive.

Finally, we are committed to energy efficiency as a vital element of meeting our statutory goals on fuel poverty and climate change. We set out our strategy in 2012 and updated it in 2013. We will report by the end of April 2016 on progress achieved towards national energy efficiency targets, as part of the EU energy efficiency directive. In the light of those already substantial obligations and the reassurance that I have given, as well as the work that is done in the department, which takes considerable time, I hope that the noble Lord proposing the amendment will feel able to withdraw it.

14 Sep 2015 : Column 1704

Lord Grantchester: My Lords, I thank the Minister for that reply and for being keen to hear about our policies. I was questioning only whether state aid issues could be re-examined by the commission if the UK appeared to divert from its stated neutrality towards renewable technologies. I am heartened by his reply, notably that the Committee on Climate Change will press forward with its annual reports to which the Government are mandated to reply. On that basis, I beg leave to withdraw the amendment

Amendment 35 withdrawn.

Amendment 35A

Moved by Lord Whitty

35A: After Clause 60, insert the following new Clause—

“Decarbonisation obligation

(1) Within six months of the closure of the renewables obligation on 31 March 2016 for onshore wind generating stations, the Secretary of State must bring forward regulations for a decarbonisation obligation.

(2) A “decarbonisation obligation” means the level of carbon intensity of electricity generation in the United Kingdom that a relevant supplier may not exceed in respect of the total kilowatt hours of electricity that it supplies to customers in England and Wales during a given year.

(3) In setting a decarbonisation obligation, the Secretary of State must first obtain and take account of advice from the Committee on Climate Change.

(4) In this section, “relevant supplier” means electricity suppliers supplying electricity in England and Wales.”

Lord Whitty: In the unavoidable absence of my noble friend Lord Foulkes, I will speak to Amendment 35A. As we have just discussed, electricity decarbonisation is a key component of our carbon reduction strategy. The amendment would provide a mechanism whereby decarbonisation by supplier is built in and becomes transparent, and is therefore enforceable supplier by supplier. It would require the Secretary of State to issue regulations to place on each electricity supplier—subject to definition in the regulations—a maximum level of carbon intensity in the electricity that it supplies within England and Wales. This decarbonisation obligation would be a proportion taken over the year of the carbon content of the electricity supply to its consumers over the course of that year.

The amendment of course does not specify exactly how the obligation would be expressed nor the level, nor whether there would be a single figure or whether that would be varied supplier by supplier depending on their pre-existing achievement of reductions in carbon intensity. That is a matter for consultation prior to the regulations being promulgated. The only specification in the amendment is that the Secretary of State needs to take the advice on this issue of the Committee on Climate Change—I am glad to see that the noble Lord, Lord Deben, has joined us at an appropriate point. Therefore, that would be the benchmark against which the Secretary of State calculates the requirement. It is noticeable that the amendment would apply only in England and Wales. There would be different arrangements in Scotland and Northern Ireland.

14 Sep 2015 : Column 1705

The amendment would give a crucial mechanism to the Secretary of State for ensuring that the pace of decarbonisation in the electricity supply was maintained, transparent and understood supplier by supplier. It would be an important additional weapon in the Secretary of State’s armoury. The Minister has assured us that we are on track for 30% of renewables by 2020. We need to go much further than that to meet what will be the requirements for carbon reductions over the years beyond 2020. I beg to move.

Lord Teverson: My Lords, I was pleased to add my name to the amendment, although I do not pretend to be an expert on exactly how it would work. There was a great celebration in February this year when our Prime Minister, to whom I give full credit, made a declaration jointly with Nick Clegg, the then Deputy Prime Minister and Ed Miliband the then leader of the Official Opposition. They made pledges through the Green Alliance, one of which was to accelerate the transition to a competitive energy-efficient, low-carbon economy and to end the use of unabated coal for power generation.

That was a fantastic declaration at the beginning of a general election campaign when politics was running high and competition between political parties was starting to move into a more confrontational stage. Yet three party leaders came together and said that low carbon and taking out unabated coal would be key. I see the amendment as something that could move us towards that solution in a concrete way. That is why I support it so strongly.

The Energy Act 2013 started off being about decarbonisation. It made it clear that the Secretary of State had the ability—and in parliamentary Bill language that presumed that the Secretary of State would—to declare a decarbonisation target in 2016 when the Committee on Climate Change came forward with its recommendations for the fifth carbon budget. My question to the Minister on this key area in meeting Climate Change Act obligations is whether the Secretary of State intends next year to follow that through in the carbon budget that is recommended and the one that is subsequently agreed.

The other attractive thing about this amendment is that it tries to find a least-cost way through to decarbonisation. As previous debates have shown, in this House we are united in wanting to decarbonise our economy at least cost. We all know that that is important to consumers, for fuel poverty and to the competitiveness of our economy. This amendment finds a way to do that.

I welcome the amendment and I agree entirely with what the noble Lord, Lord Whitty, has put forward. I will be interested to learn from the Minister how the Government intend to take forward the pledge the Prime Minister made in February. Will the Government move next year to a decarbonisation target for 2030 and, as part of that, will they make sure that coal really does disappear from our system as soon as that is practically possible?

7 pm

Lord Deben (Con): My Lords, it is not for the chairman of the Committee on Climate Change to comment much on the means whereby we reach the

14 Sep 2015 : Column 1706

targets which have been set by the committee. That is not its role. The committee’s role is to set the targets and to insist that they are met. That is one of the difficulties of being the chairman because my instinct is to comment on all these things with enthusiasm and some pretty clear views, but that is not what I am statutorily allowed to do.

However, it might help the Minister if I say this. This may be a formulation that works; I am not sure. There are complications in it which might lead the Government not to want to do it. I want to say a word about a decarbonisation target, which the Committee on Climate Change has recommended. It has done so because a decarbonisation target would give security to those who are investing in low carbon technology, and above all in low carbon generation. One of the problems that all Governments have to face is that the timetable of private industry is very tight. First there is the timetable for how long a particular managing director will be in place and what is going to happen over the next two or three years—I am told that it is generally about three years. The second timetable is an important one, covering the length of time major investment takes between thinking about something and actually delivering it.

One difficulty—it is one which the Committee on Climate Change emphasised in its report to Parliament this year—is that most of the measures we have in place will fall off the cliff in 2020. We are now talking about “tomorrow” in the investment cycle because people often have an investment cycle which lasts certainly for five years and very often for seven or eight years. The committee sought to ask the Government to ensure that we knew where we were going to be in a progressive way after 2020. The Government have made it clear that certain things will continue, but not how much and how long. That security is important for investment.

The second point is that it is occasionally the belief of all politicians that if they promise something in 2050, everyone will believe it and proceed to get there. But I remember an embarrassing debate in this House when I pointed out that the previous Labour Government had an energy Bill from which they had removed every date except 2050, and I worked out that there was not a Member of the Government who was likely to be alive when the one promise that had been made would be delivered. That is a dangerous position because if we are to be taken seriously, we ought to make promises that will be delivered at least in our likely lifetimes.

What I want to put to the Minister is simply this: we need to have some sort of interim point between 2020 and 2050 towards which people can work with some confidence, and we have suggested a carbon intensity target for 2030 entirely on that basis. I hope that the party opposite will not be upset by this, but one of the reasons I want the target is because I am a capitalist and I do not want to judge what is going to be the best way of achieving it by 2030; in other words, I want to be as unrestrictive as I can. I just want to deliver the ends, and that is why I always talk about targets, not means. I do not know what mixture of means will enable us to reach the target, and that is why I am less enthusiastic about those who insist upon this proportion from renewables, that proportion from other low carbon

14 Sep 2015 : Column 1707

technologies and this proportion from nuclear. I have always felt that a portfolio is what we want, and if possible I want an unprescriptive target because we do not know the ways in which we are going to achieve it. But we must give people the confidence that if they pursue those ways, there will be a proper return from the market on the investment that they have carried through. That is why a carbon intensity target is a valuable thing. I hope that the Government will wish to do that in 2016, for reasons we all now know. A carbon intensity target would be unprescriptive, but it would give real confidence.

