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House of Lords

Monday, 19 October 2015.

Prayers—Read by the Lord Bishop of Southwark.

West Africa: Ebola


2.36 pm

Asked by Lord Giddens

To ask Her Majesty’s Government how they assess the potential challenges of economic reconstruction in West Africa following the Ebola epidemic.

The Parliamentary Under-Secretary of State, Department for International Development (Baroness Verma) (Con): My Lords, the UK has committed £54 million to kickstart the recovery in Sierra Leone, and is designing a £240 million programme to help drive sustainable economic growth. We will invest in the private sector and help to make transformative improvements in health systems and public services. We are co-ordinating with donors to ensure that the $5 billion committed towards regional recovery is delivered effectively.

Lord Giddens (Lab): My Lords, I thank the Minister for that response. I hope that all noble Lords will join me in sending warm words of support for nurse Pauline Cafferkey as she struggles for her life combating Ebola for the second time. What a tragic situation.

The Ebola epidemic has devastated the economies of the three main countries involved and destroyed their health systems. Huge investment is needed to pull them around. A good deal of this will have to come from the global community, and the IMF and the World Bank have made large promises of investment. How much of that is notional and how much is real, and how much money has actually reached the three countries affected so far?

Baroness Verma: My Lords, I join the noble Lord in wishing Pauline Cafferkey a speedy recovery. She is being remembered by all for the wonderful work she has done in Sierra Leone. On the noble Lord’s question about the pledge, it is right that we as a country should continue with our supportive work and urge other donors who have committed to the $5 billion to step up and deliver. But as the noble Lord is aware, this work is going to take time. The three countries involved have suffered quite badly, but we can rest assured that the work we are doing with the president of Sierra Leone and through our own programmes is not the short-term application of a plaster and will ensure a long and sustainable recovery.

Lord Chidgey (LD): My Lords, I share the concerns of the House regarding the hoped-for recovery of nurse Cafferkey; we recognise the sacrifice she has made in the interests of the communities we are trying

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to support. Following the Ebola health crisis, studies for the Africa All-Party Parliamentary Group, which I co-chair, confirm the importance of community ownership of health systems and local empowerment through the development of effective community health workforces, together with the resources they need to protect themselves. The letter I received from the Secretary of State this morning appears to confirm that, although the United Kingdom addressed the shortage of health workers and health resources in Sierra Leone during the crisis, a sustainable, localised solution is still needed for the future. What provision is DfID therefore actively making in its forward programming for the long-term health and development assistance at community level that is essential to stabilising and growing local economies?

Baroness Verma: My Lords, the noble Lord is right to say that we need to work at many levels. The noble Lord, Lord Giddens, asked about the work and the commitment of major investors such as the International Monetary Fund. While this work must be done at several levels, I agree that we need to work at local level with civil society and local communities to ensure that they can recognise the situation and respond. The work we have done to date shows the effort we have put in trying to reach a zero rate of Ebola cases. It is important to note that this will be an ongoing, long-term recovery. We are one of the partner countries, and we have led on this issue in Sierra Leone. We now need to ensure that, at all levels, we commit to and retain sustainable, long-term development.

Baroness Hayman (CB): My Lords, I echo what was said about the long-term health consequences for survivors of Ebola here and in the countries affected. One thing that would help economic reconstruction would be the resumption of direct flights to Freetown from this country. Will the Government urgently reconsider their position on this issue? In February of this year, I saw for myself how much co-ordination was needed in the different areas of work to help in the fight at the height of the epidemic. Exactly that sort of co-operation will be needed for the long term. Can the Minister reassure me that the processes are in place to co-ordinate and complement the different agencies and government initiatives from this country that will be there for the long term?

Baroness Verma: My Lords, initially, the noble Baroness asked about direct flights. The Government introduced a ban on direct flights to Sierra Leone when the number of cases increased rapidly. We continue to keep the situation under review but, ultimately, the safety of the British public has to be at the heart of any decision on the resumption of flights. On greater collaboration, we are working closely with the President on his recovery strategy, and with other agencies on the ground.

Baroness Jenkin of Kennington (Con): My Lords, does my noble friend agree that it is important to learn lessons from this experience and that a greater focus on community mobilisation should be a key resource in controlling future outbreaks?

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Baroness Verma: My Lords, we are learning lessons. We recognised that, initially, responses were slow but we are working very closely with organisations such as the World Health Organization so that we learn the lessons and can respond quickly—globally and internationally—and that the people on the ground and local communities can also respond quickly.

Baroness Kinnock of Holyhead (Lab): My Lords, does the Minister agree that women have been disproportionately affected by the Ebola crisis? They, of course, are the care givers, farmers, birth attenders, nurses and laundry workers. As a result, 60% of those who have died from Ebola in Sierra Leone, Guinea and Liberia have been women. What precisely are our Government doing to ensure that support for women is central to our efforts to help restore the protection of people from Ebola?

Baroness Verma: My Lords, the noble Baroness is absolutely right that the impact on women has been adversely greater socially and economically as a result of the crisis. Addressing the inequalities faced by women and girls will be central to our programming—from basic services to education and livelihoods. However, there is a lot of work to be done and, of course, we will work collaboratively with agencies on the ground to ensure that that happens.

Mental Health Services


2.44 pm

Asked by Lord Patel of Bradford

To ask Her Majesty’s Government how they will improve mental health services, as outlined during Prime Minister’s Questions on 16 September (HC Deb, col 1039).

The Parliamentary Under-Secretary of State, Department of Health (Lord Prior of Brampton): My Lords, the Government are committed to putting mental health on a par with physical health. We invested more than £120 million to introduce the first waiting times standards for mental health services from April 2015. We have expanded access to psychological therapies. Our crisis care concordat has ensured that we have halved the number of cases of people going through a mental health crisis being held in police cells.

Lord Patel of Bradford (Lab): The Minister gave three significant areas of development. First, on the investment to introduce the first waiting times standards for mental health services from April 2015, will the Minister say what the results of the waiting times standards have been in the first quarter, from April to June? Secondly, he mentioned the expansion of IAPT services, but as I understand it there is no ring-fencing for IAPT services. What evidence and assurance can

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the Minister provide that these services are being provided across the country, especially for children and young people?

Finally, the Minister mentioned the excellent crisis care concordat, which says that we have halved the number of people in crisis being held in a police station. He will be aware that just this June the CQC report said that people in mental health crises, even those who are suicidal, are not getting the care that they need in emergency situations. What assurances and steps are the Government taking to deliver care to those people in an emergency situation?

Lord Prior of Brampton: My Lords, very briefly on those three points, we will have the waiting time results for IAPT tomorrow. I will publish them in the Library and write to the noble Lord. On the ring-fencing point, the IAPT part of the £150 million extra spending on CAMHS is not ring-fenced, but the £150 million is in total. We will wait to see the results on how effective the IAPT spending is before we come to a final decision on how much should be spent on IAPT and on other parts of the care budget. On the noble Lord’s third point, the CQC published its report, Right Here, Right Now, some six months ago. It found that things were getting better, but there was still far too much variation. By using that report and encouraging local crisis care concordat teams, we hope to address that variation.

Baroness Tyler of Enfield (LD): My Lords, given the current paucity of mental health services in meeting rising demand, will the Minister say what steps the Government are taking to ensure that money earmarked for mental health services is spent on mental health by clinical commissioning groups?

Lord Prior of Brampton: It is too early. I cannot give the noble Baroness specific figures for last year’s spending, but we believe that they will show an increase of some £300 million over the year before. We have made it very clear to NHS England in the mandate that we expect spending on mental health services to increase this year and that every CCG in the country will see a real-terms increase in mental health spending compared with the previous year.

Lord Winston (Lab): My Lords, we are very grateful that money is being spent on waiting times, but will the Minister be kind enough to comment on a particular situation that occurred just a few weeks ago? The husband of a colleague of mine had a severe manic episode and was in a hospital casualty department for the best part of the day and the whole night, most of the time not being seen. He waited for two days before a bed could be found, not at that hospital, nor at his local mental hospital. Eventually, a bed was found some distance away. Does the Minister feel that that is satisfactory?

Lord Prior of Brampton: The noble Lord makes a very good point. It is totally unsatisfactory that beds are not available for people suffering a severe mental health crisis. However, looking at the research done by the noble Lord, Lord Crisp, it is not the number of

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beds that is a problem, but the use of the beds we currently have. Far too many people still in in-patient beds could be treated outside. The answer is not more beds, but using the beds we have more effectively. I completely agree with the noble Lord. What he described I have seen myself. It is totally unsatisfactory.

Baroness Fookes (Con): My Lords, will my noble friend look very closely at mental health provision in prisons, where a disproportionate number of people have mental health problems? This is a matter of many years’ standing.

Lord Prior of Brampton: The noble Baroness makes a very strong point that people with mental health problems who are in prison should be entitled to exactly the same care as people who are not in prison, and the extent to which that is not the case should be addressed. It is an issue that I will certainly take up outside the House.

The Earl of Sandwich (CB): My Lords, I am sure the Minister knows about the ill effects of many very common prescribed drugs, which can contribute to mental illness. I have experience of that in my own family. However, is he also aware that there are no significant government services for those mental health patients? Will he follow the lead of the BMA, which is preparing a document right now on that subject?

Lord Prior of Brampton: I am not aware of the report being prepared by the BMA but I will certainly be very interested in seeing it, reading it and discussing it with it.

Lord Bradley (Lab): My Lords, I declare my health interests. Although I welcome the ban on the use of police cells as places of safety for children under Section 136 of the Mental Health Act by July 2016, barely nine months away, does the Minister believe that the £50 million investment in health-based places of safety will be sufficient to achieve a similar ban on the use of police cells for adults and significantly reduce the thousands of adults who end up in accident and emergency departments each year under Section 136 at a time of severe mental crisis?

Lord Prior of Brampton: The noble Lord makes a very good point. Treating people in the right place is fundamental to any notion that we have of parity of esteem. He recognises the successful work that has been done with children, which we are hoping to replicate with adults. As part of the increased spending on mental health, we are also investing £30 million in liaison services in A&E departments, which is very important. A&E departments are not an appropriate place for people with a severe mental health crisis. Certainly, the evidence from Right Here, Right Now, by the CQC, indicates that people with such a condition are often treated extremely badly in A&E departments.

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Social Care and Support: Funding


2.52 pm

Asked by Baroness Wheeler

To ask Her Majesty’s Government what actions they propose to take to address the concerns about the availability of social care and support funding expressed in the joint statement Spending Review 2015: a representation from across the care and support sector.

The Parliamentary Under-Secretary of State, Department of Health (Lord Prior of Brampton) (Con): My Lords, social care is a priority for this Government, which is why we have established the better care fund to join up health and social care. We recognise that there are pressures on the system and we welcome the joint spending review representations from the care and support sector in helping us to understand these fully. The representations from the sector will help inform spending review decisions. The review will be announced on 25 November.

Baroness Wheeler (Lab): I thank the Minister for his response. I emphasise that this very stark submission to government represents the collective view on the deepening social care crisis from care providers, commissioners and national organisations from across the private, public and voluntary sectors. While understanding that the Minister will not pre-empt the spending review, will he at least reassure the House that, in making the very welcome decision to introduce the national living wage from April next year, the Chancellor fully recognises the estimated additional £2.3 billion cost of this for the social care sector? Does he honestly expect councils to be able to meet this cost if the scale of cuts made over the last five years continues into the future and the Government fail to provide any substantial extra funds?

Lord Prior of Brampton: As regards the position of the social care sector, “fragile” is putting it kindly. It is very difficult; there is no point making any bones about that. The increase in the living wage, which is long overdue and very welcome, will add to pressures on the sector. It was made very clear in the Five Year Forward View that the future of the healthcare system is very much tied up with the future of the social care sector. The noble Baroness can be assured that we have brought that to the attention of the Treasury and we are waiting for a favourable result in November.

Baroness Brinton (LD): My Lords, the social care sector is in a perfect storm, with councils having faced a 30% cut in their social care budgets as well as the increase in the national living wage which—much as it is welcomed—it is estimated will cost an extra £1 billion. I ask the Minister once again: will the Government commit to spending the extra £6 billion that they are saving by not implementing Dilnot and ring-fence that money to support the social care sector through this very difficult time?

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Lord Prior of Brampton: I thank the noble Baroness for those comments. I do not recognise the size of the cut to which she alluded. The figures that I have seen indicate that in cash terms it has been broadly neutral over the last four years, representing a real-terms cut of probably more like 10%. However, I think we are cavilling over numbers here because I agree with her broader comments about the state of the social care sector. We have, indeed, noted the savings gained from the delay in implementing the Dilnot proposals, which have been brought to the attention of the Treasury.

Baroness Pitkeathley (Lab): My Lords, while I recognise the Minister’s concern about the spending review, does he accept that the lack of proper provision of social care has a very profound effect on the rest of the economy? I offer as evidence a family carer to whom I spoke last week. She is a single mother. She looks after her mother, who has Alzheimer’s, and a son with severe learning difficulties. She has been doing so for many years. She has been receiving two afternoons a week of respite care for the son and gets one day of daycare for the mother. This rather minimal provision has just about enabled her to cope. Both those services have now been withdrawn. I fear that she will have a breakdown because she is so distressed and under pressure. If she does, all three of those people will be a charge on the state. Will the Minister explain how that makes any kind of economic sense?

Lord Prior of Brampton: There is no doubt that what the noble Baroness says is true: the impact on other parts of the economy will be significant. It is also true that the impact on the healthcare system of reduced resources in social care will have an effect, which is why we are developing the better care fund and why we believe that more of the health and social care budgets should be pooled and used as one. Again, that is an integral part of the five-year forward view. At the risk of being boring, I am afraid that I will repeat myself: we will have to wait until the end of November before we know what the financial settlement is.

Lord Wills (Lab): My Lords, in view of the undoubted stringency of the forthcoming spending review, and all the pressures on social budgets we have just heard about, what words of comfort can the Minister give that care leavers, who are already an extremely disadvantaged group, will not be further disadvantaged as a result of all these financial pressures?

