Before I conclude, let me just say that a few weeks ago I came across an anomaly when talking to the leader of a research group in Oxford. He pointed out that at present there is no way of remunerating an organisation which is actually carbon negative. He had tried to attain funding and support from what used to be the Technology Strategy Board and which I think is now Innovate UK, but he was told that there is no market for carbon negativity. That is an anomaly which we ought to do something about. What was presented to me was something that, while not certain, was a plausible way of building power stations that could remove CO2 from the atmosphere by a series of processes while burning natural gas as part of their activity. If this could be made to work, it would be very attractive indeed, but it is something for which it is difficult to find support at present, and is something that the sort of review and organisation I have been talking about could address.

5.15 pm

Lord Howell of Guildford: My Lords, carbon negativity, which the noble Lord, Lord Oxburgh, has just mentioned, is the concept I was groping for in an earlier amendment and is of course all part of the picture that is emerging: one of several very rapidly technologies for handling the carbon issue in ways that may not involve heavy pipelines into redundant oilfields and gas fields in the North Sea or anywhere else. However, that is an aside.

The question I have about this amendment is as follows. I suppose, having criticised the last amendment—our criticisms have been slapped down by the vote of your Lordships’ House and the amendment has been passed—I ought to be consistent and raise an eyebrow about this amendment. Can my noble friend explain why it is necessary and why it is not covered by Clause 4(1) of the Bill? There is an item in it on innovation:

“The need to encourage innovation in technology”.

This is a requirement already in the Bill and seems sufficiently open to allow all the vast variety of new technologies to come along. I have no quarrel with the other amendments from my noble friend about samples and information and I am sure that they are totally right, but this amendment again focuses on carbon emissions and the storage of carbon dioxide in the North Sea. I would just sound a warning note that we are again close to a dangerous tendency to pick winners, something which has led to so much grief and sorrow

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in the past because it led to a huge waste of resources and delayed the moves that we all want to see towards a more efficient energy industry and one more in line with meeting our climate obligations. Why does subsection (1) of Clause 4 not meet that, and why is the amendment necessary at all? The amendment states at the end that its aim is,

“to meet the target in section 1 of the Climate Change Act 2008”.

That of course is the point. There are many paths to meeting our carbon budget in the climate change obligations. Earlier, I think the noble Baroness, Lady Liddell, mentioned the UN official Professor Jacquie McGlade, who was given airspace on the radio this morning about the UK’s energy and climate policy. She seemed to be talking complete nonsense and seemed to believe that renewables targets were more important than our emissions targets, and that subsidising particular renewable technologies, regardless of their contribution to CO2 reduction, was the key aspect of our commitment. That is precisely the trap into which the European Commission and European Energy Commissioners have fallen into in the past; namely, trying to lay down the precise pattern of renewables to be backed and not backed. They have been trying to extricate themselves from the mess that they caused by that perception ever since at great cost, with great difficulties and with much uncertainty for the industry. When I see this kind of addition I realise why the Minister has probably put it in.

However, we have some real dangers to avoid. From the previous coalition we have inherited a legacy of considerable confusion, although I admit that I was part of that coalition. We have a legacy in the energy sector which is not at all happy and is leading to considerable ructions and many more difficulties ahead. I will pass over the fact that the targets have not been meet at all when one takes into account per capita carbon emissions, let alone the other trilemma targets of affordability and reliability. That is for another debate, but can we please be careful that we leave open the path for all kinds of innovation in the future to meet our climate obligations, and that we do not get trapped into overemphasis on one particular path in order to meet the enthusiasms of those who believe that CCS is essential to be brought into everything? Perhaps it is or perhaps it is not, but let us be careful not to overegg this particular pudding.

Lord Foulkes of Cumnock: My Lords, I want to take up a point made by the noble Lord, Lord Oxburgh, with which he reinforced our concern about this Bill being rushed through and consideration not being made. We have just heard from the noble Lord, Lord Howell, about whether renewables can be equated with carbon production, which he challenges. As the noble Lord, Lord Oxburgh, said, these are the kind of things that could be and should be dealt with in pre-legislative scrutiny in the kind of get-together that he suggested.

I am not a fan of this non-elected House. I want to see a move towards a senate of the nations and regions. When we eventually get a Labour Government, we will move in that direction. However, again and again I hear from those who do like this nominated House that we have lots of experts on various subjects, and why

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do we not make use of them and get them together to provide that experience, insight and knowledge into the legislative process. If we get things rushed through in the way in which this is being rushed through, we are not able to do that.

We saw that again today at Question Time. Members who were present will have heard my intervention when I got really irate concerning the noble Lord, Lord Prior. I think that it was the noble Baroness, Lady Maddock, who said that it was not for the first time. The noble Lord seemed to be acting like a disinterested observer of what is happening in social care, which is being reduced enormously, and it was as if he could do nothing about it. He seems to forget that he is a member of the Government who is supposed to report to us and supposed also to take our views back to the Government to try to influence what they do. Ministers are not here just to read out the instructions that they get from the Civil Service and from down the corridor. They are here to listen to what Members of the House of Lords say, to take account of it and to pass it on. To be fair to the noble Lord, Lord Bourne, as my noble friend Lady Worthington said, he has taken account of some of the specific aspects that have been raised. But there are others that have been overlooked and I fear that there will be others that will be overlooked. I hope that I am proved wrong on Wednesday and that some account will be taken.

The noble Lord, Lord Howell, is about to disappear but I think even he would agree that, if not a direct equation between CO2 emissions and renewables, renewables have a high correlation between their development and their expansion, and the reduction of CO2. Not every renewable energy source is perfect and does not have some carbon emissions in the production of the equipment that it uses and so on, but producing this clean energy must be considered much better than the alternatives and all the ones that we have had in the past.

Incidentally, I should have declared an interest right at the start; I did so on previous occasions. I am a trustee and treasurer of the Climate Parliament. We argue very strongly at every opportunity we have in every parliament around the world to try to ensure that all countries, including the United Kingdom, are doing as much as possible to reduce carbon emissions.

Before I ask a specific question, I must say that the Minister is an eloquent man. As a Welshman, he is, like me, grieving at what happened over the last few days with the rugby results; in our case we were cheated out of a great victory. I have had dealings with him before he became a Minister and I have great respect for him, but even he, with all his Welsh eloquence, cannot argue that there has not been a deep depression in the renewable energy sector with what has happened over the last few months in solar energy—where we have seen and are seeing job losses because of the cutbacks—and now in onshore wind. We will talk more on this on Wednesday.

I ask the Minister one particular question: tomorrow we will hear the wit and wisdom of the President of China. It has been suggested that we should make all sorts of representations to him on human rights and discuss with him a range of issues concerning trade

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and co-operation in a variety of fields. Specifically, will we talk with him about energy in general, and in particular about the Green Grid alliance? At the United Nations, the Chinese President said that he is in favour of a global energy network for clean energy. The Chinese corporation dealing with this has put a lot of resources and thinking into developing a grid that takes energy from areas where it is produced cheaply and regularly, such as the deserts where solar energy is produced, and channelling it through a green grid to areas where it is used and needed.

I hope that at some point in his visit, Ministers—if not the Prime Minister—will raise with the Chinese President how the United Kingdom Government can co-operate with the Chinese Government on this. They are very far-thinking. They have great resources, a great number of people and great knowledge. I hope that we will pursue this with them, that we will take the opportunity to raise it with him when he is here and follow it up in the weeks and months to come.

Lord Teverson: My Lords, I shall speak to my Amendments 15 and 18, and to Amendment 72 in the name of the noble Lord, Lord Oxburgh. I am very pleased that the noble Lord, Lord Foulkes, mentioned the President of China because tomorrow we have to interrupt an Economic Affairs Committee meeting. I suggested that we might ask the President to be a witness on some of these issues, but unfortunately I do not think that that got anywhere.

I welcome a number of the government amendments in terms of their nod to the environment. My amendments look to try to place the OGA and this part of the Bill in the context of the broader climate change and environmental debate. We do not have those amendments completely right. In fact, I rather prefer the amendment of the noble Baroness, Lady Worthington, although I am not sure how far she will press it. As I said previously, although the OGA needs to focus on its prime areas in doing its day-to-day business, it needs to operate within this broader environmental area, as does the whole regime.

5.30 pm

Certainly, in the days of the coalition Government, there were four aspects of energy policy to which both parties involved were fully committed. One was low carbon, partly renewables but also nuclear energy. That just about staggers along on the nuclear side, as we have discussed. The renewables have suffered a number of quite severe setbacks over this year since the election. Secondly, there was energy efficiency, which as we all know satisfies all three elements of affordability, decarbonisation and energy security. Certainly, the Green Deal needed changing a lot but to opt out of that was most unfortunate. However, taking away the zero-carbon homes trajectory for 2016 was an act of gratuitous violence on a low-carbon agenda. Thirdly, the carbon tax floor has now been frozen by the Treasury. I think it rather enjoys the revenue coming from it, although that has to be combined with the reimbursement process for high-intensity users. Fourthly, there was carbon capture and storage. That is why this measure is so important in making sure

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that at least that fourth part of the energy strategy goes forward. That is why I have added my name to the amendment of the noble Lord, Lord Oxburgh.

As I said on Second Reading, I became rather sceptical about carbon capture and storage because, since I have been in the House, it has been very difficult to make progress on it. Although the Government say that the fact that Drax has withdrawn from the White Rose project is not fatal, as the facilities can still be used and the other investors are still there, it seems to me to make the task even more difficult. This measure provides a key way forward in delivering a carbon capture and storage strategy that investors, industry and people involved in the energy sector more generally need to provide them with certainty and a trajectory for the future.

The noble Lord, Lord Howell, mentioned not picking winners. I agree with that in principle. Indeed, contracts for difference were set up in that way. However, the whole area of decarbonisation and decarbonisation targets is technology neutral. That is why I am particularly disappointed that we were given to understand in Committee that the Government would not seek to implement the decarbonisation targets set under a previous Energy Act. That provided an opportunity to adopt technology neutrality and I regret very much that another part of the jigsaw of moving towards our climate change targets has been taken away.

Baroness Worthington: My Lords, I am grateful to the noble Lord, Lord Oxburgh, for introducing his amendment, to the other noble Lords who have spoken in this debate, and to the Minister for introducing the government amendments starting with Amendment 12.

I do not wish anything that has happened today to undermine our great welcome for the way in which the Minister responded to our debate on CCS. The amendments that we are debating are testimony to how much the Minister has listened and taken on board the comments that were made. We very much welcome the measures, specifically the changes on making explicit the use of sampling and on the sharing of information and, indeed, the addition of government Amendment 12 to Clause 4, which sets out the matters to which the OGA must have regard. The amendment has both an explicit reference to carbon dioxide and the meeting of climate change targets. This is indeed very welcome and I certainly support the amendment being added to the Bill.

Because the Government’s amendment is comprehensive, we will not pursue Amendments 13 and 14 any further. We are delighted that those measures will now be included. I wish to speak also to Amendment 72, which the noble Lord, Lord Oxburgh, tabled and to which I was very pleased to add my name; and to what was my own Amendment 78, to which the noble Lords, Lord Oxburgh and Lord Teverson, have added their names, which is replaced by a manuscript amendment. I apologise for that but we felt that it was important to clarify a change of wording for that amendment. I shall come on to that.

As we are considering in more detail the environmental and climate change aspects of the Bill, I should declare a potential future interest, as I did in Committee.