This amendment, on the other hand, is much more precise. It gives a role to the Committee on Climate Change, for which I thank the noble Lord, and I am sure that if we were asked to carry through this role, we would do it to the best of our ability. But I wonder whether this particular mechanism is the best one. There are complications which the Government might want to think about, but I hope that in discussing it, the Government will not cast aside the need—I think it is that—for a decarbonisation target for 2030 to give people the confidence to plan. It is no good saying that they know that our emissions must be cut by 80% by 2050. Frankly, it is true and statutorily based, and we all think it is important, but it is not going to drive investment. That is why a decarbonisation target for 2030 is important. I doubt whether this is the right way forward, but I am pleased that it has been tabled as an amendment, not least in order to ask the Government to think hard about the needs of investment and confidence.

Baroness Worthington: My Lords, I am grateful to my noble friend Lord Whitty for introducing this amendment and to the other noble Lords who have spoken in favour of it—or if not directly in favour, at least in favour of us having a debate about decarbonisation. I recall that a similar amendment was tabled by my noble friend Lord O’Neill of Clackmannan during the Committee stage of the Energy Act 2013. We had a good debate at the time, and the arguments which were put forward were important then and are even more important now. I say that because we all engaged with the Energy Act 2013 in good faith. We raised our concerns and we went forward on the basis that we hoped that we had a system that may be a transition to something more market-based and slightly less interventionist in order to encourage us to decarbonise our electricity system.

I apologise for stating the obvious, but the reason electricity is so important is that once it is fully or substantively decarbonised, it can then be used to decarbonise transport and heat in an effective way. It is not the only way, but it is one way. It is the sector with possibly the most commercially available technologies and certainly the widest range of known technologies, certainly at this stage, to help us. That is why electricity is focused on and why we have a 30% target for renewable electricity as opposed to 10% or 12% in the heat and transport sectors. It is right to focus on electricity.

This idea is definitely worthy of merit and I do not disagree with the noble Lord, Lord Deben, when he says that we have in the past debated a broader definition

14 Sep 2015 : Column 1708

of the decarbonisation obligation or decarbonisation target. In fact, that was rather exhaustively dealt with in the debates around the Energy Act 2013. The way it was left was that the Government may introduce a decarbonisation target for 2030 in line with the fifth carbon budget being set. I very much look forward to hearing some strong words from the Minister stating that that is still the Government’s intention: that a decarbonisation target will be set in 2016 once we have that fifth carbon budget in place.

For all the reasons given by the noble Lords, Lord Deben, Lord Teverson and Lord Whitty, we lack a moment of clarity to help shake people’s investment decisions beyond 2020. We have renewable targets to 2020, as part of the European renewables directive, but beyond 2020 there is big uncertainty as to what low carbon technologies, if any, will be supported by the Government. Therefore, there needs to be a framework. Why I like the idea of a decarbonisation obligation on the Government and on suppliers is because it does exactly what the noble Lord, Lord Deben, said, which is to create a market-based system.

I often find myself wondering whether I am Alice who has stepped through the looking glass. Here we are in a world where the Government—a Conservative Government—who are presiding over virtually the renationalisation of the energy system. There is no element of the energy system that is not now reliant on the Secretary of State to sign a contract of some sort or another, perhaps with the possible exception of some of the interconnectors, but even there it is quite highly regulated. Now any new clean capacity needs to be signed off by the Secretary of State with a contract for difference, and all the existing capacity receives capacity payments also through the Secretary of State’s gift. Here we are, very oddly, presiding over pretty much a state-run energy system, and here I am on the Labour Benches saying that we need a much more market-based system that allows more choice and for capital to flow to the most cost-effective ways.

It is an odd situation but that is where we are. So I press the Minister to help us to understand that the Government are sharing our objective, which is to move towards a slightly less interventionist system with more ability for a broader set of players to dictate how we meet our targets, which means the Government setting the framework, being clear about our objectives, but allowing a wider pool of people to find those solutions for us at least cost.

Amendment 35A is an interesting idea which proposes that rather than the Government taking on the obligation and the target, they should be passed down to the supply companies. It has some merit. It is worth noting that suppliers have been obliged to report on the carbon intensity of their electricity supply for some years now. They have a fuel disclosure requirement and an infrastructure and reporting mechanism that enables them to do that with certificates of origin. That enables them to calculate the carbon intensity of their electricity annually and report to Ofgem. Those numbers then probably sit on a website or in a document. Very little attention is paid to them which is a great shame because we are encouraging these data to be collected but doing very little with them. If we were to look at those numbers, sadly we would see that carbon

14 Sep 2015 : Column 1709

intensity has remained stubbornly similar over the past decade. We did very well in decarbonising when we had the dash for gas and replaced a lot of our old coal, but since then carbon intensity has just moved around, largely dictated by commodity prices where gas prices are higher than coal or vice versa. So there has not really been a grip on carbon intensity.

An obligation such as this would address that problem and mean that the full range of decarbonisation options, including fuel switching and phasing out of coal, would be incentivised in the most logical way forward. I am very grateful to the noble Lord, Lord Teverson. He and I have worked previously on the phasing out of coal and the use of performance standards to make sure that our old coal, in particular, is phased out in an orderly and certain way so that we can make room for clean investment. A decarbonisation obligation would help us to ensure that that transition out of coal took place. It is not the only way it can be done, but it would be a market-friendly way to meet the obligation because there would be an incentive not to purchase the coal that would count against the target. It would help to make it harder to hit the targets. The other benefit is that it would help renewables to stand on their own two feet and compete alongside other technologies. We would genuinely see which are both affordable and able to be supported by the general public.

7.15 pm

I should state that this carbon intensity number is one that we as a country should care about. It is really the Committee on Climate Change that has made the carbon intensity of electricity something that is in the public discourse. It is worth noting that at around 400 grams we are able to shave off more than 150 grams simply by using our existing infrastructure more wisely. If we were to change the merit order and run gas ahead of coal we would take off up to 200 grams without needing to invest in anything new. That is why those numbers matter and why we should be scrutinising them.

I pay tribute to my ex-boss at Scottish and Southern, Ian Marchant, who now claims he has invented a new law—the Marchant law, which is that over 10 years the carbon intensity of our electricity should halve, so we should go from 500 to 250, from 125 to 62.5, from 400 to 200, or from 100 to 50. We should do that over a 10-year cycle, which would give us a good pathway and is certainly achievable with the range of technologies we have. Speaking personally, that includes nuclear, carbon capture and storage, gas, renewables; to cite President Obama, I am an all-of-the-above person when it comes to climate change, with the exception of unabated coal. There is a role for everything and we must try to ensure that we invest in those things that are delivering. That is the best outcome. We also need to act swiftly because, as we know climate change and the need to decarbonise is becoming ever more apparent and we need to move with alacrity towards decarbonising our energy fully. We should be leading the world in committing to do that.

I am very grateful to the noble Lord, Lord Whitty, for moving the amendment and for the contributions we have had. It has been a good debate and I look

14 Sep 2015 : Column 1710

forward to hearing from the Minister in relation to the broader question of decarbonisation targets, as currently described in the Energy Act 2013 and the interesting idea of including suppliers in this and getting them to apply their great understanding of the markets to help us to achieve those targets with the least cost.