Lord Prior of Brampton: I think that the only word of comfort I can give is that in the long run we will have a well-funded social care sector and a well-funded NHS only if we have a successful and productive economy, and we will have a successful and productive economy only if we can get government borrowing back to where it needs to be and so can begin to eliminate the government deficit.

Lord Foulkes of Cumnock (Lab): My Lords, does the Minister not realise that he is not just a disinterested observer in this matter? He has admitted a 10% reduction,

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he has said that the sector is “fragile”, and then he says that we have to wait until the settlement in November. What are he and his colleagues doing about saying to the Treasury, “This is a fragile sector. This is a sector that needs more money. This is a sector that is alarming many, many Members of the House of Lords”, and getting those messages over to the Government?

Lord Prior of Brampton: What we are saying is that we have to fundamentally transform the health and social care sector so that it is fit for the kinds of patients living in today’s society, not those living in, frankly, 1948.

Baroness Howarth of Breckland (CB): My Lords, it seems an extraordinarily unreal situation—the present circumstances that people find themselves in. Day after day, as the noble Baroness, Lady Pitkeathley, pointed out, we hear about people having their hours cut, people finding that they no longer have carers and local authorities having huge cuts in their budgets. What is the Government’s plan if we do not get the settlement that we need from the spending review?

Lord Prior of Brampton: I am afraid that I can only repeat what I said earlier: our plan is for health and social care to become more integrated and for more budgets to be pooled, and that by doing so we can transform the care we deliver to the very vulnerable people in our society.

National Minimum Wage


2.58 pm

Asked by Lord Haskel

To ask Her Majesty’s Government what assessment they have made of the financial impact on British business of the new minimum wage when it comes into effect in 2016.

The Earl of Courtown (Con): My Lords, the Government believe that the new national living wage is affordable, given the strength of the UK economy and labour market. We created 2 million jobs in the last Parliament and the OBR has forecast another 1.1 million by 2020. The Low Pay Commission will continue to play a critical role in setting the path for the national living wage to achieve a rate of 60% of median earnings by 2020, as recommended by Professor Sir George Bain.

Lord Haskel (Lab): My Lords, while welcoming the increase in the minimum wage, noble Lords will notice that the increase is much greater than the usual rise that results from rigorous and careful analysis by the Low Pay Commission, which studies the different regions and the different sectors of industry. What studies have the Government done as to the effect on jobs and the economy of their proposed increase,

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or are we witnessing yet another example of the Government’s irresponsible politicisation of pay and the minimum wage?

The Earl of Courtown: My Lords, the whole policy of this Government is to create the right environment for businesses to succeed and to create more jobs. In the previous Parliament, the main rate of corporation tax was cut from 28% to 20%. In this Parliament, the Government will go further and cut the rate of corporation tax to 19% in 2017 and 18% in 2020. These cuts will benefit over 1 million businesses. They will save businesses £6.6 billion by 2021 and give the UK the lowest rate of corporation tax in the G20, supporting investment, productivity and growth.

Lord Stoneham of Droxford (LD): According to the Institute of Fiscal Studies, those in work, on benefits and receiving tax credits will receive only 25% compensation through the advanced minimum wage, assuming that they keep their jobs. What advice are the Government giving to these hard-working families on how they should cope with this cut in their standard of living?

The Earl of Courtown: My Lords, the noble Lord is only too well aware of the issue, since he was part of the party that joined us in coalition in the previous Government that reduced claimants of tax credits from nine out of 10 families to six out of 10 families. The fact is that we are doubling free childcare for working parents—we are giving 30 hours of free childcare—and we are also introducing tax-free childcare from 2017.

Baroness Wheatcroft (Con): My Lords, one of the perverse effects of tax credits was to encourage people to work only part-time. As the Minister pointed out, this economy has created a remarkable number of jobs. Is it not a fact that many of those who will be suffering if their tax credits are cut will be encouraged and helped to find full-time work?

The Earl of Courtown: My noble friend makes some good points. Recent employment figures show the greatest number of people ever in work. We have more young people in work and we have more women in work.

Lord Morris of Handsworth (Lab): My Lords, the new minimum wage, as well as the living wage, is causing some confusion in industry, given that one is statutory while the other is advisory. Will the Government consider asking the Low Pay Commission to lead a discussion to ensure that a new social living wage emerges?

The Earl of Courtown: My Lords, the noble Lord mentions both the national minimum wage and the national living wage. The adult rate of the national minimum wage, as the noble Lord is no doubt aware, increased by 3%—the biggest real increase since 2006. The noble Lord also mentioned the national living wage. This becomes statutory from 2016.

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The Lord Bishop of St Albans: My Lords, while welcoming the Government’s moves to look at the level of wages as the Minister has mentioned in terms of the minimum living wage, I am aware that the Resolution Foundation is concerned about very small businesses—those that employ fewer than 10 people. Its research indicates that this is likely to add roughly 1.5% to wage bills. What are Her Majesty’s Government doing to mitigate those effects—for example, by cutting red tape and by offering extra assistance to boost productivity—so that we can look forward with confidence to the Government’s wishes being delivered?

The Earl of Courtown: My Lords, we are continuing to look at all matters that affect small and medium-sized enterprises. As I understand the current situation, national insurance contributions are being cut for those that employ four people or fewer.

Lord Stevenson of Balmacara (Lab): Will the Minister join me in condemning the actions of the employer of 14 cleaners working at the Foreign and Commonwealth Office, who appear to be facing disciplinary action because they had the temerity to write a letter of congratulation to the Foreign Secretary on his reappointment and mention in it their rates of pay?

The Earl of Courtown: My Lords, a good lesson to learn is always to check the newspapers before you come to the Dispatch Box. The Foreign and Commonwealth Office is in the process of vacating the Old Admiralty Building, which has reduced the number of cleaning staff required. The department has not taken any disciplinary measures against any cleaning staff. Our contractor Interserve has assured us that no one has been made redundant as a result of a letter asking for an increase in pay. From April 2016, all Interserve staff will benefit from the new mandatory national living wage.

Lord Forsyth of Drumlean (Con): My Lords, on the subject of reading the newspapers, has my noble friend read the excellent article in today’s Telegraph by Boris Johnson, in which he says that, as a result of a decision in Europe, employers are going to have to pay for travelling time from the moment people leave for their place of work? Can this possibly be true? Can it also be true that Ministers are not in a position to do anything about that?

The Earl of Courtown: My Lords, I am afraid I did not read the Mayor of London’s article in the Daily Telegraph. However, I can tell my noble friend from my own experience of employing people in an SME that we did pay people for their travelling time to and from work.

Baroness Farrington of Ribbleton (Lab): Is it not the case that many carers need to be paid for their travelling time? The dismissive attitude about this being another European gimmick is appalling for those people.

The Earl of Courtown: My Lords, the noble Baroness raises a question of social care. The overall costs of providing social care and the travelling issue are being

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considered as part of the spending review. We are working with the social care sector, including with care providers from the voluntary sector, to understand how the introduction of a national living wage will affect them.

Energy Bill [HL]

Order of Consideration Motion

3.07 pm

Moved by Lord Bourne of Aberystwyth

That the amendments for the Report stage be marshalled and considered in the following order:

Clauses 1 and 2, Schedule, Clauses 3 to 69, Title.

Motion agreed.

Energy Bill [HL]

Bill Main Page

Report (1st Day)

3.07 pm

Relevant documents: 6th and 7th Reports from the Delegated Powers Committee

Clause 2: Transfer of functions to the OGA

Amendment 1

Moved by Lord Bourne of Aberystwyth

1: Clause 2, page 2, line 19, leave out paragraph (c) and insert—

“( ) for anything done by or in relation to a Minister of the Crown in connection with any functions transferred to be treated as done, or to be continued, by or in relation to the OGA, and

( ) about the continuation of legal proceedings.”

The Parliamentary Under-Secretary of State, Department of Energy and Climate Change and Wales Office (Lord Bourne of Aberystwyth) (Con): My Lords, before I speak to the government amendments to this part of the Bill, I thank noble Lords and others for their valuable contributions to the Bill.

Climate change is a threat to the environment, to our security and to our economic prosperity, and we are determined to tackle it. The Government will decarbonise the economy and will do so cost-effectively. A global deal is the only way both to deliver the scale of action required and to drive down the costs of climate action, so Paris this December is the opportunity to open up new avenues for low-carbon industries. The Government’s energy priorities are clear: keeping bills as low as possible for families and businesses; and powering the economy while decarbonising in the most cost-effective way.

Today, we are discussing amendments to the part of the Bill dealing with the Oil and Gas Authority. The United Kingdom oil and gas industry is of national importance and makes a substantial contribution to

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the United Kingdom’s economy, energy security and employment. This is compatible with our climate change targets. The 2011 carbon plan noted that Britain will still need significant oil and gas supplies while we decarbonise our economy and transition to a low-carbon economy. Any oil and gas that we do not produce ourselves has to be imported, resulting in additional transport costs and emissions. Maximising recovery, in terms of increasing both the levels and efficiency of production of the United Kingdom’s oil and gas, will help maintain security of supply as well as boost growth and jobs.

I was pleased to host a meeting in the House a couple of weeks ago with the noble Baroness, Lady Worthington, and the noble Lords, Lord Oxburgh and Lord Howell, to talk about the Oil and Gas Authority and its role in relation to carbon storage. We were joined by Professor Stuart Hazeldine of the University of Edinburgh and Andy Samuel, chief executive of the Oil and Gas Authority. This was an informative and useful discussion. Professor Hazeldine’s immense knowledge of carbon capture and storage was clear, and it was also clear that Andy Samuel, his team at the Oil and Gas Authority and the industry have CCS very much in mind as they plan for the future. Indeed, Andy Samuel committed that CCS will feature across the Oil and Gas Authority’s sector strategies.

There is a developing consensus on how the OGA will contribute to carbon capture and storage. I hope that we can continue this engagement and that through a collective effort we can drive this technology towards commercial implementation. We shall come on to talk about carbon capture and storage later today.

The Bill is consistent with the Government’s aims on climate change. We are committed to meeting our target to reduce greenhouse gas emissions by at least 80% by 2050, and it will be a priority for this Government to achieve an ambitious global deal on climate change. Once again, I thank noble Lords and others who have contributed to the Bill so far, and I look forward to a good debate today.

I now speak specifically to the first group of government amendments, which make provision for the transfer of staff and property to the Oil and Gas Authority and amend the schedule to the Bill in respect of the MER UK strategy and decommissioning. Amendment 1 amends Clause 2, which relates to the transfer of functions to the OGA, so that it is clear that regulations may make provision so that anything done by or in relation to a Minister in connection with any functions transferred is to be treated as done by the OGA. Because Amendment 3 confers on the Secretary of State the power to make the transfer scheme for the transfer of property rights and liabilities, the amendment makes the power in Clause 2 consistent with the transfer scheme power. It also makes provision so that it is clear that regulations made by the Secretary of State which are consequential on the transfer of functions may include provision for the continuation of legal proceedings. This mirrors the provision contained in the transfer scheme for property rights and liabilities.

Amendment 2 ensures that the definitions used in Clause 2 also apply to the new clause inserted by Amendment 3. Amendment 3 introduces a power for the Secretary of State to create transfer schemes enabling

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the transfer of property rights and liabilities from the Department of Energy and Climate Change to the OGA. This will enable property, including intellectual property, to be transferred to the OGA. It will also enable rights and liabilities under contracts to be transferred to the OGA. This is a standard provision where a new body is being established to which functions of the Secretary of State will be transferred. The transfer scheme will not cover the transfer of statutory functions from the Secretary of State to the OGA or functions under petroleum licences, for example. These functions will be transferred by way of regulations under Clause 2.

Amendment 4 introduces a general power for the Secretary of State to create transfer schemes to enable the transfer of staff from the Department of Energy and Climate Change to the OGA. As a result of the transfer of functions, civil servants currently employed by the OGA as an executive agency of DECC performing the relevant functions will be required, unless they object, to transfer along with those functions to the government company. We are committed to protecting staff conditions, and the transfer schemes will therefore ensure the same or similar protection to that afforded by the TUPE regulations. OGA management will work closely with the relevant unions and keep staff informed as the transfer schemes are developed. These transfer schemes will ensure that the OGA has the necessary skilled and experienced staff to perform its functions as an independent regulator. In addition to transferring existing staff, the OGA is conducting an extensive external recruitment campaign to ensure that the organisation has the right level of skills and expertise to perform its role as a more robust and proactive regulator.

Amendment 5 is to enable a scheme made by the Secretary of State for the transfer of property rights and liabilities or staff to the OGA to be modified, subject to the agreement of the person or persons affected. It also ensures that certain incidental, supplementary, consequential, transitory and transitional provision can be made in those schemes. This is a standard provision to be included in a power to make transfer schemes of this nature. It ensures that transfer schemes may be modified—for instance, where particular members of staff leave all new contracts are entered into in the transitional period. It also clarifies that the schemes may be detailed and make provision specific to individual cases, such as staff members with specialist allowances or the details of particular IT or property contracts.

3.15 pm

Amendment 6 will allow civil servants who transfer to the OGA continued access to either the Principal Civil Service Pension Scheme or the new alpha pension scheme, which was introduced in April 2015 and, in some cases, both schemes, depending on the date when they joined the Civil Service and their anticipated date of retirement. This is part of our commitment to ensuring that staff retain their current terms and conditions on transfer to the OGA. The amendment will also ensure that non-civil servants recruited by the OGA have access to the alpha scheme in future, which will avoid having a two-tier workforce, whereby new

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joiners work alongside existing employees but with different pension benefits, with a view to encouraging recruitment of staff to the OGA.

Amendments 8 and 9 amend the schedule to the Bill, reinstating the obligation on the Secretary of State to act in accordance with the strategy to maximise economic recovery of UK petroleum when exercising her functions under Part 4 of the Petroleum Act 1998, which sets out provisions on the abandonment of petroleum infrastructure, in so far as they relate to the reduction of costs, and slightly tweak the scope of those obligations. Section 9B(b) of the Petroleum Act 1998 currently imposes a duty on the Secretary of State to act in accordance with the strategy when exercising functions under Part 4 to the extent that they concern reduction of the costs of decommissioning. However, paragraph 3 of the schedule to the Bill as introduced amends Section 9B so that the duty is transferred to the OGA on Royal Assent.