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As many noble Lords may be aware, I shall be stepping down from the Front Bench in a matter of weeks. I am in negotiation with a charity that works on climate change issues, so I felt that I should declare that potential future interest.

Amendment 72, in the name of the noble Lord, Lord Oxburgh, would require the Government to undertake and develop a national strategy for carbon capture and storage. This amendment has a great deal of merit. It was excellent to meet the Minister and officials from his department. As has been mentioned, Stuart Haszeldine from Edinburgh University was present. It was a very good meeting and it became clear in the debate that there is an awful lot to do in the world of carbon capture and storage. However, “carbon capture and storage utilisation” is possibly the phrase we need to start using. That addresses some of the points made by the noble Lord, Lord Howell, about the fact that there is not just one version of carbon capture and storage but potentially many with different attributes, in the same way that there are many renewables technologies with very different attributes.

Carbon capture and storage is a grouping of technologies with different aspects, technologies and uses and different storage end points, some of which are stored underground, some of which might be onshore and some of which might be offshore in disused oilfields or, indeed, in oilfields that continue to be used through enhanced oil recovery. However, there may be other forms of storage, including in mineralised aggregate and as a chemical feed into various other processes. I sense a mood change within industry towards wanting to have a much more in-depth discussion about the use of CCS going forward.

As we face our climate change targets going forward, and in particular the embodiment of those targets in the emissions trading scheme, which creates a hard cap on our industrial sectors that declines over time, we will have to develop a technology to enable us to maintain primary production in this country to keep a thriving and, we hope, growing industrial base. It is going through some difficult times at the moment, but we need to find a policy that will enable us to attract inward investment into industry to help it decarbonise, in the same way as we have done for renewables in the power sector. A strategy is definitely needed, particularly for those industrial players. Although it is welcome that we hope to have two demonstration projects proceeding in the power sector, which will potentially open up useful infrastructure that can be reused, there is very little in the way of policy for industrial players that helps them to decarbonise. They have an incentive to decarbonise in the shape of the carbon price but that is often softened by receiving compensation payments. However, there is no carrot. There is a stick and then there is compensation but there is no bankable, investable policy that would cause them to make a positive investment.

That is an urgent challenge for the UK to get its head around; otherwise, my fear is that we will see more closures, as we have seen at Redcar with SSI, which was meant to be a big element of the Teesside decarbonisation cluster. That closure removes one of the elements of that strategy, which would have led to

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a carbon capture and storage hub, which would have decarbonised our industrial bases there and, I am certain, would have attracted investment from Europe and elsewhere because it would have been future-proofed. You could locate there, reinvest in industrial manufacturing and production, and be confident that you had a place to store your CO2 and therefore not just be compensated but actually avoid the need to pay carbon prices. So a strategy is definitely needed for industrial sectors.

Some ideas have been floated. One is that, just as we have a contract for difference in the power sector, it would be possible to have a contract for difference in the industrial sectors. You would not be able to do it off the power price, clearly, but you could do it off the carbon price. You could give some investor certainty that you will be compensating for the fluctuating carbon price and give a degree of confidence so that an investor could go to the bank and say, “On the back of this I am going to receive compensation from these contracts and we should go ahead and invest”. Those are the sorts of things we need to see in this strategy as we go forward.

Our strategy on the capped sectors—those subject to the EU ETS cap; that is, power and industrial—still leaves more than half the economy’s emissions uncapped and very little in the way of a wholesale comprehensive policy to decarbonise those sectors. Those uncapped sectors are largely serviced by the oil and gas industry; that is, the transport and heating sectors, in so far as heating is used in buildings, as opposed to primary manufacture and production. Those uncapped sectors, which affect the oil and gas industry, are a very important part of what we need to get our heads around and what we need to address as we look at our targets, because clearly our targets are economy-wide. They are set out in the carbon budgets we have set ourselves to meet our requirements under the Climate Change Act.

In the way we currently treat the carbon budgets, the uncapped sectors actually cause us the greatest difficulty because we do not have an EU-wide emissions trading scheme or low-carbon incentives in the form of CFDs, and we have fewer levers. We have the renewable transport fuel obligation and the renewable heat incentive, both of which, as the names suggest, incentivise investment only into renewables. They do not do anything for carbon capture and storage in those transport and heat sectors, and nor would they for nuclear. I happen to believe that in the future, we will probably be able to deliver nuclear into those sectors. We are not there yet, but we are close to being able to see how CCS could contribute in those sectors. I should say again that CCS is the broad technology that includes CCU, which would give us a number of technologies to work from.

We have a curious situation where we have a relatively challenging target on the uncapped sectors but almost no comprehensive policies to incentivise decarbonisation. This is where Amendment 78A comes in. This idea was discussed in Committee. It may be ahead of its time and we may need some more discussions. I very much look forward to the department facilitating such discussions after the Bill leaves this House. The fundamental question is: how can we get to a more market-based form of incentive to help decarbonise

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heat and transport? I do not think we can rely on renewable heat incentives paid for by taxpayers, and nor is the renewable transport fuel obligation is the answer. There has to be something much more technology-neutral and market-friendly, whereby industries and the private sector can find and select the best projects to help with that task.

The idea we debated in Committee was that we would ask providers and importers of fossil fuels into the UK—whether they are extracting here from the North Sea or onshore, or importing from overseas—to invest in projects which permanently stored and reduced emissions. We have come back with Amendment 78A as a reworked version of that. It is not the perfect wording by any means—it is still a probing amendment—but we felt it important to re-table it because there is the germ of an idea here which will help the Government, and the UK in its move towards economic growth, to harness the power and ingenuity of the private sector in delivering us least-cost decarbonisation.

5.45 pm

The idea, simply put, is that we would require a very small portion of the emissions embedded in those oil and gas products to be certifiably stored, and that would then rise over time. It would be entirely up to the importers and extractors to decide how they would meet that obligation and it would certainly not apply just to UK extractors; it would also apply to imported fuels so as not to distort. I think there is a great deal of merit in exploring that idea further. As I said, Amendment 78A is still a probing amendment but I hope that, following on from the Bill and in the spirit of collaboration that has now emerged on this issue, we can look at that and perhaps incorporate it into the strategy referred to in Amendment 72, which is intended to be a comprehensive strategy.

I am delighted that carbon negativity has come up, and I am grateful to the noble Lords, Lord Oxburgh and Lord Howell, for mentioning it. It is an anomaly. As I mentioned, we have these carbon budgets, and both the inventory submitted at international negotiations and our own budgets would credit negative emissions if we had the right mechanism to do so. We could be helping to meet our targets through the use of carbon-negative technologies, both domestically and internationally, if we could just find a way to certify that and make sure that it was done well. It is certainly not beyond our wit to be able to certify such things. If you move in the world of engineering solutions to climate change, as I do, you meet many people who already have or are very close to having projects that deliver carbon-negative emissions. One I am particularly fond of—it is near to where I live in Cambridgeshire—is the Carbon 8 company, which takes hazardous waste from an incinerator, combines it with CO2 derived from a biomass plant and turns it into a permanent aggregate which is then made into building materials that can be used to build buildings and infrastructure.

Viscount Ridley (Con): Does the noble Baroness agree that those of us who are farmers take carbon dioxide out of the air as much as we can every summer—and then unfortunately put it back into the air by feeding it to people in the winter?

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Baroness Worthington: Thereby hangs the problem—it is put back into the atmosphere. These carbon-negative technologies would have to be permanently stored and would have to be over geological timescales, or at least decadal timescales, in order to help in tackling climate change. Of course, CO2 is part of the biosphere but we are talking here about fossilised CO2 that built up over millennia and is being released over a much shortened timescale—a massive chemical experiment that we do not yet know the consequences of.

This could be a rich seam for policymakers and the department, which has already moved a long way in improving the Bill. I certainly hope that if we carry on in this spirit, we will resolve these issues of how to get CCS and CCU deployed so that we can save our industries, attract inward investment and reuse infrastructure sensibly. We could do that through a strategy or the creation of a group—there must be many ways in which this can be done. An Energy Bill should be addressing these issues. They are urgent—we are losing our industrial players—but on the plus side many innovative engineers around the country are coming forward with great ideas. We need to capture that, turn it into something tangible, use it to comply with our obligations and show that we can do decarbonisation at least cost while preserving our industrial might. If we can do that, we shall have an example to show the Premier of China, whom I am sure is grappling with this too.

There is not a single industrialised country that does not now have in its mind how it is going to create steel in a low carbon environment. How is cement going to be produced? What about plastics? We cannot simply ignore that aspect of the decarbonisation challenge. I am not saying that the Government are ignoring it, but we do seriously need to get going now in thinking this through—sooner rather than later—so that we do not see any more unfortunate examples of employers in our heavy industries leaving these shores. We need to keep them here and we need to set incentives for reinvestment. CCSU is one of the few groups of technologies that enables us to do that successfully. We must press on.

Lord Bourne of Aberystwyth: My Lords, I thank noble Lords for their contributions. I shall try to deal with these and then come back to the amendments that I believe were addressed, namely Amendments 71, 72 and the manuscript amendment, 78A.

I thank the noble Lord, Lord Oxburgh, for his kind comments and reiterate the point about £1 billion being committed to CCS projects. His points on carbon negativity—also mentioned by the noble Baroness, Lady Worthington, and my noble friend, Lord Howell—are well made. I shall come on to those in a broader context later.

My noble friend Lord Howell asked about the need for the government amendment in the light of the item under Clause 4(1) which already refers to innovation and working practices in general terms. The point here is the need for specificity. Clearly in the context of the North Sea there is a particular point about CCS, hence the government amendments. These strike the right balance. Without picking winners, we need to

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recognise that there is a particular opportunity in relation to the North Sea and particularly in relation to decommissioning—an almost unique opportunity for the United Kingdom to ensure that we focus on CCS. That is something that the OGA and its director, Andy Samuel, recognise too.

The noble Lord, Lord Foulkes, was at his disarming best. I find that that is when he is at his most dangerous, so I have to be careful. I thank him for his kind comments, share his upset about both rugby matches and recognise the particular point about Scotland being robbed. That is absolutely right.

The noble Lord asked about China and the meetings that the Secretary of State would be having during the course of the next couple of days. She already has met with the Minister for Energy to discuss particular issues. From what I can gather, that process will be going on over the next couple of days. Additionally, it is important to note that this contact with China is not isolated. Members of its rough equivalent of our Committee on Climate Change were here recently. The Secretary of State met with them, as did I and my noble friend Lord Deben. Clearly China is a massive player in relation to energy so it is important that we have this continuing dialogue. It is certainly happening. If I have any more specific points about the Green Grid alliance I shall write to the noble Lord.

The noble Lord, Lord Teverson, agreed with the thrust of the non-government amendments and the broader environmental considerations. As I have said, we have done our best. I shall deal with these more specifically to ensure, as I believe is already the case, that environmental considerations are covered. I shall touch on that shortly.

As I said previously, I wish the noble Baroness, Lady Worthington, well in her new role, as I am sure the whole House would want to do. I could sit and listen to her for a long while on energy because I think that she knows far more than any of us in this House. I am sure that her commitment and her knowledge will be a massive plus to the organisation to which she is going. I know that she will have a continuing important role in this House so that we will not lose her considerable, massive expertise in this area.