Lord Bourne of Aberystwyth: My Lords, I thank the noble Lord, Lord Whitty, for moving the amendment, but perhaps I may turn first to the opening comments of the noble Baroness, Lady Worthington. Although I am, as she will know, her great admirer in the area of climate change, I cannot allow the allegation to go unchecked and unanswered that we are in the business of nationalising the energy supply. It shows considerable chutzpah to come up with such an argument in view of what happened at the weekend. It is far from the truth. The area is certainly highly regulated but I make no apology for that. It needs to be so.

We are committed to ensuring that the United Kingdom continues to do its part to tackle climate change in line with the Climate Change Act, which, of course, has legal backing and legal obligations. As I indicated earlier, we will respond to the progress report; as the noble Lord, Lord Deben, mentioned, we will do so by 15 October, as we do annually.

Decarbonisation remains a clear goal of the Government. Emissions from carbon intensity fell by 12% in 2014, according to the Committee on Climate Change, and we are very much wedded to that. The noble Lord, Lord Teverson, referred to the commitment of the Prime Minister and our obligations in relation to unabated coal. I agree with the noble Baroness, Lady Worthington, when she said that there is a part for all forms of energy except unabated coal. That is certainly right and I would not dissent from it. We must do this as cost effectively as possible to ensure that our energy is secure and affordable as well as low carbon, as I indicated previously.

Locking ourselves into an expensive and inflexible target for the power sector is not the way to do that. There are just too many things that we cannot predict about how the energy system will develop up to 2030. The costs of getting it wrong would be picked up by consumers for decades to come. The amendment as set out would, in effect, require the Government to introduce an additional power sector target, in the form of an obligation on electricity suppliers in England and Wales. The manifesto on which the Government were elected clearly stated that we will not support additional power sector targets.

Noble Lords will know that the subject of setting a decarbonisation target has previously been debated in this House, as has been indicated, on at least two occasions: during the passage of the Energy Act 2013 and of the Infrastructure Act 2015. I therefore know that noble Lords will be familiar with the arguments against setting a target such as this. I agree that investors want to know that we have clear, credible and affordable plans. However, the CBI has said that clarity on future financial support for low-carbon electricity will be more important in driving investment than targets. That is why we have said that we will set out totals for the levy control framework beyond 2020, providing a basis for electricity investment into the next

14 Sep 2015 : Column 1711

decade. That is why we have also said that we will set out plans in the autumn on future contract for difference allocation rounds.

For those reasons I cannot accept the amendment. I hope that the noble Lord will withdraw it.

Lord Teverson: The Minister will forgive me if I did not catch this properly, but are the Government saying that they will not undertake the clause in the Energy Act 2013that says that the Secretary of State “may”—with the presumption that the Secretary of State “would”—set a decarbonisation target for the electricity sector for 2030? Did he say that the Government will not do that?

Lord Bourne of Aberystwyth: No, my Lords. I was saying that we would not support additional power sector targets. As I understand it, that target is already in existence.

Baroness Worthington: The target is not in existence. The power was created in the Energy Act to allow the Secretary of State to set a target, but it prevents the Government setting a target until 2016. That is the only thing on the statute book. I encourage the Minister to be very precise in his wording. I will have to read back over Hansard. The expectation is that the Government will set a target, but they certainly are not required to. We would like clarity on what the intention is.

Lord Bourne of Aberystwyth: My Lords, I appreciate that point. On the clause as set out, I have made it clear that we will not come forward with this additional obligation. The manifesto is absolutely clear that there will be no power sector target. That is the position of the Government.

Lord Whitty: My Lords, if I understand that right it is very disappointing. I can understand the objection, or at least the querying by the noble Lord, Lord Deben, as to whether we need a detailed mechanism for setting carbon intensity coefficients by supply, but he argued very persuasively, and has done before, for a decarbonisation target for 2030. That is why that was written into the 2013 Act and why there was an expectation and general indication from the Minister’s predecessors that there would be a target set in 2016, but only in the context of the carbon budget, which they are obliged by the Climate Change Act to come forward with. I did not accept that argument, but I understood it in terms of the timing. There was some considerable debate about that during the passage of the 2013 Act.

It is very disappointing, not only to us in this House but to the various industry operators, including the supply companies, that there seems to be an abandonment of that commitment in what the Minister has interpreted from the Conservative Party manifesto. As I well know, manifestos are pretty flexible things. I hope that he can consult with his colleagues as to whether it actually meant that, or whether there was some more room—

Lord Teverson: I am not quite sure how to ask the noble Lord, Lord Whitty, this, but having read the Conservative manifesto many times and having it

14 Sep 2015 : Column 1712

on my iPad on iBooks, I have not seen this obligation not to have a target anywhere in it. Has he?

Lord Whitty: My Lords, I am not quite such a conscientious and diligent reader of the manifestos of various parties—even my own—as the noble Lord, Lord Teverson. The best thing we can ask the Minister to do is to go back and talk to his colleagues—whether it was in the manifesto or not—about whether they are definitely now not going ahead with what was allowed for in the 2013 Act. If that is the case, there are ramifications. I understand why the Minister is opposed to the mechanism proposed in the amendment. I would have thought that having set the 2030 target for decarbonisation would be a useful addition to the armoury, as the Committee on Climate Change and the noble Lord, Lord Deben, advocated. If the Minister feels that that would be too much interference in the market mechanisms, I understand that. It would still be up to the supply companies how they met that obligation and what kind of technologies and contracts they entered into. The market is still operating there. I understand and accept that the Minister is not prepared to go along with that.

Lord Bourne of Aberystwyth: To be helpful, in view of the fact that there is a degree of uncertainty about what the manifesto says specifically—not least with me—I am happy to go back and have a look at it. We can come back to it on Report to ensure that I have understood the position correctly. I undertake to do that and we can pick it up on Report if that is helpful.

Lord Whitty: My Lords, that was very generous of the Minister. I thank him very much, as I think the Committee will as a whole. Before I withdraw the amendment, on something that the Minister said on markets and nationalisation, when the then Energy Bill 2013 first came before us, the noble Lord’s colleague, the noble Lord, Lord Lawson of Blaby, described it as “Gosplan”. There is something in that. There is nothing from any element in the Labour Party that goes as far as that. I beg to ask leave to withdraw the amendment.

Amendment 35A withdrawn.

Amendment 35B

Moved by Baroness Worthington

35B: After Clause 60, insert the following new Clause—

“Statement on costs of non-compliance with EU renewable target

Within six months of the passing of this Act, the Secretary of State shall report to Parliament on the estimated cost to the taxpayer should the United Kingdom not comply with the 2020 EU renewable target.”

Baroness Worthington: My Lords, that was an interesting debate. It has slightly changed the context for the next two amendments, if that does indeed transpire. We look forward to getting clarity on this. It hinges on the word “new”. In fact, so much of the Bill hinges on the word “new”, because it was a manifesto commitment to have no new subsidies for onshore

14 Sep 2015 : Column 1713

wind, which could have been interpreted in lots of different ways. I think there was a manifesto commitment that there will be no new targets. We need to start to understand how the Government use that word.

As I have mentioned, Amendment 35B seeks to make up for one of the biggest holes in the impact assessment, which is to consider the implications of this new change of policy. Indeed, when we come on to talk about the last amendment, our concern about the transition to the contracts for difference regime is that this will have an impact on the taxpayer that is not yet being monetised, described or communicated by the Government.

Amendment 35B would simply require:

“Within six months of the passing of this Act, the Secretary of State shall report to Parliament on the estimated cost … should the United Kingdom not comply with the 2020 EU renewable target”.