It is of vital importance that all parties to the decommissioning process, including the Secretary of State and the OGA, act in accordance with the strategy when carrying out their respective roles. As such, to ensure that the Secretary of State remains under an obligation to act in accordance with the strategy, Amendment 9 introduces a new section which reimposes the duties with minor modifications. These amendments also slightly modify the duty that will be transferred to the OGA under Section 9B(b) to ensure that the OGA’s duty to act in accordance with the strategy when exercising its new functions under Part 4 is not limited to the reduction of costs but will include all the aspects of its new functions under the revised Part 4. I beg to move.

Lord O’Neill of Clackmannan (Lab): My Lords, perhaps the Minister could tell the House why the provisions in these amendments, which all seem to be worthy and sensible, were not included in the original wording of the Bill. That would have saved us a great deal of time, because I do not think that any of us are going to complain about any of them. Equally, the additional information should have been taken account of when the Bill was drafted. I do not want to take any more time, because I am accusing the Government of wasting our time by doing this now when we could have had these provisions in the Bill at First Reading.

Lord Foulkes of Cumnock (Lab): My Lords, my noble friend makes a very important and relevant point. This illustrates a great feature of this Bill, which is that we are having foisted on us all sorts of detail at short notice and at the last minute. As my noble friend said, this kind of thing should have been included in the original Bill. If it is true, as the Government claim, that they had planned this and that it is all included in their manifesto—that they had thought a lot about it and they knew exactly what they were up to—it ought to have been included in the original Bill. It is clear that they did not know what they were up to. We found this the other day when the Bill was recommitted, when we looked at pages and pages of detail that were foisted on us at the last minute. As I understand it, we still do not know some of the amendments that we are

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going to be discussing and approving, or otherwise, in two days’ time—major amendments with huge implications.

The Minister took a little bit of umbrage in Committee, but I do not blame the Minister personally. I would say he is piggy in the middle, except that we must not use that kind of expression anymore; he is the meat in the sandwich—you know what I mean—and is getting squeezed. He is between the devil and the deep blue sea—I am trying to think of metaphors that do not bring in animals. We are rightly demanding more details and advance notice; the industry, even more so, should know well in advance exactly what the Government’s intentions are. It is really quite unacceptable that such important things are dealt with at short notice on Report. No doubt even more will come in at a later stage in the other place.

That raises the question of why the Bill was commenced in the House of Lords. My understanding is that only non-contentious Bills are dealt with first in the House of Lords, but this is one of the most contentious Bills that has been considered for some time as a House of Lords starter. An unfortunate result is that we are having so much debate and discussion at this early stage. The Bill has to go to the House of Commons where, no doubt particularly in relation to things that affect Scotland, there will be some even more acrimonious debate and amendments will be proposed, and then the Bill will come back to us. This is really going about it in a cack-handed way.

In relation to staff who are being transferred, what happens to those who are required to move as part of the new arrangements? How many will be asked to move from one part of the United Kingdom to another? Will there be any? Will there be many? It is very important that we should know that. If there are some, we should know exactly how they are being treated and whether they will be helped with their removals from one area to another and be given other assistance in relation to that. For example, if they are moved from a rural area in the United Kingdom to London, their expenses will be far greater. If they are moved from England to Scotland, there are important implications in relation to the differences between provisions in one part of this United Kingdom and the other. It would be very helpful if the Minister in his reply can indicate the situation with regard to staff moving between different parts of the United Kingdom.

Lord Howell of Guildford (Con): My Lords, I fully understand why these amendments are necessary, because we are dealing with the setting-up of a gigantic and very important new authority. The usual problems of pensions and the transfer of staff are major administrative problems and inevitably they always require some adjustment and amendments in legislation.

We are dealing with a rapidly changing world situation and national situation. At this moment, thousands of people are being laid off in the North Sea and North Sea-related firms. The industry is under immense pressure. It has even been described as one of the worst crises facing the North Sea industry since the high days of the 1970s, 1980s and 1990s. Are any of the amendments

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relevant to this enormously changing scene? What account is being taken, even while we are taking this Bill through Parliament, of the immense blows inflicted on the North Sea by the prospect of far lower oil prices for a long time to come combined with many other difficulties? A newspaper yesterday said:

“North Sea oil producers face a perfect storm”.

There are difficulties and challenges that they have never had to face before. Over the years, costs have been allowed to rise, and suddenly revenues have collapsed. Will the Minister explain what, if any, changes in the Government’s mind were triggered by the fact that we are dealing with a situation that has totally changed since the Bill was first printed and which, if any, of these amendments relate to that? That would be very helpful.

Baroness Liddell of Coatdyke (Lab): My Lords, it seems to be “Kick the Minister” time, but I do not particularly want to do that, since I know how he feels—I once had to take through a utility Bill that ended up with 1,000 amendments. However, I think everyone would acknowledge that this Bill has been a bit of a dog’s breakfast.

Further to the points made by the noble Lord, Lord Howell, the uncertainty facing the North Sea oil and gas industry is considerable at the moment, and there is speculation about perhaps another 10,000 jobs being marked to disappear. I ask the Minister to get some indication of certainty about what is going to happen about the OGA. We cannot go on with this miasma of uncertainty, with changes to amendments and perhaps even further amendments going through to the House of Commons, at a time when there is such a feverish atmosphere around the North Sea.

While I am on the issue of uncertainty, is the Minister aware of the comments by Professor Jacqueline McGlade from the United Nations this morning about the impact of uncertainty on those who are investing? She was talking primarily about the renewables industry, but it also has an impact on oil and gas, particularly in relation to decommissioning.

Lord Teverson (LD): My Lords, I echo the comments by the noble Lords, Lord O’Neill and Lord Foulkes, surrounding the tsunami of amendments that we have had to the Bill so far, with more to come on Wednesday, with very little notice indeed. That makes it very difficult for this House to do what it sees as its core activity in this sort of legislation.

I have no issue at all with the managerial nature of the amendments, but I echo the comments by the noble Baroness, Lady Liddell. While I agree wholeheartedly with the Minister that the key factor here is that we should be able to continue to benefit from our own oil rather than import it, which is important with regard to both energy security and the environment, I hesitate more and more as we go through these energy conversations when it comes to the Minister’s and the Government’s confidence about our ability to meet our own climate change targets, which we all passed into law with the Climate Change Act with cross-party agreement in this House and the other place, and which we all still say we support.

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We are far from being able to be confident about achieving those targets a few years hence, let alone by 2050. We have to look at all these debates on Report as part of that challenge, whether it is from the United Nations special scientific advisers or from our own Committee on Climate Change. The writing is on the wall that we are moving in the wrong direction, and I think that we should take this concern very seriously.

Baroness Worthington (Lab): My Lords, I am grateful to the Minister for his introductory comments. As we start the first day of Report on the Bill, it is welcome to hear from the Government a reiteration of their commitment to action on climate change and to decarbonising the UK economy.

I add my voice to those of noble Lords who have spoken ahead of me in reflecting on the way in which the Bill has been conducted. I am probably not alone in not having had much of a weekend; I am sure that the Minister has had similar issues to deal with. I take these issues incredibly seriously, as people know, and it makes me genuinely unsettled and discomfited to know that I am not able to do the best job that I can because of the timescales that we are working under. I think that many noble Lords share that feeling. As I have said before at the Dispatch Box, we are where we are—but it could have been so different.

In these opening comments on Report, I want to reflect on the question of why we are making such haste. Why is such an important body as the OGA being created in such a piecemeal way, with amendments coming forward and new issues arising in a very febrile and fast-changing environment? There seems to be no time for the Government to take stock and review. It is because the timing of the Bill is not about the major portion of it, which is the OGA, but Clause 66 which closes the RO a year early. It was closing anyway in 2017, so we are in rather a rush to make that deadline in order for this not to be a complete waste of our parliamentary time. That is why we are racing through. That is why we have not had enough pre-legislative scrutiny and why there are so many fundamental issues that have not been properly addressed in Committee. That is why we are facing an inundation of amendments now. It is a very regrettable situation and one that I personally take very seriously, as I am sure the Minister does, too. I only wish that perhaps people in other parts of the Government took this issue as seriously as those who are represented here today, because it is not good enough.

3.30 pm

Turning to the amendments that we have begun to discuss under the first grouping, we should remind ourselves that Clause 1 of this Bill begins by creating a limited company that shall be named the Oil and Gas Authority. The words that are used in relation to the OGA often describe it as a regulator or a body that is there to do a job for government, yet when you look at its legal structure it is a private company in which there is only one shareholder—the Government. That is a very odd structure for a regulator. A private limited company with one shareholder is not—to my knowledge—the usual way to set up a regulator whose

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job is not simply to disburse funds but to engage in activities on behalf of the department to oversee a very complex and rapidly changing environment in the North Sea. That is where my disquiet really resides. It is not clear what this body is being set up to do: nor is it clear why the Government have chosen this particular legal structure.

This is illustrated by Amendment 6, one of the amendments that the Minister has tabled today. Here we are being asked to agree that the staff of this body should have access to Civil Service pensions and compensation packages. I will just reread part of Clause 1(2), which states that,

“the Oil and Gas Authority is not to be regarded as acting on behalf of the Crown, and … its members, officers and staff are not to be regarded as Crown servants”—

because of course this is a limited private company with one shareholder. The Minister alluded to the fact that this is a body that will be going out to recruit new members of staff and will be hoping to attract the best in industry. What will the remuneration packages be for those staff? If this body is not to be seen as a representative of the Crown and its staff are not Crown servants, is it free to set whatever remuneration packages it wishes or will it be governed by the remuneration packages of civil servants? In government Amendment 6, however, we are being told that despite not representing the Crown or being civil servants, staff will have access to the pension schemes—which seems to reopen the idea that maybe it is in fact a regulator that is seen as an arm of the Government.

I suspect that the answer to my disquiet and questions is all to do with how the Treasury is currently overseeing its budget spend commitments and that the desire is that this should be off balance sheet and therefore that the expenditure or costs or activities will not be counted towards government spending. I am asking the Minister: what is the rationale for this legal structure and what will the status of the staff be? It certainly cannot be the case that on the one hand you are allowed to offer private sector salaries to attract the best in the industry while on the other you are also able to offer Civil Service pension provisions.

We will get on to the primary objective of the OGA a little later, in the fourth group, but my fundamental concern is that it is not at all clear why this body is being established, or that it is fit for purpose. The amendments in this group appear on the surface to be rather administrative yet they touch on a very real issue: is this a regulator? Should it be considered as a non-departmental public body or is it, in fact, a body that is being created with the potential to be privatised and sold off in the future? That would lead to a very different discussion and to a whole host of other concerns being raised by noble Lords scrutinising this legislation.

The Minister might say, “That is mere speculation, and why would the Government seek to set something up in public statute and then privatise it?”. I simply remind Members of the House that we have had exactly that situation with the Green Investment Bank, and this week we will see amendments brought forward which will mean that the Green Investment Bank will be changed by primary legislation so that it can be

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privatised. Therefore it is not too much of a conspiracy theory to think about the future of the OGA and where it might be going and to ask the Minister to give us complete reassurance that this is intended to be a regulator and to remain something of which the Government have oversight, and that the single share that they own will not be diluted nor sold to the private sector. I would like to hear that reassurance from the Minister today.

Lord Bourne of Aberystwyth: My Lords, I thank noble Lords for their contributions. I will try to deal with the issues that have been raised. First, it is true that the Government have tabled many of the amendments before us, but I would argue that the most of them, certainly in this group, are technical. The nature of business means that some House of Lords legislation has to start in this place, and we should rejoice in that rather than think it should not happen. The noble Lord, Lord Foulkes, seemed to suggest that a lot of what we are looking at today regarding the Oil and Gas Authority is controversial. I do not agree, but I accept that some of the stuff we will look at on Wednesday is more controversial.

I take the points made by the noble Lords, Lord O’Neill, Lord Foulkes and Lord Teverson, and the noble Baroness, Lady Liddell. It is true that we have brought forward amendments, but it has to be said that this is a complex area and we are setting up a pretty substantial body. In seeking to allay the fears of the noble Baroness, Lady Worthington, I hope she will accept that I have no part in any conspiracy, and if this were not setting up a regulator, I would be very concerned. The first time I heard the word “privatisation” mentioned was by the noble Baroness, so I hope that she will accept that there is no such intention at all.

Baroness Worthington: The last time this legal form was used to create an agency was when the Highways Agency was created, and at the time numerous articles stated that this was a very convenient way to allow a future Government to privatise it. Therefore, there has been a previous discussion about this form of legal construct and this issue has been raised in that context. In addition, it is true that in the current form there would be nothing to stop the Government privatising without returning to Parliament to seek its approval.

Lord Bourne of Aberystwyth: I hope the noble Baroness will accept that that is not the intention. She also asked if there were other precedents. There are: the Prudential Regulation Authority is an example of a limited company that is a regulator.

Let me deal with some of the specific points that were raised. First, I reassure the noble Lord, Lord Foulkes, that I certainly did not take umbrage last week. I pointed out that, as was the case, I had been asked to seek an extra day in Committee and had been unable to get another day in Committee in the House. I offered a recommittal in the Moses Room to opposition parties, Cross-Bench Peers and Peers on my own side

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and had only one objection, from the noble Lord. I hope he will accept that. However, I certainly did not take umbrage.

My noble friend Lord Howell mentioned the immense pressure and the changing position. That is certainly true, but it underlines the importance of managing to secure this legislation, and the prime objective of maximising economic returns from the North Sea is very much in the interests of all parts of the United Kingdom and in the interests of decarbonisation. Therefore, I am not sure that I accept the underlying thesis of one or two contributions from noble Lords—that there is no urgency about this legislation. It is important, and there is an urgency attached to it. I accept the point about investment certainty and we have that very much in mind, as well as the need to ensure that we have a consensus at least on this part of the legislation. That would be of great importance for the industry, for our decarbonisation plans and for securing the best economic return from the North Sea.