The noble Baroness referred to the steel issue. I was at the summit in Rotherham that the Government held on Friday. The steel issue in relation to the United Kingdom is very complex. At its root, perhaps, is overproduction in China, which is more than twice total EU production. That sums up the problem. There are many aspects to it, and one is procurement. The procurement rules in Europe have been relaxed considerably in our favour. We are the first country to sign up to those new rules, so I hope that we shall be in a position to benefit from that. However, I do not pretend that that is a silver bullet. It is not. There are clearly many issues there. I agree with many of the points that she was making.

The noble Baroness asked about decarbonising industry and particularly mentioned Teesside. We are currently reviewing the findings from the Teesside feasibility study that was published in July and will work with industry on the policy framework on that.

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Let me turn to some specifics on Amendments 72 and 78A. I thank the noble Lord, Lord Oxburgh, for speaking to Amendment 72, which seeks to place a duty on the Secretary of State to produce and implement a CCS strategy. As the Government have set out, and as the noble Lord rightly underlines, CCS has the potential to play a vital role in decarbonising our power and industrial sectors. The Energy Technologies Institute estimates that CCS could halve the cost of meeting our 2050 emissions reduction target from £60 billion to £30 billion.

Plants fitted with CCS technology could reduce CO2 emissions from coal and gas power stations by around 90%, enabling clean, dispatchable power powered by coal or gas to play a role in a decarbonised UK economy. This would contribute to secure, resilient energy supplies for consumers. That is why the Government have in place one of the most comprehensive CCS programmes in the world, as recently recognised by the independent Global CCS Institute and to which allusion has been made. Our commitment to supporting CCS is clear. The CCS road map published in 2012 set out the long-term plan to support CCS through the CCS Commercialisation Programme, research, development and innovation, electricity market reform, a strong regulatory environment and international collaboration. Our CCS competition is potentially providing up to £1 billion support, as has been acknowledged.

We have invested over £130 million since 2011 to support research, development and innovation to foster the next generation of CCS technologies, including £2.5 million in a recent project to scope promising CO2 storage sites—key to developing a viable CCS industry here in the United Kingdom. We also recognise the real potential offered by CCS as a long-term route to help United Kingdom industries such as iron, steel and cement to decarbonise. We invested £1 million to explore the business case for industrial CCS on Teesside. We are also looking ahead. The CCS policy scoping document published last year set out the key issues for the medium-term development of CCS in the UK. We are actively engaging industry on the challenges facing future projects and how Government can best design a framework to overcome them.

I understand that noble Lords are keen to support the deployment of CCS in the United Kingdom. The noble Lord, Lord Foulkes, expressly mentioned the need for a government response. That is why, in one of the meetings that we held looking at CCS, I suggested setting up a CCS Peers’ group as a sort of ginger group. I have asked the noble Lord, Lord Oxburgh, to chair that group. That would be a good way forward. I should be happy to look at advice, obviously without commitment. It would be a way of feeding in the expert advice which the noble Lord, Lord Foulkes, has quite rightly said exists in this House. It would help to shape what is, as I think that we all agree, an important area of policy.

I hope I have reassured the House that we are serious about realising the potential of CCS in the United Kingdom and that we have in place a robust support framework. Our proposed amendments on the role of the OGA with regard to CCS underline this.

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6 pm

I thank the noble Baroness for her explanation of manuscript Amendment 78A, which seeks to insert a new clause into the Bill that would require the Government to consult on measures requiring extractors and importers of petroleum to contribute to the development of reduced carbon emissions technologies in the United Kingdom. Noble Lords will know that the regulatory measures in this part of the Bill result from a specific set of challenges highlighted in the Wood review. These have been endorsed by industry and are given increased urgency by the fall in global oil prices.

Were Amendment 78A to be accepted, a consultation would need to take place on measures the industry would be required to take to contribute to an as-yet unquantified and uncosted obligation. To be fair, I accept that the noble Baroness set out that this was a rough-hewn amendment. However, it would, as framed, involve additional burdens on industry at a time when it faces unprecedented challenges and would risk diluting the objective of maximising the economic recovery of offshore United Kingdom petroleum. It is vital for the UK economy and our energy supplies that the continental shelf remain competitive in a global market. Introducing additional costs to the industry would reduce the attractiveness of the continental shelf and would pose a significant threat to all of the positive work that is being done.

Baroness Worthington: By way of clarification, I do not think that I stressed enough that this would apply not just to UK operations but, significantly, to the increased importation of fuels in the oil and gas sector. Obviously, it would be excellent if the Treasury could use the funding that would flow from that to invest in UK infrastructure for decarbonisation. This is not intended as a punitive measure for UK operators but as a way of addressing the fact that an entire half of our economy—fuels that we use for heat and transport—is uncapped, with no explicit carbon price. This would be a way of dealing with that and having that money flow from the ultimate sources of these imported fuels, which are overseas, into UK infrastructure.

Lord Bourne of Aberystwyth: I thank the noble Baroness for the clarification. She identifies a problem that does exist. We are looking, as I think I indicated previously, at regulation in relation to the transport sector, which is probably more realistic and a more likely runner at the moment. I accept the spirit in which she has tabled the amendment, but I do not think that we are in a position where we can accept what I would see as additional cost burdens on industry at this stage. That said, I believe that the offer to the noble Lord, Lord Oxburgh, has been accepted, subject to his busy diary, and I hope that we can move forward with that. Perhaps in that context we can look at proposals like this and at possible developments in the industry. I urge noble Lords not to press these amendments.

Amendment 12 agreed.

Amendments 13 to 15 not moved.

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Amendments 16 and 17

Moved by Lord Bourne of Aberystwyth

16: Clause 4, page 3, line 32, leave out “does not include any” and insert “means any function of the OGA, including any function under Chapter 3 of Part 1 of the Energy Act 2008 (storage of carbon dioxide), other than a”

17: Clause 4, page 3, line 34, at end insert “or an agreement under section 3(3).”

Amendments 16 and 17 agreed.

The Deputy Speaker (Lord Geddes) (Con): I should advise noble Lords that Amendment 18 has been placed incorrectly in the Marshalled List—it is an amendment to Clause 5.

Clause 5: Directions: national security and public interest

Amendment 18 not moved.

Consideration on Report adjourned until not before 7.04 pm.

European Council


6.04 pm

The Lord Privy Seal (Baroness Stowell of Beeston) (Con): My Lords, with the leave of the House, I will repeat a Statement made by my right honourable friend the Prime Minister in another place. The Statement is as follows:

“With permission, Mr Speaker, I would like to make a Statement on last week’s European Council. The main focus of the Council was on migration, but there were also important discussions on Syria and on the UK’s renegotiation. Let me take each in turn.

The European Union is under massive pressure over the migration issue. The numbers arriving remain immense. Some countries have attempted to maintain and police external borders; others have waved migrants through. Eight thousand people are arriving in Germany every day. The Schengen zone response is to establish hotspots in the countries where most are arriving so that they can be properly processed, and then have a mechanism for distributing migrants across the EU. This is what most of the Council’s discussions and debates were about.

Of course, the UK does not take part in Schengen. We have maintained our borders while others have taken them down, and we are not participating in the quota system for migrants who have arrived in Europe. Instead, we are taking 20,000 Syrian refugees straight from the camps. We think this is the right approach.

I will turn to some of the specifics of how the EU is planning to help ease this crisis. First, on aid to the affected area, Britain was praised for its contribution to the World Food Programme, where we have provided $220 million out of the $275 million shortfall needed

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to close the funding gap for the rest of the year. The Commission President made a particular point that the rest of the Council members should do more and follow Britain’s lead on this point. It is still the case that the United Kingdom has spent more on aid for Syrian refugees than any other EU country—indeed, more than any other country in the world save the United States of America.

Secondly, the EU agreed in outline a new joint action plan with Turkey. This includes potential additional financial support to help with the huge volume of refugees—more than 2 million in Turkey—and assistance with strengthening its ability to prevent illegal migration to the EU. While the terms of the EU’s assistance remain to be finalised, any visa liberalisation agreed under the action plan will not, of course, apply to the UK. We will continue to make our own decisions on visas for Turkish nationals.

Thirdly, we agreed more action to stop criminal gangs putting people’s lives at risk in the Mediterranean. The EU’s naval operation is now moving to a new phase, in which we can board ships and arrest people smugglers. Britain played a leading role in securing the United Nations Security Council resolution that was required to make this possible. The Royal Navy ships HMS “Richmond” and HMS “Enterprise” will help deliver the operation.

Fourthly, obviously the most important thing is to deal with the causes of the crisis, in particular the war in Syria. The Council condemned the ongoing brutality of ISIL. When it comes to Assad, the conclusions are equally clear:

“There cannot be a lasting peace in Syria under the present leadership”.

I presented to the Council the facts about Russia’s intervention, with eight out of 10 Russian air strikes hitting non-ISIL targets. The Council expressed deep concern over Russia’s actions, especially attacks on the moderate opposition, including the Free Syrian Army. Our view remains the same: we want a Syria without ISIL or Assad.

Ahead of the Council I convened a meeting with Chancellor Merkel and President Hollande. We agreed the importance of a renewed diplomatic effort to revive the political process and to reach a lasting settlement in Syria. We agreed that, together with our US allies, we must seek to persuade Russia to target ISIL, not the moderate opposition.

The three of us also discussed the situation in Ukraine. We welcomed recent progress and agreed the need to maintain the pressure of sanctions on Russia until the Minsk agreement has been fully implemented.

Turning to the UK’s renegotiation, I have set out the four things we need to achieve. The first is on sovereignty and subsidiarity, where Britain must not be part of an “ever closer union” and where we want a greater role for national Parliaments.

Secondly, we must ensure the EU adds to our competitiveness rather than detracting from it by signing new trade deals, cutting regulation and completing the single market. We have already made considerable progress. There has been an 80% reduction in new legislative proposals under the new European Commission and we have reached important agreements on a capital

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markets union, liberalising services and completing the digital single market. Last week, the Commission published a new trade strategy that reflects the agenda that Britain has been championing for years, including vital trade deals with America, China and Japan, but more needs to be done in this area.

Thirdly, we need to ensure that the EU works for those outside the single currency, protects the integrity of the single market and makes sure that we face neither discrimination nor additional costs from the integration of the eurozone.

Fourthly, on social security, free movement and immigration, we need to tackle abuses of the right to free movement and deliver changes that ensure that our welfare system is not an artificial draw for people to come to Britain.

As I have said before, those are the four key areas where Britain needs fundamental changes, and there is a clear process to secure them. The Referendum Bill has now passed through this House and is making its way through the other place. I have met with the other 27 leaders, the Commission President, the President of the European Parliament and the President of the European Council, and will continue to do so. Technical talks have been taking place in Brussels since July to inform our analysis of the legal options for reform. There will now be a process of negotiation with all 28 member states leading up to the December European Council. As I said last week, I will be writing to the President of the European Council in early November to set out the changes we want to see.

Throughout all this, what matters to me most is Britain’s national security and Britain’s economic security. I am interested in promoting our prosperity and our influence. We have already made some important achievements. We cut the EU budget for the first time ever. We took Britain out of the eurozone bailout mechanisms—the first ever return of powers from Brussels to Westminster—and we vetoed a new treaty that would have damaged Britain’s interests. Through our opt-out from justice and home affairs matters, we have achieved the largest repatriation of powers to Britain since we joined the EU. We have pursued a bold, pro-business agenda, cutting red tape, promoting free trade and extending the single market to new sectors.