Of course, the wording is not written in a way that it should be in a final version. However, it is an appropriate moment to raise the point that it is not the case that we can simply change our policies without due concern and reference to the implications if we were then to miss our EU requirements. As I have said in previous debates, there would be two implications. First, we would be forced to purchase renewables certificates from other countries. Let us just think about that for a second. That would mean us sending our money to other countries to purchase their investments, which would make them have more jobs and supply chains, and help them to decarbonise. We would be spending our hard-earned cash on their development of a very successful renewables industry. That does not seem like sensible policy to me, but that is what would happen if we decided simply to buy our way out of this target in the mistaken idea that this would somehow be better value for money for the Government. I would like to hear from the Minister whether there is any truth in the speculation we have seen in the media that that is one of the Government’s ideas—that they would be prepared to buy their way to compliance in terms of the targets, and what that would cost us. Secondly, we may be fined if we are in non-compliance. I would like clarity from the Minister on what the penalty regime looks like if we fail to meet our EU renewables target.

7.30 pm

I am sure that the Minister will lead off with his often-stated, confident assertion that we are on track to meet our target. Let us just look at the numbers, shall we? We have a 20% renewables target overall across all energy, which translates into a 30% target for renewable electricity and, I believe, there is a 12% renewable heat target, and therefore a 10% renewables target. There is no breakdown of those targets at a European level into those sub-sectors: it is simply an all-energy target, and there is no further subdivision into technology types. That is purely a rod of the department’s own making. The department and the Government have chosen to subdivide and subdivide until we all have little pockets of so-called allocations of CFDs and subsidies that they are seeking to manage into a perfect solution in 2020 when we hit our targets.

14 Sep 2015 : Column 1714

It all looks rather statist, I have to say, but that is the current system. You can see it writ large throughout the impact assessment. The thing that has most attention devoted to it is these subdivisions of subdivisions into how much onshore wind we think we might need. From my experience of working inside and outside the Civil Service, that makes me nervous. If there is one thing I have learned, it is that it is incredibly hard to predict the right way forward in terms of technologies. It worries me when I see documents emerging from the Civil Service seeking to predict and provide a very detailed plan—I hesitate to say “Gosplan”—of how our electricity system will look in 2020. It will almost certainly be wrong.

How are we doing in relation to the divisions of the targets that we have? As has been mentioned, we were at just under 20% of electricity from renewables in 2014, so you could argue that we are on track to hit our 30% by 2020, although there should be no complacency as there is still quite a hill to climb to deliver another 10% in only five years. As has been pointed out, there is something of a time lag in all these technologies. If you take your foot off the gas now, get it wrong or destabilise the sector, you may find that you will have to make up a lot of ground in a very short time towards the end of this decade.

Unfortunately, we are not doing quite so well as regards heat, and in 2013 we hit only 2.8% of the target. As I say, we are trying to hit a target of 12% for heat, so a quadrupling over the next five years looks like quite a challenge. From everything that I have heard about how the renewable heat incentive is going, things are picking up, but we have significant underspend of the budget that has been made available for the RHI. I find it very difficult to get any clarity on what exactly the Government’s policy on renewable heat is going forward. I would welcome some clarity from the Minister on that.

As regards transport, we are at 4.4% of our target of 10%. Here it gets even harder for the Government to make up ground because we have a frozen renewable transport fuel obligation which stipulates that 5% of our transport fuel should come from renewable sources. There has been no sign of whether that 5% cap will be alleviated. If policy on that is not changed, and we do not see a return to the escalator in that policy, we will be at merely 4.4% or lower, depending on whether anyone stays in a business that is essentially contracting in size.

What are the implications of missing our targets? The very helpful and excellent report by PWC, Investment in Renewable Electricity,Heat and Transport, contains some very interesting charts. If we read across and assume that we stay at 3% for heat and 4% for surface transport—I hope that we will not stay at 3% or 4% respectively, but that is where we are at the moment—the implication is that, to meet our target overall, we will need to see in the region of 50% to 52% of electricity being renewable to comply overall, or we will purchase a significant volume of certificates from other countries, or we will face a fine. Let us be generous and say that we can double our heat figure to 6% and perhaps inch up to 5% or 6% for transport. However, we would still require 45% of electricity to come from renewables. Therefore, we cannot say that the Government are

14 Sep 2015 : Column 1715

comfortably on track to meet their targets—far from it. Now is not the time for complacency, to destabilise the industry or to introduce capricious changes in policy without consultation. The Minister can say that this point was in the Conservative manifesto, but a manifesto is a manifesto—nothing more. These Houses are here to keep a Government in check and to scrutinise proposals. These proposals lack detail, have not been thought through and are not fit to leave this House in the way that they arrived or to receive Royal Assent in anything like the shape in which we see them now.

We believe that we need more information on the amendment we are discussing. I have sympathy with the noble and learned Lord, Lord Wallace, who I think suggested that we should ask for a redrafted impact assessment. I will certainly go away and talk to others about whether that could be progressed, and what the process for that might be. However, in the absence of information, this amendment is tabled to ask the Government at least to start to consider the implications of the reality of the situation—namely, we are not on track to meet our EU targets, and that will come at a price.

Lord Bourne of Aberystwyth: My Lords, I thank the noble Baroness, Lady Worthington, for moving this amendment. She is right: we are continuing to make progress towards the 2020 renewables target of 15% of final energy consumption from renewable sources. The provisional figure released on 25 June showed 6.3% of final energy consumption for 2013 and 2014 came from renewable sources, against a target level of 5.4%. The Government set out their plan to meet the target in 2010. We are on track to meet the next interim milestone. In fact, as I say, the provisional figure indicates that we are ahead of it. We have a clear plan for meeting the target. I wish to say something about the specific areas of heat and transport which the noble Baroness mentioned, where there certainly are challenges. First, in relation to heat, under existing schemes the Government have supported almost 33,000 homes and 10,000 businesses, schools, farms and other organisations with new renewable heating systems. That is on top of the generation of 3.4 terawatt hours of eligible heat—enough to heat the equivalent of more than 225,000 United Kingdom homes for a year.

On transport, the Government are investing more than £500 million over the next five years in making ultra-low emission vehicles more accessible to families and businesses across the country. I think our record on this bears comparison with other EU countries, and across government departments we are putting in a lot of effort on this. As noble Lords will appreciate, the lead department on ultra-low emission vehicles is the Department for Transport but the Department of Energy and Climate Change is, of course, represented in that process and we are pushing forward with it.

We have a clear plan for meeting the target and already have many reporting requirements. I cannot accept the amendment and I hope that the noble Baroness will withdraw it.

Baroness Worthington: My Lords, I am grateful to the noble Lord for his response although I do not believe that it adequately addressed the points that

14 Sep 2015 : Column 1716

I raised, particularly on vehicles and fuel which are obviously two separate things when it comes to energy. We can have as many zero-carbon vehicles as we like but if they are powered by electricity that is generated at 400 grams per kilowatt hour, that is not a solution. Equally, it is true that the escalator is frozen. I heard nothing about whether or not that will be lifted in order for us to hit the 10% figure. I hope the Minister will write to me giving a detailed response to the points that I made. I do not believe that I got the detail I sought.

Lord Bourne of Aberystwyth: I will certainly write to the noble Baroness on those points.

Baroness Worthington: I thank the Minister. On the basis that we will continue this discussion and I will be in touch on the impact assessment and the absence of detail within it, I am happy to withdraw the amendment at this stage.

Amendment 35B withdrawn.

Amendment 35C

Moved by Baroness Worthington

35C: After Clause 60, insert the following new Clause—

“Contracts for Difference

After section 13(3) of the Energy Act 2013 insert—

“(3A) An allocation round must be held no less than annually in each year in which the UK is not on target to meet the 2020 EU renewable energy target.””