I was asked about issues relating to the contracts of employment and whether these people would be civil servants. To address some points made by the noble Baroness, Lady Worthington, and the noble Lord, Lord Foulkes, many people will be transferred from the government service and it is entirely right that they can expect to see their conditions of employment continue in the same way as previously. It is obviously the desire to ensure that we have a scheme analogous to TUPE. I believe that they are also entitled to the same pension arrangements, and that is why these pension arrangements are in place. I do not know of any cases of employees who will be required to move. I think it is unlikely because the people who will be transferred will be in London and Aberdeen—the great bulk of them in Aberdeen. If any are to be moved, I will ensure that the noble Lord gets a response, copied to other Peers, but I suspect that it will be on the existing terms, because that is the aim with the transfer of staff.

On future staff, we felt it right that there should be only one set of pension arrangements, which is why the current arrangements will continue. Of course, there will be the freedom to operate them so that the OGA can recruit as it sees fit in the future. However, as I say, the current pension arrangements will continue so that there is not, as it were, a two-tier system going forward.

Baroness Worthington: So the Minister is happy to have a two-tier system for remuneration but not for pensions. It seems rather odd to insert a clause that carries forward many of the benefits of civil service remuneration packages for all employees—the Minister said that it could be for new employees, too—yet we are going to unlock the salary levels at the same time. This seems very imprudent.

Lord Bourne of Aberystwyth: We are setting up a separate body. The analogy the noble Baroness is pursuing is not perfect. Obviously, there are variations in salary at the moment, as there would be going into the future. The OGA will be given some operational freedom because we have set up a separate entity,

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which I think is entirely sensible. As I understand it, since the pension scheme operates on a percentage basis, that, too, would be variable. Essentially, it will be the existing one, and I think that is wholly defensible.

I believe that I have dealt with the relevant points. If I have missed any, I apologise, and I will pick them up after I have looked at the record. With that, I commend these amendments to the House.

Lord Hope of Craighead (CB): I return to the point, which I believe the noble Baroness, Lady Worthington, responded to, of an apparent inconsistency between Amendment 6, which we have just been discussing, and Clause 1(2)(b), which says that,

“members, officers and staff”,

of the Oil and Gas Authority,

“are not to be regarded as Crown servants”.

There is a difference between somebody who is a Crown servant for the purposes of the law and somebody who is being paid as a civil servant. I cannot put my finger precisely on the point, but it would be helpful to be reassured that there is no such inconsistency, which, at first sight, rather springs off the page when you read these two provisions side by side.

Lord Bourne of Aberystwyth: I thank the noble and learned Lord. It is my understanding that there is no inconsistency. We are seeking to ensure that these people are treated in an analogous way where there is a transfer of staff and that they are not, going forward, civil servants, as I understand it.

Amendment 1 agreed.

Amendment 2

Moved by Lord Bourne of Aberystwyth

2: Clause 2, page 2, line 25, after “section” insert “and section (Transfer of property, rights and liabilities to the OGA)”

Amendment 2 agreed.

Amendments 3 to 6

Moved by Lord Bourne of Aberystwyth

3: After Clause 2, insert the following new Clause—

“Transfer of property, rights and liabilities to the OGA

(1) The Secretary of State may make one or more transfer schemes transferring qualifying property, rights and liabilities of a Minister of the Crown to the OGA.

(2) A scheme made under this section may, in particular, make provision—

(a) for anything done by or in relation to a Minister of the Crown in connection with any property, rights or liabilities transferred by the scheme to be treated as done, or to be continued, by or in relation to the OGA;

(b) for references to a Minister of the Crown in any agreement (whether written or not), instrument or other document relating to property, rights or liabilities transferred by the scheme to be treated as references to the OGA;

(c) about the continuation of legal proceedings;

(d) for transferring property, rights or liabilities which could not otherwise be transferred or assigned;

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(e) for transferring property, rights or liabilities irrespective of any requirement for consent which would otherwise apply;

(f) for preventing a right of pre-emption, right of reverter, right of forfeiture, right to compensation or other similar right from arising or becoming exercisable as a result of the transfer of property, rights or liabilities;

(g) for dispensing with any formality in relation to the transfer of property, rights or liabilities by the scheme;

(h) for transferring property acquired, or rights or liabilities arising, after the scheme is made but before it takes effect;

(i) for apportioning property, rights or liabilities;

(j) for creating rights, or imposing liabilities, in connection with property, rights or liabilities transferred by the scheme;

(k) for requiring the OGA to enter into any agreement of any kind, or for a purpose, specified in or determined in accordance with the scheme.

(3) Subsection (2)(b) does not apply to references in an enactment or a relevant authorisation.

(4) In this section—

“property” includes interests of any description, and

“qualifying property, rights and liabilities” means property held, and rights and liabilities arising, in connection with functions which were functions of a Minister of the Crown and as a result of this Act have or are to become functions of the OGA, but does not include rights and liabilities relating to an individual’s employment in the civil service of the State.”

4: After Clause 2, insert the following new Clause—

“Transfer of staff to the OGA

(1) The Secretary of State may make one or more transfer schemes under which persons who hold employment in the civil service of the State become employees of the OGA (but this is subject to any provision contained in the scheme that allows a person to object to becoming an employee of the OGA).

(2) A scheme made under this section—

(a) may make provision for giving full effect for a person’s transfer into the employment of the OGA as a result of the scheme, and

(b) may (in particular) include provision that is the same as, or similar to, the provision made by the Transfer of Undertakings (Protection of Employment) Regulations 2006 (S.I. 2006/246) (whether or not those regulations would otherwise apply in relation to the transfer).”

5: After Clause 2, insert the following new Clause—

“Transfer schemes: supplementary

(1) A scheme made under section (Transfer of property, rights and liabilities to the OGA) or (Transfer of staff to the OGA) may—

(a) contain incidental, supplementary and consequential provision;

(b) make transitory or transitional provision or savings;

(c) make different provision for different purposes;

(d) make provision subject to exceptions.

(2) Subject to subsection (3), the Secretary of State may modify a scheme made under section (Transfer of property, rights and liabilities to the OGA) or (Transfer of staff to the OGA).

(3) If a transfer under the scheme has taken effect, any modification under subsection (2) that relates to the transfer may be made only with the agreement of the person (or persons) affected by the modification.

(4) A modification takes effect from such date as the Secretary of State may specify; and that date may be the date when the original scheme came into effect.”

6: After Clause 2, insert the following new Clause—

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(1) The persons to whom section 1 of the Superannuation Act 1972 (persons to or in respect of whom benefits may be provided by schemes under that section) applies are to include the employees of the OGA.

(2) Accordingly, in Schedule 1 to that Act (employment to which superannuation schemes may extend), in the list of other bodies, at the appropriate place insert—

“The Oil and Gas Authority.”

(3) The employees of the OGA are to be treated for the purposes of paragraph (1)(b) of regulation 3 of the Public Service (Civil Servants and Others) Pensions Regulations 2014 (S.I. 2014/1964) as persons—

(a) to whom the scheme established under that regulation may potentially relate by virtue of paragraph (2) of that regulation, and

(b) in respect of whom the Minister for the Civil Service has made a determination under section 25(5) of the Public Service Pensions Act 2013.

(4) The OGA must pay to the Minister for the Civil Service, at such times as the Minister may direct, such sums as the Minister may determine in respect of any increase attributable to this section in the sums payable out of money provided by Parliament under the Superannuation Act 1972 and the Public Service Pensions Act 2013.”

Amendments 3 to 6 agreed.

3.45 pm

The Schedule: Transfer of functions to the OGA

Amendment 7

Moved by Lord Bourne of Aberystwyth

7: The Schedule, page 41, line 4, at end insert—

“Energy Act 1976

A1 The Energy Act 1976 is amended as follows.

A2 (1) Section 12 (disposal of gas by flaring, etc) is amended as follows.

(2) After subsection (2) insert—

“(2A) Disposal of gas by flaring, or by releasing it unignited into the atmosphere, does not require consent under this section if consent—

(a) is required under section 12A (disposal of gas by flaring etc: OGA’s functions), or

(b) would be required under that section but for subsection (3) of that section.”

(3) At the end of the heading insert “: Secretary of State’s functions”.

A3 After section 12 insert—

“12A Disposal of gas by flaring, etc: OGA’s functions

(1) The OGA’s consent is required for natural gas to be disposed of (whether at source or elsewhere)—

(a) by flaring, or by releasing it unignited into the atmosphere, from anything that for the purposes of section 82(1) of the Energy Act 2011 is a relevant oil processing facility or a relevant gas processing facility, or

(b) by releasing it unignited into the atmosphere in connection with activities carried out under a licence granted under—

(i) section 3 of the Petroleum Act 1998, or

(ii) section 2 of the Petroleum (Production) Act 1934.

(2) This section applies to all natural gas of the United Kingdom, whether obtained there or in territorial waters, or in areas designated under the Continental Shelf Act 1964, except gas conveyed through pipes to premises by a gas transporter within the meaning of Part 1 of the Gas Act 1986.

(3) Disposal of gas does not require consent under this section if—

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(a) it is necessary in order to reduce or avoid the risk of injury to any person,

(b) the risk could not reasonably have been foreseen in time to reduce or avoid it otherwise than by means of the disposal, and

(c) it was not reasonably practicable to obtain consent under this section in the time available.

(4) A person who disposes of gas in cases where the consent of the OGA would have been required but for subsection (3) must inform the OGA of that disposal as soon as practicable after the disposal takes place.

(5) The OGA’s consent under this section—

(a) may be given only by reference to particular cases, and

(b) may be made subject to conditions which may, in particular, be framed by reference to the description or origin of the gas, or the quantities to be disposed of.

12B Sanctions for failure to comply with section 12A

(1) The requirements imposed by subsections (1) and (4) of section 12A are to be treated for the purposes of Chapter 5 of Part 2 of the Energy Act 2016 (power of the OGA to impose sanctions) as petroleum-related requirements.

(2) But the OGA may not give an enforcement notice, a revocation notice or an operator removal notice under that Chapter by virtue of this section.”

A4 (1) Section 18 (administration, enforcement and offences) is amended as follows.

(2) In subsection (2)(a), for “9 and 12” substitute “9, 12 and 12A”.

(3) In subsection (3)—

(a) in paragraph (a), for “9 or 12” substitute “9, 12 or 12A”, and

(b) in paragraph (b), after “Secretary of State” insert “or the OGA”.

A5 In section 21 (interpretation), after the definition of “natural gas” insert—

““the OGA” means the Oil and Gas Authority;”.”

Lord Bourne of Aberystwyth: My Lords, I now turn to Amendments 7 and 22, which relate to further functions to be transferred to the Oil and Gas Authority.

The Energy Act 1976 contains important provisions relating to the giving of a consent for the flaring and venting of gas. Consent will be given by the OGA, rather than the Secretary of State for Energy and Climate Change, for the flaring or venting of gas by a relevant oil or gas processing facility within the meaning of Section 82(1) of the Energy Act 2011. The holder of a petroleum production licence will have to obtain the consent of the OGA rather than the Secretary of State to vent gas. Consent to the flaring of gas under a petroleum production licence is not covered by that provision, as it will be sought under the licence from the relevant licensing authority. The matters for which consent must be sought from the OGA are set out in proposed new Section 12A of the Energy Act 1976, which is introduced by Amendment 7.

In bringing these functions within the regulatory remit of the OGA, the amendments make provision to ensure that the OGA can issue a financial penalty notice for a failure to comply with requirements to seek consent before disposing of natural gas by flaring and venting. A financial penalty notice may also be issued where a person has failed to inform the OGA of the disposal of natural gas by flaring or venting where

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it was not possible to obtain the consent of the OGA because there was a risk of injury to a person and the relevant criteria were satisfied.

Amendment 22 would allow the OGA to charge fees for the issuing of consents in relation to the disposal of natural gas by flaring and venting. This is consistent with the “user pays” principle and is in line with Her Majesty’s Treasury’s Managing Public Money guidance. I beg to move.

Baroness Worthington: My Lords, I am grateful to the Minister for introducing these amendments. The extent to which operations across the UK can conduct flaring or venting is important, and it is clearly right that there should be an ability to issue a financial penalty if there is a failure to comply. Therefore, many of the provisions introduced here appear to make sense.

I have one question. Venting and flaring would require careful correspondence with the environmental aspects of the regulation of the North Sea, in particular, and indeed of onshore oil and gas operations. Has the Environment Agency been involved in and consulted on these amendments? How would the proposed arrangements work in relation to the requirement to include the venting and flaring of gases under the European Emissions Trading Scheme, which is administered by the Environment Agency?

Lord Bourne of Aberystwyth: My Lords, I thank the noble Baroness for her comments on these amendments, which, like me, she accepts are important in relation to fee-charging. I will have to write to her on the specific issue of whether the Environment Agency has been consulted—I would anticipate that it has—and on the related point about the European Emissions Trading Scheme. Of course, the Oil and Gas Authority would be bound, as are other institutions, by environmental law, and I anticipate that the proper liaison would therefore take place. However, as I said, perhaps I may write to her on the specific issues she raises.

Amendment 7 agreed.

Amendments 8 and 9

Moved by Lord Bourne of Aberystwyth

8: The Schedule, page 41, line 10, at end insert—

“( ) in paragraph (b), omit the words from “to the extent” to the end,”

9: The Schedule, page 41, line 14, at end insert—

“3A After section 9B insert—

“9BA Exercise of certain functions of the Secretary of State

(1) The Secretary of State must act in accordance with the current strategy or strategies when exercising the functions mentioned in subsection (2).

(2) Those functions are functions under Part 4 to the extent that they concern reduction of the costs of abandonment of offshore installations and submarine pipelines (including the reduction of such costs by means of the timing of measures proposed in abandonment programmes and by the inclusion in such programmes of provision for collaboration with other persons).””

Amendments 8 and 9 agreed.

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Clause 3: Contracting out of functions to the OGA

Amendment 10

Moved by Lord Bourne of Aberystwyth

10: Clause 3, page 3, line 11, at end insert—

“(3) The Welsh Ministers may enter into an agreement with the OGA authorising the OGA to exercise any functions of the Welsh Ministers.