I want Britain to have the best of both worlds. Already, we have ensured that British people can travel freely around Europe, but have at the same time maintained our own border controls. We have kept our own currency while having complete access to the single market. I believe we can succeed in this renegotiation and achieve the reform that Britain and Europe need. When we have done so, we will put the decision to the British people in the referendum that only we promised and that only this Conservative majority Government can deliver. I commend this Statement to the House”.

My Lords, that concludes the Statement.

6.12 pm

Baroness Smith of Basildon (Lab): My Lords, I thank the noble Baroness for repeating the Statement that the Prime Minister made in the other place. I suppose that we should not be too surprised that the

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issue that is talked about so much outside the European Council meetings was not formally debated at this Council meeting but yet again deferred until December. I certainly understand why the Prime Minister would want that, but do the Government really understand that it is not just the British public or Conservative politicians who need clarity. Even Angela Merkel, the German Chancellor, has asked for greater clarity about the Prime Minister’s intentions. The problem is that it appears that the Government do not themselves know what they are proposing. That creates greater uncertainty, and when there is such uncertainty, it allows rumours and speculation to take hold.

The issue raised in the other place but not answered was on one of those rumours, concerning the protection of those working here in the UK. Both the working time directive and the social chapter have served British workers well, and I hope that the noble Baroness can confirm from the Dispatch Box that the Government also value the rights of those in employment and that the speculation that they could be undermined or scrapped is completely and totally unfounded.

Of great interest to your Lordships’ House are the European Convention on Human Rights and the Human Rights Act. When the Labour Government signed up to that convention, they ensured that British citizens did not have to leave the UK to pursue their rights but could do so at in their home country within the UK legal system. It was bringing rights home. Can the noble Baroness clarify the Government’s position on this?

We support the right of national Parliaments to have a greater influence on EU legislation—and so the proposed red card mechanism. That was a commitment in our manifesto at the election and we stand by it.

We also support European co-operation on a wide range of issues. The Government have to understand that on so many issues, we need co-operate with European partners if we are to have any significant impact. I refer to issues such as crime and climate change, on which we had debates earlier in the year, corporate regulation, tax avoidance and, indeed, people trafficking. We have seen the result of that in the Mediterranean. Our acceptance and promotion of European co-operation in these areas strengthens our case for EU co-operation on refugees and Syria.

We have been clear: we do not support business as usual, we support reform. But we want to be part of that reform and have influence on it, not merely shouting from the sidelines with no credibility or influence. The noble Baroness may remember—her Chief Whip certainly will—debating the Government’s hokey-cokey of the opt-out, opt back in again to tackle the most serious and organised crime. We were disappointed that the Government’s approach was more about political management than about the important and serious issues at stake. If the Prime Minister is to have any success in his negotiations, he must be convincing that he has changed and believes in a Britain at the heart of Europe with serious influence within it.

The Leader of the House will be aware of the amendments tabled to allow 16 and 17 year-olds to vote in the EU referendum. I hope that she understands why we have tabled them. First, it concerns the future

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of these young people. A decision on a referendum is way beyond a decision for the next general election or council election; it is the most important of decisions, not just a one-term decision. We saw in Scotland that when young people, 16 and 17 year-olds, were engaged in the debate and decision-making about their future, they were fired up about the issue. It was the right thing to do then, and it is the right thing to do now.

I will not press the noble Baroness on the substance of the issue today, but will she think a bit further about what it really means to extend and engage that wider franchise? I know that the noble Baroness, Lady Anelay, spoke about it as being the same franchise as for a general election—“except”. One of those exceptions is that it has already changed to allow Members of your Lordships’ House to vote. I welcome that; I miss greatly not having a vote in a general election, so I welcome the fact that the law is being changed to allow me and your Lordships to vote in the referendum. But with the greatest respect to all of us here, most 16 and 17 year-olds will have to live with that decision a lot longer than we will. It will have a far greater impact on their lives. I find it difficult to accept that we in this House can have the vote but 16 and 17 year-olds cannot.

Over the weekend, I read yet again about the tragic deaths of children and their families when trying to find sanctuary. I worry that images of the distraught and the dying are becoming so regular that they no longer convey the absolute horror of the refugee crisis. There is a responsibility on all European nations to act in a co-ordinated way, first, to help the refugees but, secondly, to deal with the reasons why so many are fleeing and to try to resolve the conflict that is driving Syrians to leave their homeland.

We commend the Government on the level of aid that they have provided to refugee camps in Lebanon and elsewhere in the region. That is welcome and has been supported on all sides of your Lordships’ House. However—this is where the gap is—we must do more to aid those who have come to Europe. I understand that Turkey has now requested £2.2 billion to aid and support it in dealing with 2.5 million refugees who have come to the country. There was some information in the Statement, but can the noble Baroness tell us more about the negotiations regarding that request? What negotiations were there at the Council for all the countries of Europe to welcome their fair share of Syrian refugees?

Yvette Cooper, who is heading up Labour’s task force on refugees said:

“There is chaos at borders across Europe, people are dying and children are walking miles, sleeping in the open despite the falling temperatures. It is unbelievable we are seeing scenes like this in a continent which includes four out of the top ten richest countries in the world”.

The Minister responsible for Syrian refugees was unable to provide figures to the Home Affairs Select Committee a few days ago regarding how many Syrians were accepted under the Government’s vulnerable persons relocation scheme. The question was also asked in the other place. Can the noble Baroness update the House now on how many have been accepted? Also, European Council conclusion 2(d) states that we should be,

“providing lasting prospects and adequate procedures for refugees and their families, including through access to education and jobs, until return to their country of origin is possible”.

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We have an Immigration Bill going through Parliament. To ensure that we are able to comply with those words from the European Council, can the Minister confirm that, if necessary, amendments will be made to the Immigration Bill?

If the UK played a more positive role on this front, it might create good will in Europe to make headway in the forthcoming negotiations. It is right that we take firm action against the evil trade of people smuggling and I was interested in the comments in the PM’s Statement. Can the noble Baroness provide any information about the naval operation and the Royal Navy’s role? If she does not have that information to hand today, I would be happy for her to place it in the Library. And would the Prime Minister agree that the refugee crisis will not be resolved without greater efforts from all countries, and therefore look at the UN target percentage of GDP on international development? This country has taken a lead in ensuring we meet that 0.7%. I congratulate the Government on that as well, but will the Prime Minister work with us and across the House to put pressure on other EU countries as well?

The situation in Syria, which the Statement also covered, is complex and we welcome the words of the European Council that:

“The EU is fully engaged in finding a political solution to the conflict in close cooperation with the UN and the countries of the region”.

However, the Statement also recognises,

“the risk of further military escalation”.

The humanitarian crisis has seen half the population of Syria leave their homes—millions to neighbouring countries, which have borne the greatest burden—and hundreds of thousands of innocent civilians from Syria have been killed, the vast majority at the hands of Assad’s forces. Clearly, a political solution is essential and that means the world needs an answer to ISIL’s abhorrent brutality, which also threatens us here in the UK. So we need concerted action to cut off the supply of money, arms and fighters; we need a co-ordinated plan to drive back ISIL from Iraq and from Syria. The noble Baroness will be aware that if the Government were to consider working with their allies to establish safe zones within Syria, some of the millions of displaced people could return to their homes, humanitarian aid could get in, and we could stop the killing that has gone on for far too long. When I listened to the Statement in the other place, I heard the PM’s response to the request to urgently seek a new UN Security Council resolution on a comprehensive approach including action against ISIL. I thought his response was disappointing, so can the noble Baroness say whether there have been any discussions at all with the Security Council members?

Finally, with regard to Libya, the European Council conclusions state that:

“The EU reiterates its offer of substantial political and financial support to the Government of National Accord as soon as it takes office”.

Can the Minister give us any indication on the possible timescale and process for this to take place?

The Statement refers to promoting national and economic security. Will the noble Baroness agree that promoting British influence in European decision-making is also important?

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Lord Wallace of Tankerness (LD): My Lords, I also thank the noble Baroness the Leader of the House for repeating the Statement made by the Prime Minister on last week’s European Council. It appears that, when we have these Statements, the agenda may be very much the same but these very serious and profound issues are no less intractable.

It is clear from the Prime Minister’s Statement that the issue of migration and refugees was what most of the Council meeting was about. As the noble Baroness, Lady Smith of Basildon, has said, we still have regular reports on our TV screens that provide visual reminders of the suffering of—and, indeed, deaths of—many of those who are trying to escape the oppression in Syria and trying to find a better life for themselves in Europe. The issue is no less problematic now, and indeed I rather suspect that as we approach the winter months and see the effect that the winter weather will have on the refugees, there will be some even more harrowing pictures and scenes.

The Prime Minister in his Statement says that,

“the UK does not take part in Schengen … we are not participating in the quota system for migrants who have arrived in Europe”.

He says that as if, in some way or other, it was a badge of honour. I accept there is no legal obligation, as we do not take part in Schengen, for us to take refugees under the EU relocation scheme, but on these Benches we would argue that there is a strong moral obligation to play our part. I believe that would be consistent with the letter to the Prime Minister that was subscribed by a number of Bishops of the Church of England and published at the weekend, which said that it would be consistent with,

“this country’s great tradition of sanctuary and generosity of spirit”.

I hope and believe it should not be a question of either/or—of either taking part in the EU relocation scheme or doing other, very valuable work. I applaud the work that the Government have done in the support and help that they have given to those in the refugee camps in Jordan, Lebanon and Turkey and, indeed, on their commitment to bring—perhaps we would argue for more, but nevertheless they are bringing some—more vulnerable people from there to the United Kingdom. However, it should not be an either/or; we should do that and also be willing to make a meaningful and substantial response to the human suffering that we see in our own continent.

I acknowledge what we are doing, but on a specific point I remind the noble Baroness that, when we had a Statement on this issue when we were back last month, I raised with her that there had been a report that 600 young Afghans had arrived in the United Kingdom—unaccompanied children—who were then deported after their 18th birthday because their temporary leave to remain had expired, albeit that many had by that stage established very strong roots in the communities where they were living. When my noble friend Lord Ashdown of Norton-sub-Hamdon pressed the Leader of the House on this matter, she said:

“I am not suggesting that there is a new set of rules, or a change to existing rules, because of this expanded refugee programme at this time”.—[Official Report, 7/9/15; cols. 1258-59.]

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I would hope that, in the intervening weeks, the noble Baroness and the Government have had an opportunity to consider that. If we are taking in people—and it will often be the more vulnerable people, including children, from the refugee camps—and if many of them come and settle here and make their roots here, I am not quite sure what they feel about the thought that they could be sent home without further ado on their 18th birthday. Again, that is another moral issue to be considered.

On the question of Syria, we will certainly continue to condemn the brutality of ISIS and we support the conclusions of the European Council that there has to be a political settlement. Indeed, there needs to be much greater emphasis on the possibilities for diplomacy, including possibly looking at issues such as something similar to a treaty-based, Dayton-style regional agreement as happened in the Balkans, which would be supported by neighbouring countries as well as the major powers. Are the Government giving consideration to that and to doing more to draw Iran into the process, which I rather suspect could be a very influential player in trying to achieve the kind of political solution referred to in the Council communiqué?