Baroness Worthington: My Lords, Amendment 35C would insert a new clause after Clause 60 to require that an allocation round should be held for the CFD—contracts for difference—process at least annually for each year that the UK is not on target to meet the 2020 EU renewable energy target. As is evident from the previous debate, there is some debate about how we measure that, but we still have to make quite a bit of investment to get to our targets, and we must ensure that we have a policy framework that is fit for purpose to enable that investment to be made.

In the Energy Act 2013, we undertook to transition from the renewables obligation to contracts for difference. There was cross-party support for the idea that contracts for difference would be a material improvement: they would give greater certainty for investors and enable us to move to a technology-neutral auctioning system, which would allow costs to come down. On that basis, the Energy Act received cross-party support and Royal Assent. However, things have changed; as has been pointed out, the Government have changed. Maybe we should not be surprised about what the Government are now doing but that certainly does not mean that we should agree with it. I feel that there is quite a degree of concern across the different parts of the House about the Government’s current trajectory.

We have been told that there will be a statement on whether there will be a contracts for difference round this year. My understanding is that if we were to be ready for an auction in the autumn, we should have already made announcements, so I would specifically

14 Sep 2015 : Column 1717

like to hear from the Minister when we will have a statement on contracts for difference allocation rounds this year and what the likely date for the next round is. Here, we get to the nub of the interpretation of the word “new” and, indeed, of the word “subsidy”. If the Government are going to stick to interpreting their manifesto commitment to mean that no new subsidies for onshore wind includes contracts for difference, we need to know that now, or sooner rather than later, because it will have huge implications. State aid clearance was gained for the contracts for difference system, but that was worded in such a way as to encourage the Government to move to technology-neutral auctions as soon as possible. It would be highly problematic if the Government ruled out one of the least costly forms of renewable energy from the CFD system; the European agreement to give it state aid clearance would need to be looked at again if there were to be such a substantial change. That would cause delay across the piece. Nobody wants to see yet more uncertainty introduced into this picture, and it worries me greatly that we are going to hear in the autumn that there will be no contracts for difference for onshore wind from now on. If that is so, we need to hear about it sooner rather than later. Onshore wind should continue to be considered, alongside all the other technologies, in those hopefully technology-neutral auctions and we should move towards that as soon as possible.

We need to see onshore wind continue within the CFD process, not least because there is possibly a misunderstanding that onshore wind will continue to keep producing for ever more once it is put into the ground. In fact, that is not the case. The commercial reality is that, once you have a wind farm, you are quite able to upgrade it: you can use the existing footfall and the existing site but then upgrade either the nacelle or the entire turbine to get more power out from the same land area. These sorts of recommissioning projects could be completely ruled out if onshore wind renewables do not survive into a contract for difference regime. That risks around 1.5 gigawatts that is currently being generated from onshore wind coming offline by 2025, with no ability to repower. For that reason alone, we need to see some clarity about the role of onshore wind in the CFD regime going forward. However, it is not just the repowering; there are definitely options for continuing cost-effective deployment of onshore wind in those communities that are happy to accept it.

7.45 pm

I will end by taking a step back and looking at this part of the Bill in the context of the Bill as a whole. In previous discussions about the Oil and Gas Authority, we talked about costs and the fact that we are now moving into a phase where decommissioning costs will be rising in the North Sea. I just wanted to draw the Committee’s attention to the fact that, perhaps with very few people realising it, we have introduced a system of contracts for difference for decommissioning costs in the North Sea. We have done that by moving from Finance Bill tax breaks as the way in which decommissioning costs were being paid back to the industry, to contract law. It is all set out in the HMRC tax code. Knowing that the Government can be at

14 Sep 2015 : Column 1718

times capricious and that Finance Bills do change things quickly and with little consultation, the oil and gas sector has cleverly asked for contracts for difference for its decommissioning costs, so that it is insulated against government suddenly changing its mind. Isn’t that good?

Here we have a fossil fuel-based industry that has successfully engineered itself to have contracts for difference for decommissioning costs—which does not give you very much in the way of future capacity but simply takes capacity away that was once there. Here we have a complete lack of clarity and certainty over whether there will be any contracts for difference for low-carbon power. A couple of months before Paris, and that is the Government’s Energy Bill. I could say more, but I do not think I will. This Bill needs some serious revision. I look forward to coming back after Recess, and to the comments now from the Minister, but I am hoping that the Bill will be significantly improved by the time it leaves this House at least.

Lord Bourne of Aberystwyth: My Lords, I thank the noble Baroness, Lady Worthington, for moving this amendment. She will know that, as I indicated by my letter of 6 September, we are looking at decommissioning on Report, so there may be an opportunity to look at some of the specific points that she raises then. I am certainly happy to do that.

In relation to Amendment 35C, I acknowledge that it is important that developers and investors have some foresight as to the frequency of contracts for difference allocation rounds. However, this must be balanced with the levy control framework budget available, which, as noble Lords know, is funded by a levy on consumer bills. The United Kingdom continues to make progress towards the renewables target, but the interaction of those two is important.

Committing to annual contracts for difference allocations rounds, even only in certain circumstances, would inhibit the Government’s ability to respond to evidence on levels of deployment in renewable electricity generation, costs to consumers and opportunities in other sectors. That said, as the noble Baroness rightly said, we are committed to a statement in the autumn, so that decisions on any future allocations of contracts for difference will be taken in due course. On the specific point on state aid approval, we remain consistent with the contracts for difference state aid approval. If our future plans should have an impact on our state aid clearance, we would seek an early discussion with the European Commission. However, as I understand it, that is not the case at the moment.

The noble Baroness’s amendment would unnecessarily commit the Government to a course of action which would neither benefit the consumer nor provide any certainty to renewable energy generators or investors. I have indicated that I am happy for us to look at the specific point about decommissioning on Report. We are committed to our energy targets and continue to make strong progress towards meeting them. I do not know the specific date of the statement we will be making in the autumn—indeed, I do not think it has been fixed at this stage—but I hope that gives reassurance that we will be making a statement about the contracts for difference regime. Our intention is to set out plans

14 Sep 2015 : Column 1719

in the autumn in respect of the next contracts for difference allocation round, but we do not believe that an annual round is necessarily appropriate.

For those reasons, I am unable to accept the amendment and respectfully ask the noble Baroness, Lady Worthington, to withdraw it.

Baroness Worthington: I thank the Minister. I find it quite curious that an amendment asking for greater certainty in CFD allocations is described as creating more uncertainty yet the Minister’s statement, which contains no information at all about when we might expect another round of allocation, supposedly increases certainty. I just do not understand how that works. The autumn is arguably already upon us. I hope that the Government’s interpretation of “autumn” does not mean 31 December and that we will see the information come to us while we are still considering the Bill, in the autumn. That statement needs to be made in respect of and is highly relevant to the Bill.

I am grateful to the Minister for picking up on the point about decommissioning. However, given that we now have an extra day in which we will recommit to Grand Committee in the Moses Room, I wonder whether we could have those amendments in time for then. It will be only a matter of days before Report. If those decommissioning amendments could at least be made available for that day, it would certainly help to alleviate some of the pressure on Report. I feel that we are stacking up quite a lot of issues for Report.

Lord Bourne of Aberystwyth: On that point, I am happy to endeavour to make the amendments available. What I cannot do, and I had given due notice to Peers who participated in the debate, is undertake that they are debated on that day. That was not in the agreement we have in relation to the recommittal day. I will of course endeavour to table the amendments as soon as possible.