(4) The reference in subsection (3) to functions does not include functions of making, confirming or approving subordinate legislation contained in a statutory instrument.

(5) An agreement under subsection (3) does not affect the responsibility of the Welsh Ministers.

(6) An agreement under subsection (3) does not prevent the Welsh Ministers from exercising a function to which the agreement relates.

(7) The Welsh Ministers must arrange for a copy of any agreement under subsection (3) to be published in such manner as the Welsh Ministers consider appropriate for bringing it to the attention of the persons who, in the Welsh Ministers’ opinion, are likely to be affected by it.”

Lord Bourne of Aberystwyth: My Lords, I will now speak to the third group of amendments, which relates to the devolved Administrations, and will start with our proposal to enable Welsh Ministers to contract out functions to the Oil and Gas Authority before turning to a technical matter on the applicability of the objective to maximise economic recovery to Northern Ireland.

Amendment 10 amends Clause 3 on the contracting out of functions to the OGA in relation to Welsh Ministers. In establishing the OGA we have been careful to keep the devolution implications in mind. The OGA currently, as an executive agency of DECC, manages the onshore oil and gas licensing regime across Great Britain. Following the recommendation of the Smith and Silk Commissions, onshore petroleum licensing is expected to be devolved to Scotland and Wales respectively. The Scotland Bill is currently being considered by Parliament and makes provision for the devolution of onshore petroleum licensing. The Government intend to publish a draft Wales Bill tomorrow.

Following engagement with the Welsh Government, I am now introducing these clauses which would enable the Welsh Ministers, should they choose, to enter into an agreement with the Oil and Gas Authority authorising them to exercise any of their functions. The aim here is to provide flexibility in the delivery of onshore oil and gas licensing functions once devolved. Equivalent provision is not being made for Scotland as Scottish Ministers are content that they may rely on the Deregulation and Contracting Out Act 1994 to achieve a similar effect.

I will, of course, continue close co-operation with the devolved Administrations on oil and gas issues in general and the implementation of the Wood review specifically. Our existing close working relationship is demonstrated through initiatives such as the PILOT group, of which the Scottish Energy Minister is a member. This aims to deliver a quicker, smarter and sustainable energy solution to secure the long-term

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future of the United Kingdom continental shelf and ensure full economic recovery of our hydrocarbon resources.

Amendments 75, 83 and 86 relate to MER United Kingdom and Northern Ireland. The Oil and Gas Authority will be formally established so that it is an effective, robust and independent regulator of the petroleum industry. The first steps in this direction were taken in the Infrastructure Act 2015, which made provision, among other things, for a strategy to maximise the economic recovery of petroleum from the United Kingdom territorial sea and the United Kingdom continental shelf. In relation to Northern Ireland, those provisions were created with a mismatch between their territorial extent and application. They apply to Northern Ireland’s territorial sea: however, they do not form part of the law of Northern Ireland. Amendment 75, therefore, amends the MER UK provisions so that they form part of the law of Northern Ireland as well as of England, Wales and Scotland, which is currently the case.

This also requires an amendment to Section 9H of the Petroleum Act 1998 so that a relevant upstream petroleum pipeline, a relevant oil processing facility or a relevant gas processing facility is included if it is situated in Great Britain, the territorial sea adjacent to Great Britain or the United Kingdom continental shelf. This is also achieved by Amendment 75.

We considered extending the third party access regime under Chapter 3 of Part 2 of the Energy Act 2011 to Northern Ireland’s territorial sea. However, this could not be done easily. This is because upstream petroleum infrastructure can be found onshore as well as offshore and the intention is for the third party access regime to be unified. We note that the onshore regime is a matter that has been transferred to Northern Ireland. However, we do not consider this to be a problem at the moment as there is currently no upstream petroleum infrastructure in Northern Ireland or the territorial sea around Northern Ireland.

Amendments 83 and 86 are consequential upon Amendment 75 and respectively ensure that Amendment 75 has the correct territorial extent and the short title of the Bill recognises this too. I beg to move.

Lord Foulkes of Cumnock: My Lords, I confess that I do not have an exact understanding of all the details in relation to this issue—I hope I will be forgiven by any Members who do, if there are any—especially in relation to the devolved Administrations which inevitably seem to complicate matters. Can the Minister answer one question in relation to fracking? What is the position of the Scottish Government in terms of permissions for and control over fracking now, and how will it change if we pass this Bill?

Baroness Worthington: My Lords, I am grateful to the Minister for presenting these amendments. I have no real questions on their detail, but I suspect that this is not the part of the Bill which has the most controversy in relation to devolution, and it is not Wales and Scotland that will be the most contentious aspects.

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However, I reiterate the question of my noble friend Lord Foulkes about fracking. If we could have an answer from the Minister, that would be welcome.

Lord Bourne of Aberystwyth: My Lords, I thank the noble Lord and the noble Baroness for their comments. On the specific question about fracking, I have to confess that I am not certain about the position, but I am endeavouring to find an answer, and perhaps I may come back to it during the course of the debate.

Lord Foulkes of Cumnock: Perhaps I may expand slightly on what I said. Fracking is generally a very controversial issue in the United Kingdom, and it has become increasingly so following the recent conference of the Scottish National Party where there was a major debate about a moratorium on fracking. It is going to be a lively issue over the next few months and I think it is important that we know exactly what the current position is before the Bill gets to the House of Commons, and whether it will make any material changes to it.

Lord Bourne of Aberystwyth: My Lords, it has now been confirmed that the Bill does not do anything in relation to fracking, but that the Scotland Bill does. So I hope that the controversy and the heated debate on fracking can be transferred to the Scotland Bill rather than to this one.

I thank the noble Baroness, Lady Worthington, for her comments on this part of the Bill. I quite agree that this is not going to be the most controversial of its aspects. We have dealt with the devolved Administrations with what I hope is sensitivity and I think that we are going forward in a united way. With that, I urge noble Lords to support these amendments.

Amendment 10 agreed.

Amendment 11

Moved by Baroness Worthington

11: After Clause 3, insert the following new Clause—

“Transportation and storage of greenhouse gases

In section 9A(1) of the Petroleum Act 1998 (the principal objective and the strategy), for “recovery of UK petroleum” substitute “return of UK petroleum, while retaining oversight of the decommissioning of oil and gas infrastructure, and securing its re-use for transportation and storage of greenhouse gases”.”

Baroness Worthington: My Lords, in moving Amendment 11 I shall speak also to Amendments 27 and 28 and to government Amendment 26, which is in this group. The Government’s Amendment 26 is a welcome concession. It is obviously a response to the debate held during the passage of the Bill where a number of noble Lords from different sides of the House raised the very important issue of whether the OGA’s powers, and indeed from my perspective its principal objectives, were fit for purpose. There was a strong sense that a review ought to be provided for in the Bill which the Government would undertake and then report back to Parliament. We are pleased to see

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that an amendment which would at least introduce a review has been tabled. I would say, however, that the review is of performance alone and not of purpose, and certainly makes no mention of a review of the primary objectives of the Bill. It is those primary objectives which are causing me the most concern. If noble Lords will bear with me, I should like to spend a little time articulating why that is, which will explain why we have brought forward Amendment 11 to change the principal objective of the OGA.

Noble Lords will be aware that the OGA was first created as a temporary executive agency under the Infrastructure Act 2015, and the intention was to implement the recommendations made by Sir Ian Wood as set out in the Wood review, which coined the phrase, “maximising economic recovery”. The eagle-eared among us will note that often when the Minister refers to MER, he actually describes it as “maximising economic return”, which is quite a significant difference. It may just be one word, but it indicates a subtle shift in focus that has happened since we received the Wood review in 2013. It has been eloquently alluded to on many occasions by the noble Lord, Lord Howell, and my noble friends Lady Liddell and Lord O’Neill, and others. There has been a significant change in the North Sea in particular since the Wood review was published and now, when we find ourselves looking at the detail of the OGA and how it will go about meeting the objectives of MER.

4 pm

I want to take some time to go back to the principal objectives as defined in law. They do not occur in this Bill but are in the Petroleum Act 1998, as amended by the Infrastructure Act. To get the full context of what we are discussing today, one has to go back through two layers of legislation to find out what the OGA is set up to do. Section 9A of the Infrastructure Act provides two objectives. The first is,

“maximising the economic recovery of UK petroleum”,

which is subdivided into,

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

That does not sound like the object of a regulator. It sounds more like the object of a company that might be seeking to invest in technical infrastructure and construction. I repeat that the legislation refers to,

“development, construction, deployment … of equipment”.

It is an interesting object for a regulator.

The second part of this section is subdivided to include,

“collaboration among the following persons”.

The word used is “collaboration”, and not regulation, dispute resolution or licensing. There is no reference to any of those in this legislation. The collaboration is among,

“holders of petroleum licences … operators under petroleum licences … owners of upstream petroleum infrastructure … persons planning and carrying out the commissioning”—

let us note that it refers only to commissioning and not decommissioning—

“of upstream petroleum infrastructure”.

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That is the collaboration that was imagined. There is no reference to people who may seek to reuse the infrastructure for carbon capture and storage or any reference, significantly, to those who might be decommissioning infrastructure.

The legislation goes on to refer to a strategy which the Secretary of State must produce and that it “may”—I repeat “may”, so there is no real lock on what has to be done in the strategy—

“relate to matters other than those mentioned in subsection (1)(a) and (b)”.

Those are the objectives of the OGA.

As I have said, that does not strike me as a very clear set of objectives or a very comprehensive set of objectives. Nor does it strike me as a set of objectives that sounds like it applies to a regulator. The objectives sound awfully like they might apply to a company that might be established to attract investment into the North Sea and to oversee the deployment of that investment—hence, my reference to privatisation in the previous debate. Although it may be the first time the Minister has heard that phrase, that is not necessarily very comforting. That is not to say that the Minister is not across his brief. Of course, he is but he is very new to his position. I suspect that if it has been talked about, that will have been not in his department but in the Treasury, which, as we know, is obsessed with making sure that overall commitment to spending is kept at an absolute minimum, and that all new bodies are kept at arm’s length and do not appear on the Government’s balance sheet. That is despite the fact that in this Bill clauses have been improved to give the OGA the ability to have grants from the Government. Indeed, the word is “grants” and not loans.

One can see why we have a concern about the primary objectives and why we have raised it in this Bill in the way that we have. This has led us to put down Amendment 11, which seeks to change those principal objectives to make them much more in line with what we now know to be the set of activities that will be undertaken by the OGA. I have no doubt that when Sir Ian Wood wrote his review in 2012-13, he had a great vision of simply needing a little government intervention to make sure that investment was happening in a logical way, which would keep the oil and gas flowing, and that some element of dispute resolution would be needed, but that by and large everything would be relatively rosy if people would just get talking to each other, and that is what led to those objectives.

However, now we know that that is not the situation in the North Sea—far from it. We have a crisis. We have people exiting and not investing. It is an economic problem, for the country as a whole and for public receipts, and a social problem. As we heard from noble Lords, people are losing their jobs. There is a great deal of uncertainty. It is not at all clear what the strategy now is in the North Sea.

We tabled Amendment 11 to change the fundamental objective of the OGA: to make it fit for purpose, comprehensive and a little bit closer to what we would expect a regulator representing the Government’s interests in the extraction of oil and gas to be interested in; and to maximise economic return from our resources, not necessarily just the economic recovery of fossil fuels.

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Amendments 27 and 28 are amendments to the Government’s Amendment 26. As I mentioned, the Government have come forward with a review of performance that we think does not get to the nub of our problem. It would be at least useful to have a review, but it is not appropriate to delay for another three years before that review reports to Parliament. It should be one year. We should have a proper review of the OGA’s fitness for purpose.

As I said in my introductory comments to the first group of amendments, this could have been so different had proper time been allocated to this very important piece of legislation. Had we had the chance to have pre-legislative scrutiny, I am sure that many of these issues would have been flushed out and we would have found ourselves with a far better Bill than the one we face today. As I say, we are where we are and we are doing what we can to encourage the Government to take another look at this—to have a proper assessment of whether this is fit for purpose for the challenges facing us now, not the challenges that Sir Ian Wood was asked to look at three years ago.

I have one question for the Minister: when was the last time he had a conversation with Sir Ian Wood? His name is often used; it is almost as if he were Moses, handing down his diktats in stone and we have been enforcing them. Has Sir Ian Wood been engaged with by the Government? What are his views on what is now happening in the North Sea? What does he think about the OGA, with the benefit of being able to see what has happened to our oil and gas infrastructure over the last 24 months?

I am afraid that the Government have no strategy for energy in this country and are out of their depth when they consider what should be done in the North Sea in particular. I am concerned that we are establishing in statute a body that simply is not fit for purpose, neither in future-proofing for the challenges of the 21st century, nor in reflecting what is happening now. I hope that the Government will give me their reassurances that they will accept the amendment, because we feel very strongly that it is an important aspect of the Bill that has been overlooked.

Lord Howell of Guildford: My Lords, although I sometimes agree very much with the words of the noble Baroness, Lady Worthington, with her enormous expertise in these fields, on this occasion I have some doubts about the amendment and what it tries to do. We all agree that the scene in the North Sea is changing very rapidly and that there is colossal uncertainty. I do not find any difficulty with the suggestion that the new authority should oversee decommissioning of oil and gas infrastructure. Frankly, there will be a lot more of that. We are already hearing of whole fields being made redundant and major problems of finance with existing operations. That the authority should have oversight of decommissioning oil and gas infrastructure seems to me merely common sense. That will happen anyway.

It is this extra bit that is added on about transportation and storage of greenhouses gases; we need to think very carefully about what we are saying. We are talking

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about very elaborate and interesting new technologies, which, if they could be developed commercially, would be a godsend, both to the global movement to reduce CO2 emissions and our contribution to it. It would allow the burning of fossil fuels, but in ways that did not emit CO2 and did not damage the climate. But this technology is not very far advanced. It is working in one or two places around the world. Billions have been spent on it, but the difficulties and sheer size of the engineering—of getting pipes into the North Sea and into the redundant oilfields, or areas where enhanced recovery will be enabled by higher pressure, delivered through the injection of CO2—is very much in the future and costs a lot of money.