We certainly welcome the EU-Turkey action plan. It is important to recognise the burden that Turkey has to bear in accommodating refugees and it would be interesting to know particularly what the Government propose to do to support that action plan. Given that it is now some considerable time since Turkey applied to join the European Union and it has been the policy of successive Governments to support that application, can the noble Baroness indicate whether it is still the policy of Her Majesty’s Government—provided, of course, that Turkey meets and signs up to European Union values, including on human rights issues—that it would be our intention to support Turkish membership of the European Union?

On the issue of renegotiation, the Prime Minister had indicated four broad heads of discussion, and I think it would be very useful at some stage to have a debate on that in your Lordships’ House so that we can probe and examine these four areas in greater detail. I certainly endorse what the noble Baroness, Lady Smith of Basildon, said about encouraging and making provision for 16 and 17 year-olds to vote in any referendum, and I hope that the noble Baroness the Leader of the House will not give a knee-jerk response to that. We just need to think on the fact that, in the referendum in Scotland last year, engagement among 16 and 17 year-olds was higher than engagement among 18 to 24 year-olds. Most schools did some kind of civics, encouraging young people to find out how they went about actually voting, and that may hold young people in good stead for years to come in terms of playing a part in the civic and democratic process. Therefore, in a decision which will be so fundamental to their future lives, we should give them an opportunity to have their say.

If we look at the conclusions that emerged from the EU Council meeting, we find that after five pages there are two lines:

“The European Council was informed about the process ahead concerning the UK plans for an (in/out) referendum. The European Council will revert to the matter in December”.

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Given that the main item on migration was so important, it is perhaps not surprising that the matter is relegated to two lines, but I would be interested to know whether the Minister knows what the mood music was. How did people react to the Prime Minister when he informed the Council about the process? In particular, having had very serious discussions about migration and the EU relocation plan—and the Prime Minister no doubt made it very clear that the United Kingdom has nothing to do with it because we are not part of Schengen—how did the Council react to the Prime Minister’s request about renegotiation? It would be interesting to learn something about the mood music around that.

I shall not go through each of the four issues that the Minister mentioned, but I want to ask specifically about the question of competitiveness. When I was in Brussels with colleagues last month, we heard much about what is being done on the digital single market, capital markets union and liberalising services, which are things on which the United Kingdom quite properly and effectively is taking the lead. The Minister says that more needs to be done, and we would like to know what more the Government have in mind. The Government are playing a crucial and positive role there. Do they not have sufficient confidence in their ability to continue that leadership? If they say that more needs to be done, it would be very useful to know quite what that means.

Baroness Stowell of Beeston: My Lords, a huge number of issues were raised by the noble Baroness, Lady Smith, and the noble and learned Lord, Lord Wallace. It is worth me saying again that this was an important Council meeting. The main focus was on migration, and rightly so. Although it is right and true that the United Kingdom is not part of the Schengen agreement and the UK is not party to many of the measures that were discussed during the Council meetings, it would be absolutely wrong to portray the United Kingdom’s role in the discussions, or its contribution to addressing this important topic of the current situation of refugees in Europe and the situation in Syria, as anything other than a big part.

It is quite notable that in the course of the discussions at the Council, and as was reflected in the outcomes from those discussions, European members recognised that this issue requires a comprehensive response that tackles the root causes, not just their consequences within our borders. Indeed, the approach that the European Union is taking is very much in line with what we have been saying would be the right and most effective way for us to provide a long-lasting and sustainable way to support people who are in such a dreadful situation right now, which is caused by the terrible events in Syria and other places in that region.

The noble Baroness and the noble and learned Lord raised specific points on these issues. We believe we have a moral obligation to contribute on this matter. As the noble Baroness acknowledged, our contribution by way of aid to the refugee camps in the countries neighbouring Syria is the most significant of any country in Europe; indeed, it is second only to that of the US. That has been recognised by our fellow member states. We are proud of our aid commitment

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of 0.7% and put pressure on other member states to follow suit. We support the action plan being drawn up with Turkey, and we recognise how much Turkey has done to support the refugees accepted into that country. We want to ensure that by providing additional funding via the European Union, which will be within the multiannual framework provision, those refugee camps are the most appropriate place for people to receive the kind of support they need in the dreadful situation in which they find themselves. That includes education for children and the potential for people to be employed in Turkey.

Questions were asked about accepting refugees in the United Kingdom. As noble Lords know, it is United Kingdom policy to offer refuge to those who are in the camps. We think that is the right approach for us to take. Working with the UNHCR, we have started the process of identifying people who will come to the United Kingdom. We expect that by Christmas we will have welcomed 1,000 refugees to the UK as part of our overall commitment to 20,000 refugees by the end of this Parliament. It is important that we prepare a warm welcome for those refugees who come to the United Kingdom and that we provide the kind of support they so desperately need when they arrive here.

The noble Baroness asked about the Navy’s role in the Mediterranean. As I said in the Statement, we continue to play our part there. We are at the forefront in negotiating the extension of the effort to go beyond search and rescue and to be more effective in tackling those who are running these criminal gangs and routes that are causing so much distress.

On the issue of Syria, the noble Baroness asked about a Security Council resolution. It would be a good thing if we could achieve a UN resolution, but we should not allow that to get in the way of our decision to take action in Syria, because we know that Russia would potentially block such a resolution. Syria was very much discussed when the Prime Minister and other members of the Government attended the UN General Assembly meeting a few weeks ago.

Returning to Europe and the process of reform and renegotiation before we approach the referendum, which we are committed to providing for the people of this country, we are very much on track for our timetable. It was always the intention that the technical discussions would start in the summer, as they did, and that there would be an update, as there was, at this Council meeting. The Prime Minister said he will set out in more detail what changes he wishes to see made in the light of the discussions he has in those areas of reform. Further detail will be discussed and detailed negotiations will proceed from that point in bilaterals with the relevant member states and in plenary in December. What is most important is that we get the substance right and that we get the right outcome for the United Kingdom. That is what the Prime Minister is focused on delivering. Indeed, that is the record we have as a party in government. The Prime Minister has a good record of achieving change in Europe on behalf of, and in the interests of, the British people. I note what the noble Baroness said about the changes that we were able to secure in the context of justice and home

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affairs. I would argue that they were powerful changes that were very much in the interests of the United Kingdom and show just how much influence the United Kingdom has in delivering change that is right for the UK.

With regard to remaining an influential country in the negotiations and the noble and learned Lord’s questions about mood music and so on, it should not be forgotten that a lot of what the Prime Minister is proposing by way of change in Europe is change that would benefit not just the United Kingdom but the whole of the EU. He has a great deal of support from the other member states for what he is seeking to achieve.

No doubt the issue of votes for 16 to 17 year-olds will be debated at great length when the Bill currently progressing through this House is in Committee, so I will not take up your Lordships’ time on that right now. However, I am very confident that David Cameron as Prime Minister will secure a good outcome from his negotiations in Europe and that we will achieve success on behalf of the people of this country.

6.40 pm

Lord West of Spithead (Lab): My Lords, the sea state and the weather in the Mediterranean are deteriorating rapidly. We are unwittingly going to cause the deaths of increasing numbers of men, women and children. Does the noble Baroness agree that the only way to stop the flow of people from Libya is to blockade the coast? She is well aware that international law at sea allows us to do boardings without an EU requirement to do so, and that only by blockading the coast and really getting at people smugglers can we stop them being able to advertise our ships and EU ships as part of their ticket to Europe.

Baroness Stowell of Beeston: The noble Lord knows that, as I have mentioned, we have progressed from search and rescue to being able to target the smugglers who are operating these ships; we can actually go on board and tackle those on board. We are not yet at a point where we can move closer to the Libyan borders, but what will see us being able to make that kind of progress will be the unity Government in Libya that we so much want to see in place as soon as possible. Once there is stable governance in Libya, we can see the further action that the noble Lord and others would like see taken.

Lord Howell of Guildford (Con): My Lords, the Syrian situation is recognised as one of the sources, although not the only one, of the migrant and refugee problem. I thought that I heard the Statement say that we want a Syria “without ISIL and without Assad”. Does the Minister agree that if that is so, those two objectives will probably have to be sought in different timeframes, and that in the mean time bargains and strategies that would not be acceptable in other circumstances may have to be sought with Russia, Iran, Turkey and even with President Assad if the global poison of ISIL, which is the source of it all, is to be tackled effectively?

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Baroness Stowell of Beeston: As my noble friend knows—and he is far more experienced in the matter of foreign affairs than I am—ISIL is not just in Syria. It is operating in many countries and is a serious threat that we have to see defeated. Our point is that getting rid of ISIL alone is not enough; for the sustainability of what we want to see achieved, we also need to ensure that Assad will no longer be part of Syria. This is an area that continues to be discussed, and options for progress in this area continue to be explored. We want to see Russia applying its influence over Assad; we do not want to see Russia continuing to prop up Assad by attacking only those areas where there are Syrian people.

Lord Wigley (PC): My Lords, I express the hope that the Prime Minister comes back with a package that he can recommend wholeheartedly, get the support of every party, including his own, and get a resounding yes in the referendum when it comes. However, I draw the noble Baroness’s attention to the points made in the Caernarfon refugee committee, on which I sit and which sat last night, in which extreme surprise was expressed that so few refugees are being allowed into the United Kingdom, and that the figure of 4,000 to 5,000 a year represents no more than three families or so per constituency. Surely we can do better than this; the people want to do better than this; and if we are to build good will among those with whom we are negotiating in Europe, should we not show that we are willing to share the burden that so many of them face?

Baroness Stowell of Beeston: The noble Lord makes a powerful point. I say in reply to him that we have already given refuge to 5,000 people from Syria over the past few years. We are committed to supporting more people who are based in those refugee camps, and we think that that is the right way for us to proceed. If we were to participate in the relocation scheme that the rest of Europe is following, it would not ultimately benefit people who need to be supported in places close to their home countries so that ultimately they can return. We must not forget that only about 4% of those who have had to flee are actually here in Europe; there are millions more in need of support who have not yet made it to Europe. It is important that we do a lot of things and that our effort is comprehensive, and that is what the Prime Minister is pursuing.

Lord King of Bridgwater (Con): The Statement covers three critical issues but I shall address the overriding and urgent one that is likely to arise. If an attack develops on Aleppo, as is reported in the press, we are going to see millions more refugees added to the enormous number that are already involved. Does this not reinforce the importance not only of the visit of Chancellor Merkel to Turkey but also of the Prime Minister’s position that, whatever is done about accepting refugees into this country and other countries in Europe, the only way to save millions of people this coming winter will be the effectiveness of providing safe, secure camps and accommodation immediately in the area, saving them the need to travel and the enormous danger that will be involved? In that regard, I particularly

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welcome the announcement of the United Kingdom’s contribution to the World Food Programme. I trust that resources we will be available to feed the millions concerned during this coming winter.

Baroness Stowell of Beeston: My noble friend makes some important points. As I have already said, we have applied our effort where we think we should help people—at the point of need—in a way that means that the countries they are fleeing to are able to sustain that support. We very much support what is happening in terms of a plan with Turkey. It is also worth adding that in November there will be the Valletta summit between European and African countries to look at what more can be done to prevent more people fleeing from that part of the world. We have to try to ensure that we support people where they are most in need of that support—that is, before they make these dreadful and treacherous crossings.

Lord Grocott (Lab): My Lords, on the renegotiation, there was one line in the Statement that was close to being amusing, which must be a first for a Statement on Europe from any leader. It said:

“I will be writing to the President of the European Council in early November to set out the changes we want to see”.