Baroness Worthington: Given that the Minister has been so excellent in communicating with us in Committee, I am happy to take it in good faith that he will do his very best. I am sure that will produce results and on that basis, and on the basis that we will revisit this after Recess, I am happy to withdraw my amendment.

Amendment 35C withdrawn.

Amendment 35D not moved.

Clause 61: Regulations

Amendment 36

Moved by Lord Bourne of Aberystwyth

36: Clause 61, page 33, line 14, leave out “or” and insert—

“(aa) regulations under section 27(8), or”

Amendment 36 agreed.

Clause 61, as amended, agreed.

Clauses 62 and 63 agreed.

Amendment 37 to 42 were renumbered and considered as Amendments 1A to 1F.

14 Sep 2015 : Column 1720

In the Title

Amendment 43

Moved by Lord Bourne of Aberystwyth

In the Title, line 1, after “functions;” insert “to make provision about rights to use upstream petroleum infrastructure;”

Amendment 43 agreed.

Title, as amended, agreed.

Bill reported with amendments.

House resumed.

Smoke and Carbon Monoxide Alarm (England) Regulations 2015

Link to the SI

Motion to Approve

7.53 pm

Moved by Baroness Williams of Trafford

That the draft regulations laid before the House on 16 March be approved.

Relevant documents: 1st Report from the Secondary Legislation Scrutiny Committee, 2nd Report from the Joint Committee on Statutory Instruments (Special attention drawn to the instrument)

The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Williams of Trafford) (Con): My Lords, the draft regulations will require private sector landlords, from 1 October 2015, to have at least one smoke alarm installed on every storey of their rental property which is used as living accommodation, and a carbon monoxide alarm in any room used as living accommodation where solid fuel is used. After that, the landlord must make sure that the alarms are in working order at the start of each new tenancy. The regulations have been brought before this House because the Government want to increase the safety of private sector tenants. Setting a minimum standard for the testing and installation of smoke and carbon monoxide alarms will reduce the risks that tenants face from fire and carbon monoxide poisoning in the home. We estimate that the new regulations will save 26 lives and nearly 700 injuries per year.

Local authorities will be responsible for enforcing the regulations. An authority will be required to issue a remedial notice to a landlord if they have reasonable grounds to believe that they are in breach. If the landlord fails to comply with the notice the local housing authority must, if the occupier consents, arrange the necessary action to ensure that the property is compliant. The local authority can also levy a civil penalty charge of up to £5,000 on the landlord. The levying of a penalty by a local authority is a last resort in the enforcement process. The landlord will have 28 days to achieve compliance where a remedial notice is served. If they comply within that period, no fine can be levied. The regulations aim to save lives and not catch landlords out.

14 Sep 2015 : Column 1721

I want to respond to concerns about a lack of publicity to make landlords aware of the regulations coming into force. The report by the Secondary Legislation Scrutiny Committee asked the department to raise awareness of the new draft regulations in good time for the planned commencement date of 1 October 2015. We have done this. The regulations were announced in two departmental press releases in March, giving more than six months’ notice before the planned commencement date. A comprehensive awareness campaign about the regulations, co-ordinated by the Chief Fire Officers Association, also ran from May to July and is estimated to have reached more than 8 million people. All 46 fire and rescue authorities raised awareness of free alarms available for distribution to landlords through various methods such as press releases, information on their websites and social media.

The department also published two explanatory booklets, one for landlords and one for local authorities, on the GOV.UK website on 4 September to provide helpful information to landlords in understanding and complying with the regulations. Nothing new is introduced; the requirements of the draft regulations are simply explained. I acknowledge that the timing of the parliamentary debates means that there is a short period between scrutiny and the regulations coming into force but the debates as scheduled are the earliest allowed by the parliamentary timetable.

Successive Governments and local fire and rescue authorities have made extensive use of non-regulatory approaches to increase the uptake of smoke alarms, including a series of highly effective public campaigns, such as “Fire Kills”, and home fire safety checks. I would add here that the “Alarms4Life” campaign stated the date as being in October. However, private rented sector tenants remain less likely to be protected by a working smoke alarm than any other tenants. The department has also piloted alternatives to regulative approaches to increase the installation of carbon monoxide alarms. However, there are still high-risk properties without these alarms installed.

The majority of landlords act responsibly and protect their tenants with working alarms. However, a minority of private sector landlords have proved resistant to safety advice and recommended best practice. That is why the Government decided that it was necessary to introduce the draft regulations to protect the tenants of these landlords. A regulatory approach to the installation of smoke and carbon monoxide alarms was discussed as part of the Government’s discussion paper, Review of Property Conditions in the Private Rented Sector, and the majority of responses were in favour. The regulations aim to increase the safety of tenants by ensuring that they are not subject to death, poisoning or injury by a lack of smoke or carbon monoxide warning alarms. The Government have funded local fire and rescue authorities to purchase a number of alarms for free distribution to landlords, encouraging all landlords to act responsibly towards their tenants as well as helping them comply with the regulations.

At this point, perhaps I might correct a comment that I made in the previous debate on a question about Airbnb from the noble Lord, Lord Beecham. I said that the Regulatory Reform (Fire Safety) Order 2005

14 Sep 2015 : Column 1722

did not apply to Airbnb accommodation. The order applies to houses or flats where the premises are not occupied as a private dwelling; therefore, in the case of Airbnb, we consider that the order would apply during the period when paying guests are staying. I therefore apologise that that comment was misleading. I spoke to the noble Lord, Lord Beecham, earlier and I will be writing to him to clarify this in more detail. I will make arrangements to place a copy of the letter in the Library of the House, which will ensure that this correction is recorded.

The Government are committed to creating a bigger and better private rented sector. The regulations will set a new benchmark for alarm installation in private sector properties, making tenants safer and increasing property standards while still supporting good landlords by not overregulating and stifling the sector with unnecessary red tape. The regulations prove the Government’s commitment to continue improvement and create a private rented sector that works for everyone, and I commend them to the House.

8 pm

Lord Marlesford (Con): My Lords, in speaking to this statutory instrument, I first declare an interest in that I have residential properties which are let in the village that I live in in Suffolk, and the regulations will apply to them. That is in the Register of Lords’ Interests.

I got involved in this last Monday, when I suddenly realised, because I was told, that this statutory instrument was to be brought into full force on 1 October this year. I heard about it because the Government had issued a guidance note on how it would all work on 4 September, the Friday before, which was three weeks before the regulations were due to come into force. In a question and answer section, the guidance note states:

“Is there a ‘grace’ period for landlords?”

The reply is:

“If the regulations are approved, landlords are expected to be compliant from 1 October 2015 when the regulations will come into force. There will be no grace period after this date to install the required alarms”.

That is a pretty extraordinary statement considering that it was made such a short time before the regulations come into force.

My noble friend has made a lot of how everybody knew about the regulations, saying that there has been a great deal of publicity. My humble queries last Monday have produced a huge response. The British Property Federation points out that the regulations cover 4.4 million properties, but landlords are being asked to implement them in three weeks. Quite out of the blue, I received an email dated 9 September from British Gas in response to the Minister’s point about the effectiveness of the Government’s consultation. It states that,

“these Regulations are intended to come into force on the 1st October, without a grace period and with immediate effect. At British Gas, we are concerned that levels of awareness of the new regulations are currently very low, and that landlords may continue to unwittingly put their tenants’ lives at risk by not being aware of the new legislation … We recently conducted research with nearly 1,000 landlords in England through our long-term partnership with the housing charity Shelter, and found that 59% of landlords are not aware that these Regulations are due to come into force on the 1st October”.

14 Sep 2015 : Column 1723

That is pretty good evidence. As a result, there have been many applications to delay not necessarily bringing the order into force, but when it has to be complied with.