What is necessary at this stage is to think clearly in terms of the possibilities for the future handling and sequestration of carbon emissions from carbon-generating activities rather than commit the authority to thinking about a particular aspect of it which may, frankly, never become a commercial reality and could impose colossal burdens on an industry in enormous difficulties. I have in mind two technologies. I defer here to the noble Lord, Lord Oxburgh, who is sitting not very far from me and is a far greater expert on the future handling of CO2. It is, of course, a very valuable gas. Indeed, an article in this morning’s papers by my noble friend Lord Ridley reminds us that, if handled correctly, CO2 has huge potential for improving the climate and our standard of living, bringing greenery to desert areas and encouraging all kinds of industries. One of the two technologies combines CO2 with CO2 already in the atmosphere, the phrase for which escapes me for the moment. It can then be turned very rapidly into carbon, which is an immensely valuable material used in many products. If we can get cheaper carbon, we can make huge advances in all sorts of materials and products and reduce the cost of those products.

The other technology, which again is still in its infancy but is very interesting, enables carbon to be sequestered and transformed into solid forms and eventually be used to produce lime-structured bricks and other building materials. All this obviates the need for pipelines and huge elaborate systems taking this material out into the North Sea into oilfields, former gas fields and other areas. Although it will not necessarily escape as it is not that kind of gas, there are problems with leakage containment in the future, all of which implies huge extra costs on somebody’s part.

I repeat that we are dealing with an industry that is at the moment, frankly, running out of money, is very short of funds and in a contractionary phase, so it would be most unwise to add this additional imposition to the objectives and activities of the authority. It would add to costs and create further uncertainty. We should concentrate on the areas that we know about. Powers exist in the Bill to alter the OGA’s objectives in practical ways according to ministerial requirement, if I am completely wrong and what is now a very remote and expensive technology, involving vast engineering and additional costs, suddenly becomes economic due to some unimagined technical breakthrough. That is always possible, and the Bill has the flexibility to allow for that. We do not need it in this amendment.

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Lord O’Neill of Clackmannan: I am very pleased to follow the noble Lord, Lord Howell, because we had a conversation some time ago about how, as a young Back-Bencher in the early 1980s, when the noble Lord was the Secretary of State for Energy, he advocated the gas-gathering pipeline, which would have been of great significance to people in my former constituency who at that time worked in Grangemouth. Much of the energy debate is about purpose, being not just retrospective but prospective, and looking at technological advance and the possibilities this offers to facilitate greater efficiencies and better exploitation of the resources we have. Therefore, it seems very strange that we have a piece of legislation recalibrating—we might say—the Oil and Gas Authority, and that one of its main purposes is to be retrospective rather than prospective. I back my noble friend on the Front Bench because I think that we would be missing a trick here if we simply imposed on this authority in its new form the business of conducting retrospective triennial reviews. A review of past performance is desirable. You could argue that in the first instance three years might be appropriate, but thereafter I think it would be far more appropriate to have annual reviews so that we would have an annual report and perhaps an annual debate.

4.15 pm

Certainly, in my days as chair of a Select Committee one of whose major responsibilities was looking at energy matters, we would have been very keen to have an annual discussion with the OGA about what it was doing and where it was going, and in preparation for such a meeting—I would not say confrontation, simply a meeting—I would have thought that the staff would carry out a review. Therefore, I think the work within the OGA probably will involve annual reviews. I am not one of those people who says that we should have them from the word go, subject to the closest scrutiny. Fledgling functions and organisations take time and sometimes mistakes are made that are not necessarily too embarrassing but you do not need to have a battle about, “We’ve got the first year wrong”. It is when you get to year three, four or five that reviews are really critical. Also, when you are dealing with reviews and you are learning lessons, you have to review not only the past performance but whether or not the authority is capable of doing the job it has been set up to do. Then matters of purpose come into play. It would be better if we were able to do that.

We have an infrastructure in the North Sea, perhaps not as logical and sophisticated as the kind that was envisaged some 30 years ago and, sadly, rejected by the then Government; nevertheless, we have this fantastic asset in the North Sea which we could be making use of in a variety of ways, which would not necessarily be only in relation to CCS. I have my misgivings about CCS. In some respects, it is beginning to become the carbon version of fusion—“It will be all right in 35 years’ time”. In fact, the experts tell us that it may be only 20 years for fusion, but one gets a little impatient with the advocates of CCS, who keep telling us it is just round the corner. I was in Australia a couple of years ago and the Australian press was confidently saying that it would be 25 years. You might

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argue the Australians have an excuse for that, given their Government’s attitude towards climate change and the influence of the coal lobby there; they are quite happy to see it in the long grass. It would be good if we could get it earlier, but to put a substantial part of our money on that particular area of activity for the OGA is a wee bit overoptimistic. Therefore, I would strike a cautionary note on that.

One of the great successes of the British economy has been our ability to harness the resources of the North Sea. It has always been difficult and because of that it has always been expensive. When the price of oil and gas is high, such investment is possible, but with the price of a barrel now being no more than $53 or $54, at least into 2016, we are talking about very high risks and therefore we need to have the best information. We need to have another voice, which can give reasonable forecasts and another opinion, not necessarily from within government but at arm’s length from government. We would be missing an opportunity were we not to take advantage of this creature we are dealing with at the moment—the OGA—and giving it better-defined functions with a greater degree of ambition, rather than the rather limited, retrospective function we are endowing it with in this clause, if we do not amend it along the lines my noble friend has suggested.

Lord Spicer (Con): I have not spoken on this subject for 25 years. I do not intend to make up for it now—in fact, my intervention will be very short. The reason that I have not spoken for 25 years is that I have been rather too close to the industry for comfort. I was a Minister for Energy in the late 1980s and took through the Electricity Bill. Subsequently I have been chairman and president of Energy UK and of the Association of Electricity Producers. I have therefore been close to the industry. It is not until now, when I have been released from those happy burdens, that I feel that I can say at least a short work about energy matters.

In the present context, two things matter to the energy industry, particularly the petroleum industry in the North Sea. They are, first, certainty and stability, particularly in government policy, and, secondly, less rather than more regulation. On the question of certainty, we have to recognise that the petroleum industry in the North Sea is very fragile. My noble friend Lord Howell has mentioned that at the moment it is also very poor. There are questions as to how many more burdens it can bear.

I was thinking about the question of certainty just now when it comes for instance to the nuclear industry. We have now got the Chinese beginning to enter the fray. My mind goes back to when I talked to the Americans about flogging off bits of our privatised nuclear industry to them and got into terrible trouble with the Prime Minister at the time, Lady Thatcher. It is slightly ironic to me that we are now talking to the Chinese about the same subject.

Be that as it may, the question of certainty is terribly important. That brings me to the amendment. The noble Baroness fears the threat of privatisation. I do not see the point of setting something up for the purpose of privatisation. We have already been told that there are probably too many players in the industry

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in the North Sea at the moment and that they are too stretched. Therefore, my suspicion is that we are talking about more regulation. I cannot understand the argument of the noble Baroness at all on this point. I hope that it is not about more regulation and that the Minister will tell me that it is not. However, I think that it has to be about regulation. That is why I agree with my noble friend Lord Howell that if, as I think, it is about more regulation we have to be fearful about whether the industry can sustain the costs, particularly in the North Sea. Therefore, I have the opposite view to the noble Baroness and I hope that my noble friend will be able to reassure me on this point.

Lord Teverson: My Lords, I was pleased to add my name to this amendment. I agree with the noble Lord, Lord Spicer, that we do not want any more regulation than we need, but I do not see this as bringing forward greater regulation.

In my business career I learned three things in particular. The first was that you should concentrate and keep your mind on your core activity. I felt a certain resonance when the oil and gas industry wrote about this amendment that actually that was the imperative thing that needed to happen because—as I know from my extended family—at the moment that industry is under threat. There is great retrenchment and difficulty, so the OGA needs to concentrate strongly on its responsibilities for the oil and gas industry.

Having said that, the second thing that I learned from practice was that you can concentrate as much as you like on the business that you are in but the most important thing is to follow the market. That is not exactly what you can do here, but what is clearly true is that the future will be about carbon capture and storage. This is a core part of government policy and all of our policy on climate change and carbon emissions. Therefore there needs to be a real future for this sector and these facilities. That is why it is important that that element is brought into this part of the Bill and will be there for the future. I take perhaps the naive example of Beeching and the railways; now down in the south-west we are trying to reopen one or two of the lines that were closed back in the 1960s. If we thought more about future uses and what happens after our actions, we might moderate and think more about decisions for the longer-term future.

The third thing I learned from business was “right first time”, which is the best thing to remember as a principle for running any organisation. It seems to me that getting it “right first time” on this issue would be to make sure that we take into consideration carbon capture and storage, and what that offers in terms of solving our climate change issues, as well as to use the facilities, the network and the vital assets that are currently in the North Sea. We need to include that in legislation now rather than in the future.

Lord Bourne of Aberystwyth: My Lords, first, I thank the noble Baroness for setting out the non-government amendments relating to this part of the Bill. Amendment 11 would replace the principal objective in Part 1A of the Petroleum Act 1998 of,

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“maximising the economic recovery of UK petroleum”,

with an objective to maximise the economic return on UK petroleum while, first, retaining oversight of the decommissioning of oil and gas infrastructure and, secondly, securing its reuse for the transportation and storage of greenhouse gases.

I understand the purpose of this amendment. Indeed, I have detailed significant positive amendments from the Government—which we will discuss more fully elsewhere—to ensure that both CCS and decommissioning are given a prominent focus in the Bill. Indeed, the amendments that I have tabled ensure that the OGA will have a strong role on decommissioning, to ensure both that costs are controlled and that reuse of assets, including for CCS development, is given full consideration before decommissioning begins. The Infrastructure Act 2015 refers to abandonment, which of course is the technical term used in the Act for decommissioning.

I hope that noble Lords will agree that the Government’s decommissioning amendments achieve the same effect as the reference to decommissioning in this amendment, rendering it unnecessary. I have tabled a large number of amendments to ensure that CCS developments will be a firm and important consideration for the Oil and Gas Authority. My noble friends Lord Howell and Lord Spicer, and others, referred to the fragile nature of the industry, and we do not want to add more costs to it. This will be particularly relevant in looking at some later amendments, but it is relevant here, too.

Bringing CCS into Clause 4 and maximising the potential synergies, as we have done with the amendments we have tabled, will be much more effective than trying to give the Oil and Gas Authority a new and separate objective on CCS. The amendments that I have tabled are meaningful, and I hope that they will be sufficient to satisfy noble Lords that Amendment 11 is not necessary. The noble Baroness suggested that the review was limited to the Oil and Gas Authority’s performance for each review period. That is not strictly true. Subsection (4) of the new clause in Amendment 26 says:

“A review must, in particular … assess how effective the OGA has been in exercising its functions, and … consider the OGA’s functions under … Part 2, and … Chapter 3 of Part 1 of the Energy Act 2008 (storage of carbon dioxide), with regard to their fitness for purpose and scope”.

Amendment 11 is therefore broader than the noble Baroness was suggesting. It would create a significant expansion of the OGA’s responsibilities, which would have consequences for the OGA and industry.

Notwithstanding the difficult challenges that the industry is facing, the recommendations of the Wood review remain as important as ever. They continue to attract strong industry support, and I have been pleased to note the continued cross-party support for them throughout the passage of the Bill. The Wood review envisaged an Oil and Gas Authority focused on maximising economic recovery, and the recommendations made by Sir Ian Wood hold that principle front and centre.

I have not spoken to Sir Ian Wood—it might be unhelpful to ask him to revisit the review and interpret it back to the House—but it is worth noting that he has chaired the interim advisory panel of the Oil and

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Gas Authority, which is looking into the functions and preparation of the authority before it achieves its enhanced status, so he is very much involved in the process.

4.30 pm

I fear that expanding that principle to cover decommissioning and carbon capture and storage specifically would create significant knock-on effects for other aspects of this Bill and the Infrastructure Act 2015, particularly the strategy to maximise economic recovery of United Kingdom petroleum. It would also have repercussions on at least the meetings-access powers and the dispute-resolution powers in the Bill by opening them up to a raft of additional industry activity. It would also cut across many of the amendments that we have tabled in relation to the information and samples powers, which I will discuss later, which clearly and specifically address CCS, rendering them of uncertain effect. I fear that by expanding the OGA’s remit to those new and significant areas of regulatory activity, we risk weakening the overall approach that the organisation can take towards supporting the industry for the short, medium and long term.

Clearly, the oil and gas industry is facing major challenges, but it is an industry which remains critical to the United Kingdom economy by satisfying just over half of the United Kingdom’s oil and gas demand and supporting approximately 350,000 jobs. We will still need significant oil and gas supplies over the next decades while we decarbonise and transition to a low-carbon economy.

The OGA’s key actions are providing urgent support to industry through developing exploration, promoting new ways of working and protecting key infrastructure in the North Sea. The reality is that, without the OGA’s focus on maximising economic recovery in the United Kingdom, we risk premature decommissioning of the United Kingdom continental shelf and loss of assets, infrastructure and skills, including those which could in time help to promote the longevity of the industry through carbon storage projects.

I believe that carbon storage is vital. I note the points made by the noble Lord, Lord O’Neill. Clearly, it is not the whole of the answer, but carbon capture and storage has been regarded across the House as of key significance. That is why I have taken away and responded to what was said at earlier stages and come up with the amendments.

Premature decommissioning creates the very real prospect that infrastructure and skills disappear from the UK continental shelf before the CCS industry is ready to take advantage of them. Maintaining the OGA’s focus on maximising economic recovery of United Kingdom petroleum and extending the lifetime of key pieces of infrastructure will therefore benefit the CCS industry.

I reiterate that I have made extensive and meaningful amendments to the Bill to incorporate a significant role for the OGA on both CCS and decommissioning. Furthermore, as has been noted, I have tabled amendments which demonstrate a firm commitment that the OGA’s powers, including those on carbon dioxide storage, will be regularly reviewed by the Secretary of State.