It is about two years since a referendum was promised and still, if we are to believe what we read, the heads of government of the other 27 member states are not at all clear about the terms that the Prime Minister is trying to achieve; certainly, the people in this country are not clear about them. I want to register my astonishment at that. He will answer in general terms, of course—indeed, there are general terms in the Statement itself—but negotiations are not about general terms: they are about quite specific matters, about which we still do not know.

I put it to the Leader of the House, in her role as Leader, that if the Prime Minister is saying that he is going to spell out these terms by November, and the mechanism by which he is going to do so is a letter to the President of the European Council, copied to member states and presumably to Members of both Houses of Parliament—for which we thank him very much—and of course for the British public to see, at the very least this House, and I can ask her only about this House, ought to see at long last the precise terms that are the bottom line for the Prime Minister’s negotiations, so that we can examine this crucial aspect of the Government’s European policy and question the Prime Minister precisely on the efficacy of the demands that he is making.

Baroness Stowell of Beeston: I consider it my aim every day to bring amusement to the noble Lord, so I am glad that I achieved that today.

The Prime Minister has been consistent throughout this process. In his Bloomberg speech he set out his vision for Europe. He has been clear about the need to make the case for reform in all the discussions he has had with his various European partners. As I have already explained, detailed technical talks have been going on about the legal implications for change in these four areas. He will set out the detail of the

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changes that he wants to see in November and will then proceed with his negotiations and he will achieve his best for Britain. I have every faith that he will secure an outcome that will ensure we end up with a better relationship for the UK with the European Union. We will then put that to a referendum; I am pleased that the noble Lord is now supportive of the opportunity that we are providing to the people of this country.

Lord Callanan (Con): I thank the noble Baroness very much indeed for her Statement. I welcome the Government’s renegotiation agenda and look forward to an ambitious agreement succeeding in due course. When the renegotiation is completed, do the Government intend to produce a full, detailed, White Paper setting out exactly what has been achieved and the consequences therefore in the referendum of a leave or a remain vote for everybody to see, discuss and debate?

Baroness Stowell of Beeston: Clearly, people will expect to see the results of the renegotiations and how the relationship with Europe has been changed and how these changes will address people’s concerns. The best thing for me to do is to quote the Chancellor, who told the other place in June that,

“the Treasury will publish assessments of the merits of membership and the risks of a lack of reform in the European Union, including the damage that that could do to Britain’s interests”.—[

Official Report

, Commons, 16/6/15; col. 166.]

Baroness Smith of Newnham (LD): My Lords, I am very glad to hear that the Minister believes the Prime Minister will achieve the best for Britain. I wish I shared her confidence. Can she elaborate further on how the Prime Minister hopes to achieve reforms that benefit Europe as well as Britain? Could I add to the comments from the noble Lord, Lord Grocott, and request that when the Prime Minister writes to the President of the European Council that a Statement is made in this place and in the other place to give Members the opportunity to discuss what the Prime Minister is requesting before he goes to the European Council in December, rather than being presented with a fait accompli?

Baroness Stowell of Beeston: My right honourable friend the Prime Minister has a record on achieving change in Europe and that is why I have every confidence in him being successful. As I have already rattled through in repeating this Statement, he has succeeded in cutting the European Union budget—I would argue that that was to the benefit of everybody in Europe and not just the people of the United Kingdom. He has made other changes which have been first in terms of the way in which a Prime Minister has dealt with Europe. As far as the way in which he will see changes in the terms of his renegotiations, one of the areas in which he wants to ensure that he sees change is for Europe to support all of us who are members to create more jobs and growth. If that is not of benefit to the whole of Europe, then I do not know what is.

The Earl of Sandwich (CB): My Lords—

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Lord Tomlinson (Lab): My Lords—

The Lord Bishop of Southwark: My Lords, we wish to thank the noble Baroness the Leader of the House for her Statement in which she repeated the Prime Minister’s Statement in another place on the European Council. I gather that in response to a point made about the Bishops’ recent letter, he said that he would like to see the Bishops make a very clear statement on the commitment to spend 0.7% of GNI on aid. I speak only as the duty Bishop but Bishops always try to make very clear statements whenever they speak. We thank and endorse and congratulate the Government on maintaining this policy of delivering 0.7%; it is something from which many of the poorest countries in the world benefit.

The Bishops’ letter was also clear about two other points. While we wish to thank the Government for the initiative they are taking on refugees, we are asking for a much more generous response. I echo remarks that have been made in your Lordships’ House that a commitment over the remaining years of this Parliament to a number nearer 50,000 refugees would be appropriate. Secondly there are many people in this country, including the churches, who are willing to work in close partnership with the Government in welcoming refugees.

Baroness Stowell of Beeston: I am grateful to the right reverend Prelate for his clarity and I certainly endorse his remark that the Bishops in your Lordships’ House are always clear in their contributions. I also thank him for what he has said about Britain’s commitment to the figure of 0.7% for international aid. On what we are doing in support of the refugee crisis, I know that he and his colleagues think that the UK should do more and accept more than we have said we will. However we have made a clear commitment and we are getting on with putting that in place. I am very grateful to him and his colleagues for the support they are giving us in making the necessary arrangements to receive people who need this support and give them the warmest of welcomes. We are grateful to the church for everything that it does and its support for some of the measures that we are able to introduce, such as establishing a register of homes and places offered by individuals who want to make a contribution.

The Earl of Sandwich: My Lords, is the noble Baroness not underestimating public opinion on the issue of refugees? We have heard about the Bishops’ statement. There has also been a strong statement from lawyers and judges, some of whom are sitting on these Benches. I think the Prime Minister was brushing off this issue earlier on and the Government are diverting attention to Syria very skilfully. The fact is that we have a commitment within Europe and we should be looking at that much more firmly.

Baroness Stowell of Beeston: I do not agree with the noble Earl. What the British public look for from us, as the Government, is to provide a compassionate response that reflects their desire for their country to show some real compassion and care. However they want to see that happen in a well-ordered way and

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ensure that it is not just compassion but something that delivers real support to people in a way that means they feel some positive benefit. I think that that is what we are doing. The Prime Minister talks of using our head and our heart and that is what we are doing as a Government.

Lord Tomlinson: My Lords, I thank the Minister for repeating the Statement in this House. Has she noticed that two pages out of the five and a half pages that she read out stated concerns about renegotiation? Can she confirm that much of the content of those two pages is aspirational and relates to issues that were not raised at the Council meeting? Can she confirm that what was raised at that meeting was that little summary bit under “Other items”—the two lines that the noble and learned Lord, Lord Wallace, read out? As we are writing to the President of the Council, will the noble Baroness spell out quite explicitly that we will all receive not only a copy of the letter that is sent to the President of the Council but of any annexe appended to that letter which enumerates the demands that we are making so that we receive from the Prime Minister exactly what the President of the Council does?

Baroness Stowell of Beeston: The Prime Minister made a Statement after the European Council, which I repeated. Our renegotiation is something of great interest and importance to the Members of the other place, so it would be proper for him to remind them of exactly what he is seeking. However, as he has made clear today and continues to make clear, we are now moving into the stage at which in very short order he will lay out in detail what changes he would like to see brought forward in light of the reform discussions he has had.

Modern Slavery Act 2015 (Transparency in Supply Chains) Regulations 2015

Motion to Approve

7.01 pm

Moved by Lord Bates

That the draft regulations laid before the House on 7 September be approved.

Relevant document: 4th Report from the Joint Committee on Statutory Instruments

The Minister of State, Home Office (Lord Bates) (Con): My Lords, I beg to move that the draft Modern Slavery Act 2015 (Transparency in Supply Chains) Regulations 2015, which were laid before this House on 7 September, be approved.

The Modern Slavery Act 2015 includes a ground-breaking transparency in supply chains provision. Once commenced, this provision will require all commercial organisations that carry out business in the UK and are above a certain turnover threshold to disclose what steps they have taken to ensure that their own business and supply chains are slavery-free.

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Many businesses are already taking action to prevent modern slavery but the legislation will encourage business to do more and create a virtual race to the top. Requiring commercial organisations to be transparent about the activity they are undertaking will give the public, consumers and investors the information they need to make informed decisions about whom they do business with and where they shop.

Recognising the importance of the provision in the Modern Slavery Act, we decided to consult on whom the provision should apply to. The Government have always wanted to create a level playing field between businesses with the resources and purchasing power to take action, while at the same time avoiding placing any undue burdens on smaller businesses. The regulations before this House today set the threshold determining which businesses need to comply.

Between February and May 2015, the Government held a formal consultation on the threshold level and the content of statutory guidance for businesses. The consultation generated over 180 responses from a range of businesses, business groups, trade bodies and NGOs. It asked respondents for their views on the level of turnover threshold and they overwhelmingly supported setting the threshold at £36 million. Many respondents noted that setting the threshold at that figure would align with the definition of a large company in the Companies Act 2006, providing clarity and consistency for businesses.

Having listened to businesses and their representative groups carefully, the Government have determined that the transparency provision should apply to all commercial organisations with a total turnover of £36 million or more per year. The Government believe that setting the turnover threshold at this level is ambitious and creates the broadest level playing field for those businesses affected.

These regulations also specify how the total turnover of a commercial organisation should be defined for the purposes of this provision. It is calculated as the turnover of that organisation and the turnover of any of its subsidiary undertakings. This means that in calculating their total turnover, parent companies will have to include the turnover of all their subsidiaries when considering whether this provision applies.

The Government are determined to ensure that this important provision works effectively on the ground in the long term. That is why these regulations also require the Secretary of State to publish at least once every five years a report that sets out the objectives of these regulations, and assesses the extent to which these objectives are being achieved and whether they remain appropriate. This will ensure that the provision remains relevant and effective for businesses tackling modern slavery risks in the future.

The UK is the first country in the world to introduce such transparency in supply chains legislation in relation to modern slavery. This ambitious legislation will help to ensure that UK consumers do not unwittingly drive demand for modern slavery anywhere in the world and that the UK is recognised as a world leader in this area.

For this ground-breaking legislation to work effectively, it is vital that it applies to the right businesses—those with the resources and purchasing power to effect real

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change—and that it is kept under close review. These regulations will ensure that that is so, and I commend them to the House.

Lord Alton of Liverpool (CB): My Lords, in welcoming the Minister’s speech to the House tonight, I will ask some questions and make a couple of observations about the regulations.

I will start by drawing the Minister’s attention to Regulation 4(2)(c), which suggests that the objectives in the provision,

“could be achieved with a system that imposes less regulation”.

I wonder whether the phrase “a system that requires more effective regulation” would have been better. Perhaps the Minister might spell out the difference between less regulation and effective regulation.

Secondly, can the Minister say why the regulations do not provide more specific guidance to the Secretary of State on the timescale for publishing the report? While the draft regulations stipulate,

“at intervals not exceeding five years”,

more frequent reporting could uncover issues that need to be addressed to enable the provision to have its intended effect.

Thirdly, I understand that the independent review of the overseas domestic worker visa, which was committed to in Committee during the passage of the Modern Slavery Act, is now being carried out by James Ewins and was due to report to the Home Secretary in mid-July. The report has been delayed, and I understand that it is now expected in mid-November. It is important to have that in time for our debate in your Lordships’ House on the Immigration Bill. Can the Minister give us some clarity on that?