I say straight away—probably no one in the House would disagree—that we all think that the regulations are very sensible. They are needed. They should apply to all let properties—and probably, eventually, all owner-occupied properties as well. The intention is perfectly sound. I am complaining about the astonishing level of bad government in the way in which this has been put forward. It is very bad administration: Whitehall at its worst.

After I had made my comments on Monday, my noble friend very kindly invited me to see her in her department. I went with interest and expectation, but it was very unclear what the invitation was for, because she had nothing to tell me except that the Government intended to bring the regulations into force. What she said, interestingly—this was on Wednesday last week—was that she was going to lay the order that night in the Chamber. Actually, when I got back here, I found that that was not true and that the usual channels had attempted to inform her of that, but the message had not got through. That is another example which raises pretty good questions about the administration of her department—no fault of hers; I acquit her completely of that.

Then the decision was made to lay the order today. Interestingly, there was suddenly an ad hoc committee in the House of Commons, which met at 4.30 this afternoon to consider the regulations—an ad hoc committee, not a standing committee. I went along. It was very interesting. It did not take very long; the whole thing was dealt with in seven minutes, four minutes of which was taken by my honourable friend Mr Brandon Lewis, the housing Minister. I should say that Mr Lewis was kind enough to ring me over the weekend to say that he understood that I had a problem with the regulations, so I explained in some detail what it was. He undertook to consider it, which I thought was rather encouraging. Perhaps one should never be encouraged by undertakings. Anyway, he put the order forward. The Opposition spokesperson got up and said how important the regulations are, as I have just done, and how sad it was that so many people die from carbon monoxide poisoning. There was not a squeak from anyone else. Immediately, the question was put, up everybody jumped up and off they went. That was the procedure in the House of Commons.

One of our functions in this House is to see that government is properly carried out and that legislation is sound, properly thought through and brought through in such a way that it can be properly implemented. A number of questions have been raised about the regulations which I will not mention now, because it would take too long. All I say is that there is far from being happiness and agreement that the Government have run the thing properly.

I shall cite three different bodies. The British Property Federation states that the compliance date should be postponed until April 2016. The Association of Residential Letting Agents, responsible for 1.42 million properties, states:

“It is not possible to undertake this amount of work before the regulations come into force”,

14 Sep 2015 : Column 1724

and that,

“all existing tenancies should be allowed to have until 1st January 2016 to comply”.

It also raises the point, which seems to me sound, that to have to inspect on the day a new tenancy is formed is rather impractical. An organisation called Your Move said that the matter was so unclear that,

“We had mistakenly thought the legislation applied to new tenancies only”.

I may say that the CLA—of which I am a member, incidentally—thought the same, and has asked for it to apply to new tenancies from 1 October, but from 1 April 2016 for existing tenancies.

The way in which this has been handled is thoroughly unsatisfactory. It is not good government. This Government have a responsibility not just for working out the right policies but for doing so in a proper way. It is not being done in a proper way, and that is lamentable.

Lord Crickhowell (Con): My Lords, I hate having to rise to criticise my Ministers on the Front Bench, particularly the noble Baroness who is to reply to this debate. She has a well-deserved reputation for being extremely knowledgeable, not least about local government, and for dealing very well with matters. However, she has not been at her best in handling this business.

My noble friend the Minister started very eloquently this time on the way that information had been given to the fire authorities and how apparently they have rushed round the country telling tenants what they should and should not do. In the last debate in Grand Committee, I took my brief from the Secondary Legislation Scrutiny Committee and asked a number of very specific questions about the points that that committee made. The Minister did not answer one of those questions. Indeed, she did not even refer to the fact that I had made a speech at all. I had become a sort of non-person. I would gently say to her that it is usually a mistake when one of your colleagues makes a speech not to at least acknowledge he has done so, even if you are unable to give convincing answers to the questions. I was reminded earlier this evening that Lord Whitelaw always used to brief new Ministers and say, “Even if you haven’t a clue what the answer is, refer to the speech they made and then most Members will be reasonably satisfied”.

Slightly by chance later in the proceedings, partly as the result of questions from the noble Lord, Lord Beecham, on the other Benches and someone else, we were told:

“We have decided to issue new guidance in the form of explanatory booklets, one for local authorities and one for landlords. We also want to update How to Rent”.—[Official Report, 7/9/15; col. GC 177.]

How to Rent was the first of four documents referred to by the Secondary Legislation Committee, all of which it said needed revision. The situation when we met last Monday on these regulations, which launched in March and which the department had the whole summer to deal with, was that the department was going to revise and issue guidance and all these things. We are now told that it has been informing the fire

14 Sep 2015 : Column 1725

brigade, which has been rushing round telling everyone, although my noble friend Lord Marlesford suggested that that was less than entirely accurate. It does not seem that we are getting on quite as we should or that this is the way to proceed. In the course of my speech, when I was told that key stakeholders had been informed, my noble friend the Minister said:

“A key stakeholder is someone who has a stake or interest in the regulation or legislation at hand”.—[Official Report, 7/9/15; col. GC 176.]

I am not sure that that took us much further forward.

I came into the House earlier today and picked up a document I had not read before. I am not sure whether it was on the table in the Grand Committee when I came in last Monday. It is the second report of the 2015-16 Session of the Joint Committee on Statutory Instruments. In her very brief introductory speech last time, my noble friend made a reference to one of the reports of that important committee. She said that the Government would follow the recommendation that a review clause should be added to the policy. A commitment was given that a review clause would be introduced in due course. However, that was only one of five committee reports outlined in paragraphs 6.1 to 6.11 of the Joint Committee document, covering nearly three pages, which identified,

“doubtful vires, defective drafting and unexpectedly limited use of powers”.

None of those points has been dealt with at all by the Government. We come here this evening and that very important Joint Committee has not even been mentioned by the Government, except on one point. That does not seem an acceptable way to do business.

8.15 pm

My noble friend in her previous speech talked several times in terms of rogue and unscrupulous landlords, implying that anyone who did not have the right equipment in their flats and properties fitted that category. In the many years before I became a Cabinet Minister, I was a managing director of Lloyd’s insurance-broking firm, so I take a certain amount of interest in risk management. I have taken a good deal of care in the placing in three homes of the fire and other alarms in places that I think appropriate in the circumstances of those buildings. I know from having created smoke situations accidentally on at least two occasions that they work rather well. However, I have a feeling that none of them would meet the requirements of these regulations, which are very specific. Because you have not got things exactly right, that does not mean you are a rogue landlord. Rather, we are talking about someone who had not been necessarily informed of the regulations being introduced at very short notice.

My noble friend said today that the timetable was the earliest Parliament could have dealt with the matter. I cannot help observing that when the regulations were first tabled in March, no one knew that the House of Lords would be sitting in September. It is an unusual circumstance—I am glad to say, seeing the Chief Whip in his place. We do not normally sit in September; it is only because this is the beginning of a new Session and the Government want to get on with their urgent new business that we are.

14 Sep 2015 : Column 1726

Presumably what the Government would have done if we had not sat in September is to have brought forward these regulations when the House came back—probably about 11 October—and amended them to come into effect towards the end of the year. That is what they should do now in the face of a quite indefensible failure of administration by the department. It is not any good simply to say that the fire brigade has been telling everyone, when we now know that the promises given by the Government to Select Committees —important committees—have not been met or dealt with at all.

This is not the way to govern properly. I was eight years in Margaret Thatcher’s Cabinet and I can just imagine what she would have said had I been responsible in such a situation. She would have summoned me, and I can imagine the words that would have been uttered. It is no good saying that the Minister may have been badly briefed or that officials should have done this. Ministers are responsible for what goes on in their departments. It is the Government who are responsible if inadequate or inappropriate action is taken in bringing forward legislation.