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Ultimately, this process of review will provide an opportunity to review the OGA’s principal objective if in future this was considered necessary.

I hope that the approach that I have set out avoids the need for this amendment, which would create a significant extension of the Oil and Gas Authority’s functions and also directly impose new and unquantified obligations on petroleum licence holders, operators and owners of upstream petroleum infrastructure. I therefore hope that the noble Baroness will be content to withdraw the amendment.

I turn to government Amendment 26, which inserts a new clause after Clause 11, requiring the Secretary of State to carry out a review of the Oil and Gas Authority’s performance and functions on an ongoing basis. As I said in Committee, it is important to put in place measures to ensure that the OGA remains well equipped to address the diverse challenges which are faced by the oil and gas industry. The amendment requires an initial review to take place no later than three years after Clause 1 comes into force and subsequent reviews every three years thereafter, although the Secretary of State will have discretion to conduct more frequent reviews if necessary and an earlier review if that is felt appropriate. A review, of course, will consider both the OGA’s effectiveness in exercising its functions and the fitness for purpose and scope of its functions under Part 2 of the Bill. Importantly, a review will also give consideration to the fitness for purpose and scope of the OGA’s powers under Chapter 3 of Part 1 of the Energy Act 2008, which sets out the OGA’s functions in respect of the storage of carbon dioxide.

Read in conjunction with the amendments to Clause 4 of the Bill, this will ensure that the OGA’s role in relation to carbon storage is given due prominence and regularly evaluated. It will also ensure that Parliament can effectively scrutinise the outcomes of any review—and, in particular, those functions relating to carbon storage. This is achieved through the requirement in subsection (5) of the clause for the Secretary of State to lay a report of the findings of the review before Parliament as soon as possible.

In tandem with the extensive amendments which I have tabled relating to the OGA’s role on CCS, I hope that noble Lords will agree that this represents a considerable step towards ensuring that an appropriate focus upon carbon storage is incorporated throughout the Oil and Gas Authority’s functions. I have tried to strike a balance in relation to the debate and the consideration that we have had here between excessive review, in terms of disrupting the activity of the Oil and Gas Authority, and, clearly, a need to review the functions, which will include CCS and decommissioning.

I now turn to non-government Amendments 27 and 28. I thank the noble Baroness for proposing them. These amendments relate to my own Amendment 26, which I have just described, and which inserts a new clause after Clause 11 of the Bill requiring the Secretary of State to carry out a review of the OGA’s performance and functions on a more frequent basis. These amendments seek to reduce the time period for carrying out a review given in subsections (2)(b) and (3)(b) respectively of government Amendment 26. The effect of Amendment 27 would be to reduce the time period

19 Oct 2015 : Column 475

within which the Secretary of State must carry out an initial review from a maximum of three years after Clause 1 of the Bill comes into force to a maximum of one year after such time. Similarly, Amendment 28 would reduce the maximum time period within which the Secretary of State must carry out subsequent reviews from three years to one year.

Although I have reiterated that the OGA’s functions should be kept under review, I believe that a mandatory requirement for a review to be repeated on a frequency of yearly—rather than the three-year period proposed in my own amendment—would be too onerous for government, the OGA and industry, and would have unintended consequences. It is a more frequent review than is generally the case; it is almost universally the case that it is not held on that frequency. The amendments as proposed would also be out of step with other regulators and risk conflicting with the OGA’s status as an independent regulator.

Let us consider the practicalities of these amendments. Each review would need to evaluate the effectiveness of the OGA’s functions, which include statutory functions within multiple pieces of legislation and non-statutory functions. It would also need to specifically consider the fitness for purpose and scope of the OGA’s functions under Part 2 of this Bill and Chapter 3 of Part 1 of the Energy Act, which relates to the OGA’s functions in respect of the storage of carbon dioxide. This evaluation would need to be assessed against external factors, such as changes in the regulatory landscape, changes in operational practices across the UK continental shelf, and environmental and economic factors.

After a review period, the Secretary of State would need to consider the findings and prepare a copy of a report of the review to be laid before Parliament. This would be a significant piece of work, and I am concerned that for a review to be repeated every year would subject the OGA to an almost continuous process of evaluation by government. This would create significant resource burdens both for the OGA and for government and risk obstructing the work of the OGA. It would also weaken the ability of the OGA to act as an independent regulator which is free from government intervention.

Noble Lords may consider that a three-year period is too long, but in the amendment that I have tabled it is explicit that three years is the maximum period within which a review must be carried out. If the Secretary of State deemed it necessary to carry out a review within a shorter period, then this is possible through the amendment that I have tabled. It is worth also noting that there will be other mechanisms in place to ensure that the OGA is held to account over its performance and functions. It will publish, on an annual basis, a refreshed five-year business plan and an annual report of accounts. This latter report will also be laid before Parliament.

An arm’s-length body charged with the effective stewardship and regulation of the United Kingdom continental shelf was a central recommendation of the review. I believe that these amendments would conflict with that recommendation by subjecting the

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OGA to an onerous and almost continuous process. I hope that this explanation will satisfy the noble Baroness and that she is content to withdraw the amendment.

Baroness Worthington: My Lords, I am grateful for that very thorough response from the Minister and for the contributions from noble Lords in this debate. I am afraid I am not reassured. Perhaps I did not make myself sufficiently clear in my introduction of Amendment 11 about the root of my concern. This is not to do with whether we can review the functions of the OGA or whether the performance of the OGA as set out in the Energy Bill is sufficient. I am referring to the primary objectives of the OGA as set in the Petroleum Act as amended by the Infrastructure Act. As I read out, those primary objectives are very odd for a regulator, for a body that is meant to be providing stewardship and oversight to an industry in the private sector part of the economy. It is that which causes me the greatest concern about this aspect of the Bill.

I am not reassured by the Minister’s references. In fact, I found myself questioning: which is it? Is it the case that this is not needed and that Amendment 11 is simply unnecessary? All these decommissioning references and CCS references were concessions we won from the Government in Committee. When the Bill appeared before us, there was no explicit mention of CCS or decommissioning. We had to extract that from the Government in Committee. Having done so, I contend that the primary objectives of this organisation do not fit those new powers.

Lord Bourne of Aberystwyth: I hope the noble Baroness accepts that the acceptance at Second Reading of the importance of CCS was not grudging. It was readily acknowledged, so there was nothing grudging about the concession, as she terms it. I hope she accepts that we have moved forward together on that.

Baroness Worthington: Absolutely. I pay tribute to the Minister for the manner in which he has conducted those discussions. However, it is true that the Bill that appeared before us read like something from a time gone by. There was no reference to future challenges or, indeed, present-day challenges. We have improved the Bill through the process of collaboration. We need to continue that process and look at the primary objectives.

Earlier today, the Minister was kind enough to give me an example of another regulator which is a private company with a single shareholder. It was the Prudential Regulation Authority. My understanding is that that is merely a temporary measure and that the Bank of England and Financial Services Bill, which will come before this House very soon, changes that temporary arrangement. It is therefore clear that regulators are not commonly private companies with very loosely defined objectives that do not refer to any kind of stewardship or regulatory function but merely refer to conducting, developing and investing in equipment and bringing people together to collaborate. Those are not the primary objectives I wish to see for a regulator of this size and complexity. It is for that reason that I am minded to test the opinion of the House.

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The noble Lord, Lord Howell, agrees that decommissioning should be included in the primary objectives—it is not at the moment—but disagrees on CCS, so we are halfway to accepting that these primary objectives are not fit for purpose. The Government seem to be saying that the amendments are not needed and, at the same time, that to put them in the Bill would cause huge amounts of change. Those two things cannot be true. This is merely a way of making sure that the objectives match the functions we expect the OGA to undertake. This is such a significant issue for this aspect of the Bill that I wish to test the opinion of the House.

4.44 pm

Division on Amendment 11

Contents 251; Not-Contents 179.

Amendment 11 agreed.

Division No.  1


Addington, L.

Ahmed, L.

Alderdice, L.

Alton of Liverpool, L.

Anderson of Swansea, L.

Andrews, B.

Ashdown of Norton-sub-Hamdon, L.

Avebury, L.

Bach, L.

Bakewell, B.

Bakewell of Hardington Mandeville, B.

Barker, B.

Bassam of Brighton, L. [Teller]

Beecham, L.

Benjamin, B.

Berkeley, L.

Best, L.

Bichard, L.

Blackstone, B.

Blood, B.

Blunkett, L.

Boateng, L.

Bonham-Carter of Yarnbury, B.

Bradley, L.

Bradshaw, L.

Brinton, B.

Brooke of Alverthorpe, L.

Brookman, L.

Campbell of Surbiton, B.

Campbell-Savours, L.

Carter of Coles, L.

Cashman, L.

Chidgey, L.

Christopher, L.

Clancarty, E.

Clark of Windermere, L.

Clarke of Hampstead, L.

Clement-Jones, L.

Clinton-Davis, L.

Collins of Highbury, L.

Corston, B.

Cotter, L.

Craigavon, V.

Crawley, B.

Cunningham of Felling, L.

Dean of Thornton-le-Fylde, B.

Dholakia, L.

Donaghy, B.

Doocey, B.

Drake, B.

Eames, L.

Elder, L.

Falconer of Thoroton, L.

Falkland, V.

Farrington of Ribbleton, B.

Faulkner of Worcester, L.

Fearn, L.

Foster of Bishop Auckland, L.

Foulkes of Cumnock, L.

Freyberg, L.

Gale, B.

Garden of Frognal, B.

German, L.

Giddens, L.

Glasgow, E.

Glasman, L.

Goddard of Stockport, L.

Golding, B.

Gordon of Strathblane, L.

Goudie, B.

Gould of Potternewton, B.

Grantchester, L.

Grender, B.

Griffiths of Burry Port, L.

Grocott, L.

Hameed, L.

Hamwee, B.

Hannay of Chiswick, L.

Hanworth, V.

Hardie, L.

Harris of Haringey, L.

Harrison, L.

Hart of Chilton, L.

Haskel, L.

Haskins, L.

Hay of Ballyore, L.

Hayman, B.

Hayter of Kentish Town, B.

Healy of Primrose Hill, B.

Henig, B.

Hilton of Eggardon, B.

19 Oct 2015 : Column 478

Hollick, L.

Hollis of Heigham, B.

Howarth of Newport, L.

Howie of Troon, L.

Hughes of Woodside, L.

Hunt of Chesterton, L.

Hunt of Kings Heath, L.

Hussain, L.

Hussein-Ece, B.

Hutton of Furness, L.

Irvine of Lairg, L.

Janke, B.

Jay of Paddington, B.

Jolly, B.

Jones, L.

Jones of Cheltenham, L.

Jones of Whitchurch, B.

Jordan, L.

Kennedy of Cradley, B.

Kennedy of Southwark, L.

Kennedy of The Shaws, B.

Kilclooney, L.

Kinnock, L.

Kinnock of Holyhead, B.

Kirkhill, L.

Kirkwood of Kirkhope, L.

Kramer, B.

Laird, L.

Lawrence of Clarendon, B.

Layard, L.

Lea of Crondall, L.

Lee of Trafford, L.

Liddell of Coatdyke, B.

Liddle, L.

Lipsey, L.

Lister of Burtersett, B.

Loomba, L.

McAvoy, L.

McConnell of Glenscorrodale, L.

Macdonald of Tradeston, L.

McFall of Alcluith, L.

McIntosh of Hudnall, B.

MacKenzie of Culkein, L.

Mackenzie of Framwellgate, L.

McKenzie of Luton, L.

Maclennan of Rogart, L.

McNally, L.

Maddock, B.

Manzoor, B.

Marks of Henley-on-Thames, L.

Massey of Darwen, B.

Maxton, L.

Mendelsohn, L.

Miller of Chilthorne Domer, B.

Mitchell, L.

Monks, L.

Moonie, L.

Morgan, L.

Morris of Aberavon, L.

Morris of Handsworth, L.

Morris of Yardley, B.

Newby, L.

Nicholson of Winterbourne, B.

Northover, B.

Nye, B.

O'Neill of Bengarve, B.

O'Neill of Clackmannan, L.

Ouseley, L.

Oxburgh, L.

Paddick, L.

Palmer of Childs Hill, L.

Parminter, B.

Patel, L.

Patel of Blackburn, L.

Patel of Bradford, L.

Pinnock, B.

Pitkeathley, B.

Plant of Highfield, L.

Ponsonby of Shulbrede, L.

Prescott, L.

Prosser, B.

Purvis of Tweed, L.

Razzall, L.

Redesdale, L.

Rees of Ludlow, L.

Reid of Cardowan, L.

Rennard, L.

Richard, L.

Roberts of Llandudno, L.

Rodgers of Quarry Bank, L.

Rooker, L.

Rosser, L.

Rowlands, L.

Royall of Blaisdon, B.

St Albans, Bp.

Salisbury, Bp.

Sandwich, E.

Sawyer, L.

Scott of Needham Market, B.

Scriven, L.

Sharkey, L.

Sharp of Guildford, B.

Sherlock, B.

Shipley, L.

Shutt of Greetland, L.

Simon, V.

Smith of Basildon, B.

Smith of Clifton, L.

Smith of Finsbury, L.

Smith of Gilmorehill, B.

Smith of Newnham, B.

Snape, L.

Soley, L.

Southwark, Bp.

Steel of Aikwood, L.

Stern, B.

Stevenson of Balmacara, L.

Stoddart of Swindon, L.

Stone of Blackheath, L.

Stoneham of Droxford, L.

Storey, L.

Strasburger, L.

Sutherland of Houndwood, L.

Symons of Vernham Dean, B.

Taverne, L.

Taylor of Blackburn, L.

Taylor of Bolton, B.

Temple-Morris, L.

Teverson, L.

Thomas of Gresford, L.

Thomas of Winchester, B.

Tomlinson, L.

Tope, L.

Touhig, L.

Triesman, L.

Truscott, L.

Tunnicliffe, L. [Teller]

Turnberg, L.

Tyler of Enfield, B.

Uddin, B.

Wallace of Tankerness, L.

Walmsley, B.

Walpole, L.

Warwick of Undercliffe, B.