The Modern Slavery Act 2015 enjoyed all-party support and is, as I think we all agree, a very good start in combating modern-day slavery and trafficking. The Government have placed a great deal of emphasis on the role of the Independent Anti-slavery Commissioner; perhaps the Minister will confirm that some £350,000 has been set aside to support his office this year. When spelling out the sums of money involved, perhaps the Minister could also say what resources are being made available by his department to non-governmental organisations that support vulnerable people who are trafficked—sometimes over several years if they are to be helped to avoid the siren voices of their traffickers.

The House will not be surprised to learn that I want to return to an issue which I raised at Third Reading on 4 March of this year—at col. 230—when introducing Amendments 3 and 6 to Clauses 54 and 57 during the passage of the Modern Slavery Act. Those amendments, on which I divided the House and which I had raised on Second Reading, in Committee and on Report, would have required the Secretary of State to make regulations to appoint an organisation or an individual to collate slavery and human trafficking statements and to maintain a website—a repository—on which to publish those statements, in a form searchable by members of the public without charge.

The proposal was supported not only by many noble Lords from all parts of your Lordships’ House. It has been consistently asked for by civil society

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groups, which have so much experience of working with businesses on supply chains, including Amnesty International, Anti-Slavery International, CAFOD, the CORE coalition, the Dalit Freedom Network, the Evangelical Alliance, Focus on Labour Exploitation, the Law Society, Quakers in Britain, Traidcraft, Unseen,War on Want and the Equality and Human Rights Commission. I argued that without the incorporation of a central repository for slavery and human trafficking statements, it would be very difficult—if not nigh impossible—for civil society, investors, consumers and other agencies to hold big business to account.

Consider for a moment the substantial obstacles to accessing annual turnover information which indicates those companies that fall within the compliance threshold, let alone the vast number of different websites that would have to be trawled through, and it is patently obvious why a central repository must be established. One estimate was that if the threshold figure of more than £60 million had been used, more than 12,000 businesses would be obliged to produce a statement. The Minister has said to the House this evening that the threshold is now being set at £36 million. When he replies, I would be grateful if he said what he anticipates will be the number of businesses affected by that threshold; however, it will be a large number of businesses. The site would enable easy filing for business with secure verification of reports, so that spoof reports cannot be submitted. Businesses would not find themselves in the invidious position of not knowing whether they should be on that site. It must be a robust database with scalable secure storage, as over time there will be a growing number of reports to be stored, sorted and compared. This year-on-year comparison will enable clear evidence that the reports are iterative and that progress is being made year on year by businesses in combating modern slavery in their operations around the globe.

During the passage of the legislation, some noble Lords tried to cast doubt on whether the proposal for a central website enjoyed the full support of Kevin Hyland, the Independent Anti-Slavery Commissioner. He wrote to me, stating:

“I can confirm I fully support the suggestion of a website as the central repository for reports as suggested by yourself and other noble Lords”.

He said that without such a website and adequate resources,

“it will be unlikely to achieve the objective”,

but the creation of such a,

“repository with the right resource would, I believe, make a very positive difference”.

Experience from overseas supports his judgment. Groups involved in the implementation of the California Transparency in Supply Chains Act of 2010 urged the House to learn from their experience. The Californian organisation Not For Sale says that the American failure to create a central repository of information has made it,

“difficult to know which companies need to comply with the law, and which do not”.

A coalition of major UK companies, trade unions and non-governmental organisations—including many familiar high street names—that would be required to

19 Oct 2015 : Column 515

comply with this measure supports this proposal. They say that they strongly support a published list of,

“all companies that are required to publish their statements on modern slavery in an accessible central website so that effective monitoring and accountability can be assured. We believe this would go a long way to levelling the playing field for ethical and responsible businesses, ensuring that they are not undercut by unscrupulous companies that operate under the radar of public scrutiny”.

The Minister himself said on Report that he accepted the principle, stating that:

“we want to see these statements in one place so that people can monitor and evaluate them to ensure that the intended action takes place”.—[

Official Report

, 25/2/15; col. 1750.]

Therefore, my question to him is: why are we not moving towards that by regulation? Is the Home Office doing it without regulation? How much progress has been made since the House divided on this issue? At the time, the Minister said,

“we are more or less on the same page. The question is: do we at this stage want to have this written on the page, or do we want to leave it to something that we will come to a little later?”

Well, we are still here, at a later stage, and I would be grateful if the Minister told us how much longer we have to wait. At the time, in urging patience, he said that we should await the outcome of the consultation with the Ethical Trading Initiative. He said that the consultation was,

“a concession; it was something which we said we would do in response to concerns raised in your Lordships’ House. We launched the consultation and it is open until 7 May”.

He added:

“We are using this opportunity to talk directly to technology companies and to some of the businesses that will be producing these statements to determine the best options. I am pleased to say that discussions have already highlighted a number of interesting ideas which we want to pursue with the businesses as quickly as we can”.—[Official Report, 4/3/15; col. 237-38.]

I welcomed that at the time and I welcome the sentiment again this evening. But I told the House then, and I repeat, that although the Minister told us that we should wait for the consultation, I cannot think of an organisation—and I cited many—that we would consult about this proposal that has not already come out in favour of a central repository, which should be available to prevent people having to trawl across the internet to find individual companies.

7.15 pm

In conclusion, developing a central repository and website for annual statements on slavery and human trafficking as part of the transparency measures in the Modern Slavery Act will enable easy access to all reports in one place, rather than needing to search perhaps 12,000 websites. It is vital that this be a neutral site, but it must be run by an anti-trafficking charity, as opposed to a commercial organisation, in order to give credibility. The site would not be passing judgment on the quality of reports but would be a publicly and fully searchable database of reports, enabling comparisons between companies or sectors, and over time could analyse what is being reported—that is, actions in a particular country or across a sector of business, and potentially, in due course, by product. It would also be able to highlight companies that are not in compliance with the legislation.

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Creating a repository will more effectively fulfil the Home Secretary’s stated desire that civil society and consumers drive the impact of transparency in supply chain reporting, as there will be one central place to read the reports. I look forward to hearing from the Minister about the outcome of the consultation and when such a repository will be established. Tonight is a rare opportunity to press the Minister further on these points. I think he was expecting this issue to be raised, so we look forward to hearing from him.

The Earl of Sandwich (CB): My Lords, I supported my noble friend’s original amendment on the question of monitoring, and I will return to that in a moment. Whether we should go as far as the website and central information, I still am not certain in my own mind.

Having looked through the original consultation and the Government’s response, I am very impressed by the detailed work that has been done on this issue. It is rather a contrast with the Energy Bill, where the Government were castigated for bringing everything in at the last minute. I think that the whole process of pre-legislative scrutiny and consultation on the Modern Slavery Bill has been a model. I believe that the Government are genuinely behind this legislation, especially the Minister, who has shown commitment over many years, including his Nike research in China, his links with Gateshead and Traidcraft and his promise to consult widely following the Bill. This is where my noble friend’s amendment is very relevant. We are delighted that he has come up with the regulation, and I warmly welcome the decision to go for the lower threshold. This was the clear view of the respondents and I am glad to see also that companies will be given some flexibility on the form of the statement. So we are proceeding gradually in the right direction.

This does not mean that I have no misgivings. The first one is about monitoring. I notice that under section J of the impact assessment, the Government undertake to engage with businesses for a further 12 months after commencement. However, it seems that this will be only a limited assessment about reporting requirements and whether organisations have any difficulty in providing information. What about the monitoring of performance by the companies themselves after 12 months? Who is going to assess whether the companies have adequately researched their own supply chains to the point where they can revise earlier statements? I suspect that much of the monitoring will fall to civil society.

I remember the discussion under Section 54 on 10 December, when the noble Lord, Lord Rosser, questioned the Minister very closely on the amount of information that would be required from a company to enable civil society, for example, to make a judgment. This is an important point because it might be easy for a company to make very brief statements with so little content that the Government and NGOs would hardly be able to question them.

Presumably the Government will be involved after the 12-month period. Will they create a forum involving the NGOs, or will the anti-slavery commissioner, Mr Hyland, be involved in the process? I see that he has just published his impressive strategic plan: his

19 Oct 2015 : Column 517

workload is formidable. I know that he works with the NGOs a lot but surely he will have to stick primarily to policing and law enforcement and will not have the extra time that is required.

If the aim of the regulations and the Act is to,

“ensure there is no modern slavery in … supply chains”,

and to,

“aid the detection and elimination of modern slavery”,

surely a lot more needs to be done in the direction that my noble friend has mentioned than publishing what could be very limited information.

Finally, I ask the Minister whether charities are covered by the regulations. Section 54 of the Act refers to a “commercial organisation”, but the Explanatory Memorandum to the regulations says at paragraph 10.1:

“The impact on ... charities or voluntary bodies is small”.

Perhaps he could clarify this point, because there are charities with substantial overseas trading interests.

Baroness Hamwee (LD): My Lords, this is indeed a significant statutory instrument. Whether it will fulfil its potential depends on its implementation and the practice that is adopted by organisations, as well as the response by the public. Like other speakers, I think that the content of the statements is more important than the process, and inevitably the statutory instrument is focused on the process.

Actions beyond the legislation—the statute and the statutory instrument—will be important. Like other noble Lords, the first point that I wrote down related to monitoring and whether there would be a central repository and a website to cover what may be, according to the impact assessment, 17,000 or 11,000 companies—a number of figures are given. It seems to me that the demand for that was reflected in the responses to the consultation, as reported on the Home Office website. This is not just for citizens, NGOs, civil society or indeed government to check and to hold companies to account; surely the repository, or depository, also has a function in spreading good practice and disseminating information about methodologies. The responses to the consultation seemed to show a need on the part of companies for assistance in how to identify slavery. The section on supply chains in the commissioner’s strategy, to which the noble Earl has just referred, under the heading “How will we know that the response is improving?”, says:

“Best-practice models of business and supply chain transparency to be established and widely adopted”.

Clearly there is a lot of work to be done in this area, so the guidance on how to do it is important. We are told that this is to be,

“published to coincide with the duty coming into force”,

which, I understand, will be in October. Can the Minister help the House as to whether the guidance will be published before then? Surely if a duty is in effect, one needs to know beforehand how to comply with that duty in the way that, I hope, the guidance will cover.

I note, too, that transitional provisions are to be developed, and I wonder whether the Minister can explain what that means. The first point that occurred to me on this was that the duty comes into effect in

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October, but how does that relate to any given company’s financial year? Presumably that will be a basis for making a statement and an assessment. The Government must have thought through whether, for instance, the duty will apply to a report only after there has been a full financial year of experience. I may be barking up the wrong tree here but if the Minister can help the House on what is anticipated in the transitional arrangements, it would be useful.

The responses asked whether the provisions could apply to companies below the threshold. I assume that there is no reason why not. In our debates on the Bill, we talked about the reputational benefits of providing statements.

More widely—I do not know whether the Minister can answer this—what sense does the Home Office have of a buy-in of enthusiasm for this process, for instance among institutional investors? During the progress of the Bill, we talked about the position that shareholders have and the influence that they may have on companies, so the institutions, as the biggest shareholders generally, will be in an important position. I used a search engine to see what was being said about this subject and found that a number of City lawyers and accountants are including advice on the subject in their newsletters, but it will be the shareholders—and the concern not to upset shareholders—that will be central to the operation of this measure.

The noble Lord, Lord Alton, referred to the effectiveness of these arrangements. In that connection, I noted that the impact assessment seems to deal with the regulatory burden, not with the costs of the investigation leading to the content of the statement. Checking that there is no slavery in the chain is the objective, despite the get-out of the “no statement”, so it seemed to me that there was a danger that the impact assessment might be sending an inappropriate message.