I am well aware that—at this hour of the night and with a small House—if we divide, the very efficient and competent Chief Whip will summon from their offices and desks an army of Ministers and supporters of the Government. There are not many outside supporters of the Government left in the House, but they will be summoned to see the Government’s business through and therefore we will be defeated. If that is the way they get their business, they should not be satisfied in getting it that way. They should take this away and do what they would have had to do if we had not had a September sitting—bring the whole thing back and handle it properly in the autumn.

Lord Best (CB): My Lords, I declare my housing and property interests as on the register. Like everyone else, I think this is an excellent measure. We need it, it is a good thing and we need to get on with it as fast as possible. It is an awful shame that the DCLG, the front-line department here, has messed up the public relations around this—something that is well worth while and well worth having—quite badly. I have had the various missives from the British Property Federation, the CLA and others, and people are extremely angry and upset. How you can make people angry and upset about a respectable, sensible thing rather escapes me.

The timing is not as catastrophic as it may appear. I have also heard from the Chief Fire Officers Association, which has been engaged in these things for some time, that it has given out 447,000 free smoke alarms and 53,000 carbon monoxide alarms to private landlords. The association has obviously been busy—each of those is worth about £20, so there have been some goodies out there. But, more importantly, on timing, the association says in its note to me that it knows there is concern about the late introduction of these regulations, which are due to commence on 1 October. But under the process described in the draft statutory instrument, if the enforcing authority, the fire officer, becomes aware that a landlord is in breach of their duties—they will not often become aware very rapidly, I suspect—the first step is to issue a remedial notice

14 Sep 2015 : Column 1727

and allow 28 days for remedial action. However, in reality, when a tenant raises the issue with a landlord, usually the landlord will do something straightaway. If you can fix the problem for £20, not many landlords will wait around.

But if the landlord has done nothing and the 28-day period has followed the visit from a fire officer, if the fire officer finds the landlord is still in breach of the duty they can take action to ensure the alarms are fitted. Ultimately, they can impose a penalty charge, which is quite a long-winded process, I do not think it will be an emergency situation. I feel we can probably live with that one, even though it has clearly been incredibly badly handled.

I was more impressed by the British Property Federation raising the question of fire alarms in mansion blocks—blocks of flats where the regulations state that the landlord must test the alarm on the first day of a new tenancy. When someone moves in, in theory, the landlord—or more likely the agent—would test whether the alarm was working on that day. These alarms in the mansion blocks are communal alarms that ring throughout the building. If you have a block with tenants turning over quite regularly and the darn thing going off every time there is a new tenancy, bureaucracy is getting a little out of hand. Quite a lot of these alarms also ring at the fire station or the police station or both. This can all be overdone. I would like some reassurance that these regulations will not be imposed willy-nilly, across the piece, in exactly the same way for the lonely one-off house or the mansion block.

I chair the Property Ombudsman, which receives complaints from landlords as well as tenants about agents. I have talked to a couple of agents about their current experiences. Your Lordships may be interested to hear how people who are running these places feel about these matters. The agents I spoke to said that in most cases landlords are already fitting fire alarms, so this is not a big deal. They think that there will be cases where an alarm will have to be fitted on every floor in a three bed roomed house, which the landlord might not have done. They will do it. They will take the screwdriver and put in the new alarm. An agent explained to me that you want to visit your properties every six months, not every year. Some landlords and agents will go on an annual basis, but every six months is better because batteries are always running out. If a battery starts bleeping because it is getting low, tenants tend to take the battery out because it is so irritating, but that disables the system, which is not clever. The agents I spoke to believe that they can cope. This is a good measure. If only the DCLG had got its act together and put it out in a sensible way, we would all have been very happy tonight.

Earl Cathcart (Con): My Lords, I fully support what these regulations are trying to achieve. These alarms save lives. From my point of view as a landlord, I am confident that I already comply with smoke alarms and carbon monoxide alarms where properties have gas. However, I am less confident with having carbon monoxide alarms in properties in Norfolk which have no gas, although they have open fireplaces and wood burners. I always thought that alarms were

14 Sep 2015 : Column 1728

not necessary for fireplaces because when a fire is lit the air and smoke are drawn up the chimney and away. Obviously, following these regulations, I will need to fit carbon monoxide alarms there, too.

I am only too well aware of the dangers of carbon monoxide. A good friend of mine is now bringing up his nephews and nieces following the death of their parents because of carbon monoxide poisoning. They had no alarm. Also, last winter I was woken in the middle of the night in London by our carbon monoxide alarm. I jumped out of bed, turned off the gas and opened all the windows. Happily I am here to tell the tale, but it was quite scary at the time.

I support these measures, but I have three concerns about the practicalities of putting these measures in place. First, how will the Government make landlords aware of these regulations? I understand the Government have already informed local authorities, fire stations, letting agencies and various landlord associations but, disappointingly, as my noble friend Lord Marlesford said, 60% of landlords do not know of the existence of the regulations and yet they have to comply by 1 October this year.

It is a great pity that local authorities do not have a register of all landlords in their area as this would make this exercise so much easier. Last June, the noble Lord, Lord Dubs, asked an Oral Question on the private rented sector. I suggested that as all new occupants are legally obliged to complete the council tax registration form, there should be a single change to that form requiring that they give the name, address and contact details of their landlord, if appropriate. In a few years a complete list of landlords would be compiled. I raise this point again as I fully expect that when I suggested it in June it fell on stony ground. I hope this time the Minister and her department will give this suggestion serious consideration.

I go back to the question of how the Government intend to inform landlords of these regulations. For my part, nobody, not the local authority, the fire station or anybody else, has contacted me about this. I know about it only as a Member of this House.

Secondly, even if a landlord knows about these regulations, I seriously doubt that logistically it is possible for him to fit them before l October. I can imagine a landlord going to a supplier saying he would like 100 smoke alarms and 200 carbon monoxide alarms only to be told that there are only half a dozen of each in stock and that other suppliers up and down the country are in the same boat. When eventually he gets the right number of alarms, he will then need to find a professional to fit them only to be told to join the queue, which may be weeks or months long.

Thirdly, the landlord may have problems with access to his properties. Although I have keys to all my properties, I certainly would not enter without contacting the tenant first. It could take larger landlords weeks before they have access to all their properties, just to see whether those properties have the requisite number of alarms. The landlord then has to acquire the alarms and arrange for them to be fitted before he is compliant with these regulations, all before 1 October, but that could take weeks if not months.

14 Sep 2015 : Column 1729

So I fully support what the Government are trying to achieve with these regulations but I have concerns about informing landlords and the unnecessarily hasty deadline of 1 October. Why not 1 January or 1 April, for example? Regulation with excellent intentions has been spoilt by not thinking through the detail.

8.30 pm

Lord Beecham (Lab): My Lords, unlike the noble Lord, Lord Crickhowell, the Minister managed to refer to me at some length, although not too long a length, in the Grand Committee debate. Perhaps smoke got in her eyes, or maybe her ears, when the noble Lord was speaking.

While I welcome the Minister’s affirmation that Airbnb properties will be covered, I was a little puzzled by her reference to fire regulations some time before the legislation—some years before; I think she said 2005. Perhaps she could clarify that, because I do not understand how or why there should be a difference in approach under different forms of legislation for those kinds of properties. It seems sensible to have a single regime for all properties at risk that are rented out wholly or in part, but that does not seem to be the case. Airbnb properties are not within the definition of properties affected by these regulations; they may be covered, but I invite the Government to consider whether a single regime would make more sense.