Watson of Invergowrie, L.

West of Spithead, L.

Wheeler, B.

Whitaker, B.

Whitty, L.

Williams of Crosby, B.

Williams of Elvel, L.

19 Oct 2015 : Column 479

Wills, L.

Wood of Anfield, L.

Woolf, L.

Woolmer of Leeds, L.

Worthington, B.

Wrigglesworth, L.

Young of Hornsey, B.

Young of Norwood Green, L.

Young of Old Scone, B.


Aberdare, L.

Ahmad of Wimbledon, L.

Altmann, B.

Anelay of St Johns, B.

Arran, E.

Ashton of Hyde, L.

Astor, V.

Astor of Hever, L.

Baker of Dorking, L.

Balfe, L.

Bates, L.

Berridge, B.

Bilimoria, L.

Black of Brentwood, L.

Blencathra, L.

Boothroyd, B.

Borwick, L.

Bottomley of Nettlestone, B.

Bourne of Aberystwyth, L.

Bowness, L.

Brabazon of Tara, L.

Bridgeman, V.

Bridges of Headley, L.

Brougham and Vaux, L.

Browning, B.

Buscombe, B.

Butler of Brockwell, L.

Byford, B.

Callanan, L.

Carrington of Fulham, L.

Cathcart, E.

Chalker of Wallasey, B.

Chisholm of Owlpen, B.

Colwyn, L.

Condon, L.

Cooper of Windrush, L.

Cope of Berkeley, L.

Cormack, L.

Courtown, E.

Crickhowell, L.

Cumberlege, B.

Dannatt, L.

De Mauley, L.

Denham, L.

Dixon-Smith, L.

Dobbs, L.

Dykes, L.

Eaton, B.

Eccles, V.

Eccles of Moulton, B.

Elton, L.

Empey, L.

Evans of Bowes Park, B.

Farmer, L.

Faulks, L.

Fellowes, L.

Fink, L.

Finkelstein, L.

Flight, L.

Fookes, B.

Forsyth of Drumlean, L.

Fowler, L.

Framlingham, L.

Freeman, L.

Freud, L.

Gardiner of Kimble, L. [Teller]

Gardner of Parkes, B.

Garel-Jones, L.

Geddes, L.

Gilbert of Panteg, L.

Glenarthur, L.

Glendonbrook, L.

Gold, L.

Goodlad, L.

Goschen, V.

Green of Hurstpierpoint, L.

Greenway, L.

Griffiths of Fforestfach, L.

Hamilton of Epsom, L.

Harris of Peckham, L.

Hayward, L.

Helic, B.

Heyhoe Flint, B.

Hodgson of Abinger, B.

Hodgson of Astley Abbotts, L.

Holmes of Richmond, L.

Home, E.

Howard of Rising, L.

Howe, E.

Howell of Guildford, L.

Hunt of Wirral, L.

Inglewood, L.

James of Blackheath, L.

Jenkin of Kennington, B.

Jopling, L.

Kakkar, L.

Kalms, L.

Keen of Elie, L.

King of Bridgwater, L.

Kinnoull, E.

Kirkham, L.

Lang of Monkton, L.

Lawson of Blaby, L.

Leigh of Hurley, L.

Lexden, L.

Lindsay, E.

Lingfield, L.

Liverpool, E.

Lothian, M.

Luce, L.

Lyell, L.

McColl of Dulwich, L.

MacGregor of Pulham Market, L.

Mackay of Clashfern, L.

Magan of Castletown, L.

Marlesford, L.

Mawson, L.

Mobarik, B.

Mone, B.

Moore of Lower Marsh, L.

Morris of Bolton, B.

Moynihan, L.

Naseby, L.

Nash, L.

Neville-Jones, B.

Neville-Rolfe, B.

Newlove, B.

Noakes, B.

Northbourne, L.

Northbrook, L.

O'Cathain, B.

O'Neill of Gatley, L.

Perry of Southwark, B.

Popat, L.

Prior of Brampton, L.

Rawlings, B.

Ribeiro, L.

19 Oct 2015 : Column 480

Ridley, V.

Rogan, L.

Rotherwick, L.

Rowe-Beddoe, L.

St John of Bletso, L.

Sanderson of Bowden, L.

Sassoon, L.

Seccombe, B.

Selborne, E.

Selkirk of Douglas, L.

Selsdon, L.

Shackleton of Belgravia, B.

Sharples, B.

Sheikh, L.

Shephard of Northwold, B.

Sherbourne of Didsbury, L.

Shields, B.

Skelmersdale, L.

Skidelsky, L.

Slim, V.

Smith of Hindhead, L.

Spicer, L.

Stedman-Scott, B.

Stowell of Beeston, B.

Strathclyde, L.

Suri, L.

Swinfen, L.

Taylor of Holbeach, L. [Teller]

Trefgarne, L.

Trenchard, V.

Trimble, L.

True, L.

Verma, B.

Wakeham, L.

Warsi, B.

Wasserman, L.

Wei, L.

Wellington, D.

Wheatcroft, B.

Williams of Trafford, B.

Young of Cookham, L.

Younger of Leckie, V.

5 pm

Clause 4: Matters to which the OGA must have regard

Amendment 12

Moved by Lord Bourne of Aberystwyth

12: Clause 4, page 3, line 20, at end insert—

“Storage of carbon dioxide

The development and use of facilities for the storage of carbon dioxide, and of anything else (including, in particular, pipelines) needed in connection with the development and use of such facilities, and how that may assist the Secretary of State to meet the target in section 1 of the Climate Change Act 2008.”

Lord Bourne of Aberystwyth: My Lords, I will now speak to government Amendments 12, 16 and 17, which relate to the matters to which the OGA must have regard when exercising its functions. There has been informative and reasoned debate throughout the passage of this Bill about the role of the OGA in relation to CCS. I am glad that we have had the opportunity to discuss these matters more fully with many noble Lords since then. These amendments, along with others that we will be considering later today, are designed to ensure that the OGA’s important functions in relation to carbon storage, which support the Government’s overarching strategy for the decarbonisation of the economy, are at the forefront of the Bill.

I have spoken about the OGA’s role within the Government’s broader strategy to support decarbonisation. Within that context, I will now speak to government Amendment 12, which inserts an additional subsection into Clause 4. This requires the OGA, in the exercise of its functions, to have regard to the development and use of carbon storage facilities and of anything else needed in connection with the development and use of such facilities. This will create a duty upon the OGA when exercising any of its functions, so far as relevant, to give due consideration to not just the development and use of such facilities but to other necessary aspects of the carbon storage chain. Those functions include statutory functions

19 Oct 2015 : Column 481

relating to oil and gas, such as the OGA’s statutory activities on decommissioning, which we will discuss more fully elsewhere. When scrutinising an abandonment programme, which is submitted prior to decommissioning, the OGA will have a statutory duty to consider alternatives to decommissioning at every stage of a proposed decommissioning planning process. This amendment will crystallise and strengthen the need for the OGA to have regard, in particular, to the development of carbon storage facilities through its role on decommissioning.

Such duties will also read across to the OGA’s role in relation to the stewardship of upstream petroleum infrastructure, including upstream pipelines, which are important for the transportation of carbon dioxide and for the commercial viability of CCS projects more broadly. Part 2 of the Bill will give the OGA new regulatory powers that apply to owners of upstream petroleum infrastructure, including powers to attend key industry meetings. These regulatory powers will provide the OGA with a much greater insight into the asset stewardship of upstream petroleum infrastructure, and this amendment to Clause 4 will help to ensure that the OGA makes strategic links to the viability of such infrastructure for the transport and storage of carbon dioxide at an early stage.

This amendment will also read across to the OGA’s functions regarding information and samples. For example, when consenting to plans for the preservation of information and samples, the OGA will consider how such materials could be of interest to the development of CCS.

The amendment will also apply to the OGA’s non-statutory functions—for example, where the OGA is developing important sector strategies to support the oil and gas industry. This amendment will help to ensure that CCS will also form an important element of the OGA’s technology and decommissioning sector strategies, which I know are already under development. In producing these strategies, the OGA will consult the CCS industry to ensure that synergies between the industries are identified and exploited wherever possible.

The amendment will also have importance at an organisational level, and the OGA has already been examining how CCS fits into the operations of all of its directorates and has identified a key contact point for CCS at director level.

Furthermore, to make explicit the link between the OGA’s carbon storage functions and the Government’s priorities regarding decarbonisation, the OGA must consider how its work to develop carbon storage may assist the Secretary of State to meet the target in Section 1 of the Climate Change Act 2008.

Government Amendment 16 is intended to place beyond doubt that the OGA’s functions include functions in respect of the storage of carbon dioxide. It does so by expanding the definition of “function” as provided under Clauses 4 and 5 to include functions exercised under Chapter 3 of Part 1 of the Energy Act 2008, which comprise the OGA’s statutory functions in respect of carbon dioxide storage licensing. Amendment 17 simply ensures that the definition of “relevant functions” does not extend to any activity carried out by the OGA under an agreement made with the Welsh Ministers under Clause 3.

19 Oct 2015 : Column 482

Amendments 12 and 16 are intended to formalise in the OGA’s functions objectives to support the development of carbon storage, and I have outlined the effect this will have. In many cases, this reflects work already under way and which I expect to develop further as the OGA builds capacity.

I know that many noble Lords met members of the OGA leadership team following the Committee debates. I hope they will agree that the organisation recognises and understands the benefits of CCS and will work to ensure that carbon dioxide storage is properly integrated into the OGA’s functions. Through these amendments, I have sought to place clear obligations on the OGA to support that approach. Moreover, I am tabling separate amendments to ensure that these matters will be continuously reviewed by government and scrutinised by Parliament—a point that we will discuss separately in more detail.

Government Amendments 34 to 40 seek to amend provisions on information and sanctions in Chapter 3 of the Bill to put beyond doubt that information and samples relevant to carbon dioxide storage licensees are within the scope of that chapter. Amendment 34 seeks to amend the definition of “petroleum-related information and samples”, which is used throughout Chapter 3, to explicitly include information and samples which are relevant to activities carried out under a carbon dioxide storage licence. This applies through each of the clauses within Chapter 3 and ensures that information and samples that would be relevant to carbon dioxide storage licensees can be required to be retained, dealt with as part of an information and samples plan, and later published or made public.

Clause 29(1) sets out a non-exhaustive list of what an information and samples plan may provide for. Amendment 35 seeks to include within this list an explicit provision stating that petroleum-related information and samples may be transferred to a carbon dioxide storage licensee as part of an information and samples plan. “Carbon dioxide storage licence” is defined by Amendment 38.

Clause 27(4) allows the Oil and Gas Authority, in certain circumstances, to impose on a relevant person an information and samples plan, which may include the transfer of information to others. Amendment 36 restricts this transfer without the consent of the relevant person. This provision is a necessary safeguard to ensure that the relevant person can retain control of their commercially sensitive and commercially valuable information and samples to the extent that they wish to do so.

Amendment 37 amends Clause 29 to clarify that sanctions can be imposed on any person who is party to an information and samples plan and who fails to comply with their obligations under it. This amendment also includes a provision to the effect that an information and samples plan may impose obligations on a person who is not a relevant person, such as a carbon dioxide storage licensee, only with their consent. This ensures that obligations are not imposed without that person’s knowledge or consent, which the original drafting would have allowed for.

Amendments 39 and 40 amend the Oil and Gas Authority’s power to acquire information to ensure that it is able to obtain any information and/or samples

19 Oct 2015 : Column 483

for the purposes of carrying out its functions which are relevant not only to the fulfilment of the principal objective but to activities carried out under a carbon dioxide storage licence. The oil and gas industry has a wealth of information and samples that we acknowledge would be of great benefit to CCS licensees. The amendments clarify the scope of the information and samples clauses and firmly set out that it extends to include information and samples that relate to activities carried out under a carbon dioxide storage licence.

I hope that noble Lords will agree that these government amendments address the concerns raised in Committee. I beg to move.

Lord Oxburgh (CB): My Lords, I remind the House of my non-pecuniary interest in carbon capture and storage.

I both thank the Government and acknowledge the major steps they have taken in the amendments which have been presented. The Minister was clearly listening hard during Committee and now the Bill is much improved.

I do not need to remind the House that the Government have either spent or committed around £1 billion to carbon capture and storage and to get it going in two major projects which are under way. However, those projects were going nowhere unless there was relatively easy access to the continental shelves for the purpose of storing CO2. As other noble Lords have mentioned, it is not clear when and to what degree the extent of this will be required. It is difficult to put a time on it. There is one functioning carbon capture and storage operation in Canada and others are close to it. However, providing in this Bill for access as and when it is required is very important.

There is a second requirement. We need some kind of strategic framework within which private industry can operate in the CCS area. This is the focus of Amendment 72. Had there been more time—as a number of noble Lords have said, for a variety of reasons we have been rushed over this Bill—I would have liked Amendment 72 to have been made the subject of an informal all-party discussion with the Government and officials. I feel there is significant support for this idea both within the House and probably within the Government.

The fundamental requirement is for an overall structure for co-ordination, timing and funding. Carbon capture and storage with the present technology—which may not be the technology we will have in five or so years’ time—requires that you have a process for capture at the source of the CO2; that you have a process for transporting the CO2; and that you have a suitable repository in which it can be contained. Each of these are separate commercial activities requiring different expertise but all have the characteristic that they are relatively capital intensive. Getting these three elements available simultaneously is quite a challenge. You do not want a situation in which two are available but an operation cannot get under way because the third is not. You do not want two assets which are stranded until the third comes along. This would make it inordinately expensive.

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There is an overriding and compelling argument for a degree of oversight and co-ordination, a topic which the amendment would make the Secretary of State and the Minister address. Otherwise nothing will happen. There will be a great deal of talk and we will continue, as we are at present, with a glacial rate of progress. We need a framework within which business can operate.

The other question that needs to be addressed is that of funding. In Committee I floated an idea which is very different from anything we have at present and which would effectively take the Government out of the funding loop, a possibility that in many ways must be quite attractive. But that is not the only way. Indeed, I hope that one of the advantages that this amendment might bring about would be a kind of study about other funding groups.