I was interested, too, that quite a lot of respondents disagreed with providing key performance indicators—not a majority by any means, but the indicators are referred to in the legislation and they are important because they will show trends. We are talking here about not just snapshots but trends. I do not know whether the Minister can say anything about that.

Almost finally, we have heard about the requirements on the Home Secretary to report. Is there an intention to report more frequently than the statutory minimum? And finally—this matter was raised by the noble and learned Baroness, Lady Butler-Sloss, during the passage of the Bill—can the Minister tell us what the Government are doing to check on their own procurement?

Lord Kennedy of Southwark (Lab): My Lords, first, I generally welcome these regulations but have a few concerns. I am delighted that they have appeared before your Lordships’ House as close as we could get to Anti-Slavery Day, which was yesterday. Slavery and human trafficking are appalling crimes. Estimates have suggested that anything up to 13,000 people who are victims of modern slavery could be living here in the UK, and the Walk Free Foundation has estimated that there are 35.8 million people in modern slavery throughout the world. Those are appalling figures.

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During the passage of the then Modern Slavery Bill through your Lordships’ House, many examples were given of multinational businesses using very long and complicated supply chains across the world, which, due to their nature, can sometimes allow slavery to thrive. The regulations before us require companies with a turnover of £36 million or more to produce a statement that sets out the steps that the organisation has taken during the year to ensure that slavery and human trafficking are not taking place in any of its supply chains or in any of its own businesses, or a statement that the organisation has taken no steps at all. The statements must be published on the organisation’s website with a link in a prominent place on the home page of the website.

I am pleased that following the consultation the Government opted to include within this legislation companies with a minimum annual turnover of £36 million and that they did not go for a maximum threshold as a possible option. It was also clear from the consultation exercise that this figure was supported by most—more than 70%—of the people consulted. Like the noble Lord, Lord Alton, I noted that the Home Secretary has to produce a report. Regulation 4(2)(c) refers to “the extent to which” the objectives,

“could be achieved with a system that imposes less regulation”.

I would have preferred something that referred to more effective regulation rather than the word “less”. This is such an important issue that “less” lays the wrong emphasis on the regulation.

The Home Secretary is required to publish a report within five years of the regulations becoming law and thereafter every five years. Five years seems a terribly long time. We should have more frequent reporting—say every two or three years—which would enable us to more quickly identify issues that need to be addressed. This would ensure that the regulations are having their intended effect rather than to having to wait for just one chance in every Parliament.

7.30 pm

The point made by the noble Lord, Lord Bates, about allowing consumers to make informed choices is very important. During the passage of the Bill through your Lordships’ House, the question of whether a website should be maintained where details of company statements could be kept in one place was discussed. Again, the noble Lord, Lord Alton, raised this point. However, the Government were not persuaded as to the merits of the proposal, which is most disappointing. Perhaps the noble Lord, Lord Bates, could tell us whether he intends to keep that proposal under review. Could he also tell the House what his view would be if the Independent Anti-slavery Commissioner decided to set up such a website—if, of course, he had the necessary funds to do so? There is concern that it is going to be very difficult, if not impossible, to keep track of all these company statements when there is not a simple reference point or repository to go to.

Could the noble Lord also tell the House whether in any published guidance there will be some explanation of what the company statement should look like and what it should cover, or will it be up to each individual company to put down whatever if feels like?

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Page 19 of the impact assessment refers to engaging with business through,

“informal consultations and ongoing engagement”.

Can the noble Lord tell the House a little more about this?

Finally, I notice that post-legislative scrutiny will take place between three to five years after the Bill became an Act. Does the noble Lord, Lord Bates, think that we need the first report to the Home Secretary before we get into that position?

On these Benches we generally welcome these regulations, as we welcome the Act—we have been in the same place on many points—but this is such an important issue that it needs to be reviewed carefully to avoid unintended consequences. I hope the noble Lord will come back to us and tell us what the Government are going to do in the future.

Lord Bates: I thank all noble Lords who have spoken in this debate and welcome the noble Lord, Lord Kennedy, to his new role and responsibilities. He has shown a great interest in the area of modern slavery for some time and we look forward to continuing that discussion. He is right to say that this has been—certainly in my time in both Houses—model legislation in the way that it had pre-legislative scrutiny before the Bill was published. It is interesting that the original Bill was published without a clause on the supply chain. That came later between two stages. There have been a number of commitments to review and consultations which have led to that role. When we consulted on the range it varied from £100 million to £60 million, and the noble Lord is right to state what we have come forward with. During those debates there was a little suspicion in some quarters of the House as to whether it would be under £100 million but it has come down on the side of £36 million, which is the right level.

This is new legislation—a new initiative that we are undertaking—so all aspects of it have to be constantly under review to see how it is being introduced and how it is working. I will come to specific questions but I particularly wish to make reference to the question raised by the noble Lord, Lord Kennedy. The noble Baroness, Lady Hamwee, referred to the Independent Anti-slavery Commissioner and his priorities. He produced his strategic plan for 2015-17 last week and it sets out clearly what he aims to do. His first priority of course—it is important to put this on record in the context of a debate on the supply chain, although we all want to do more in every area—is the identification and care of victims. We all felt that that should be his priority. The supply chain is important. It comes in at number 4 in the section on what he intends to do to promote awareness of these new obligations on businesses. There is also an element which runs on from that about international co-operation. It is a crucial element. We are leading the way in the international community and we want this to help us build relationships with other organisations and to encourage them to have similar regulations in place.

I turn now to the specific points, but not in the order in which they were made. The noble Baroness, Lady Hamwee, asked about the transitional provisions

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and whether the company will need to report only up until the end of the full financial year. When we commence this transparency and supply chain provision, we will include a transition provision so that the first organisations required to comply will be those whose financial year ends on or after 31 March 2016. This will ensure that all organisations have sufficient time to consider the new provision and the statutory guidance before publishing their first statement. A follow-on from that was to say how long after that period they will have to file that report; the noble Baroness, Lady Hamwee, referred to this. We anticipate that a period of six months should be sufficient.

The noble Earl, Lord Sandwich, asked whether this provision applied to charities, universities and other organisations. The organisation will be caught if it engages in commercial activities irrespective of the purpose and whether profits are made. Ultimately it will be for the individual organisations to take legal advice, consider whether they meet the requirements of the Act and determine whether they need to comply. I have touched upon the transitional arrangements.

As to whether guidance will be published before October to coincide with the duty coming into force, our intention is to publish guidance at the same time as we bring this provision into force, which we expect to be next week, subject to approval of these regulations.

The noble Baroness, Lady Hamwee, asked what buy-in has been detected in the Home Office from institutional investors. A wide range of businesses and investors called for this legislation to be introduced. This included a prominent campaign led by a range of major investment firms, which wrote letters on a number of occasions calling for transparency in supply chain legislation. These include Rathbones Investments, BNP Paribas Investors, Pardes and Aviva Investors. We are therefore confident that investors welcome this provision and will provide more information. In fact, during the debate the most effective voices to be heard by organisations will be from their own shareholders. It is for institutional investors—whether they be trade unions or other investors—to make sure their voice is heard at annual general meetings. We know from experience in some areas—for example, female representation among non-executive directors on boards—that that very powerful voice has been heard. We hope that institutional investors will ensure that the voice is heard and that companies will give an adequate response.

The noble Baroness, Lady Hamwee, asked whether the Home Secretary intends to report more frequently than the statutory minimum infills. The regulations set out,

“before the end of a period of five years”.

Of course, “before the end” can be open-ended but it is certainly worth putting in a limit. While the requirement is to report only once every five years, if the Home Office receives clear evidence that the regulations are not achieving their objectives at an earlier point, we will of course consider conducting a formal review at an earlier stage.

I think that the message needs to go out to business that we are commencing this in a way which, while I do not want to use the term “light touch”, tries to work with businesses to get their supply chains in

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order. But the clear message is that we expect action to be taken, and if it is not taken it is of course open to this or future Governments to come forward with further measures for consideration.

I was asked what HMG were doing about their own procurement. The transparency provision was specifically designed with the private sector in mind. The Government are of course subject to parliamentary scrutiny and freedom of information requests in terms of their duties, but this is a key element. We have a cross-government procurement policy so that modern slavery considerations become a key part of procurement processes. I believe that imminently, if not already, a question relating to the compliance of supply chains with the Act and the regulations is being inserted into that policy.

The noble Earl asked about the role of the Independent Anti-slavery Commissioner. His remit includes promoting good practice in the prevention, detection, investigation and prosecution of modern slavery offences, which includes encouraging good practice among businesses to prevent slavery from occurring in their supply chains. The whole point is that the anti-slavery commissioner is independent, which is another change that was made in the process of the legislation. We cannot instruct him on what to do, but the Home Secretary will ensure that she listens carefully to his recommendations and requests.

The noble Lord, Lord Alton, raised a number of points, one of which was echoed by the noble Lord, Lord Kennedy: why is there a reference in Regulation 4(2)(c) to “less regulation” rather than more effective regulation? The reference to “less regulation” reflects the standard-view terminology applicable to all business regulations. It reflects the fact that these regulations are from a Government who have as one of their aims a deregulatory culture. We have committees and processes that scrutinise what we do to ensure that what we put forward is consistent with the wider government approach. In any event, the review of these regulations will seek to ensure that they remain effective.

The noble Lord also asked when James Ewins’s report would be published. He has asked for more time to complete his work, but we expect Mr Ewins to publish his report on migrant domestic workers around mid-November, and we have made a commitment that we would seek to come forward with actions in that area by the end of the year. If that is not correct—

Lord Alton of Liverpool: I am grateful to the Minister for giving way. He will know that organisations like Kalayaan gave evidence to Members of your Lordships’ House when we were debating these issues, and he will recall that my noble friend Lord Hylton and I divided the House on this question. I hope that we will have the opportunity to have, first, briefing sessions with the Minister when the report is available so that proper discussion can continue to take place. Secondly, I hope that at some point there will be a chance either in the House or in Committee to have a debate before any final decisions are taken. I wonder if the noble Lord is able to give some assurances on the process of how the issue of domestic migrant labour will be taken forward.

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Lord Bates: I thank the noble Lord for his questions. We have not made a commitment on that, but I can certainly give a commitment that I will reflect on what he has said about how we should handle the report once it is received and I will come back to him.

The key element in a number of contributions was about the central repository for these forms. The Government are not launching an online repository. However, we are aware of a number of proposals from third parties who have suggested that they could develop a website to host these statements and help people search for businesses and compare them. In California the non-governmental organisation Know The Chain has set up a website that allows the public to see which companies have complied with the legislation. The UK could adopt a similar approach to support a transparency provision. In essence, we believe that this is something that it would be valuable to have, but it is for civil society, not for government, to actually maintain the repository.

We were asked how many businesses it was likely that this would apply to. Of course, applying the threshold at the lower level captures more businesses, and according to the Mint Global database as set out in the impact assessment, 17,257 businesses will be involved.

7.45 pm

The Earl of Sandwich: Can the noble Lord clarify whether the commissioner has any role in this? It is quite an undertaking to leave it entirely to the voluntary sector.

Lord Bates: In the strategy which he published, the commissioner did not say that he felt that it was for him to do this. He did not express that as a view and he set out other priorities. Of course, whatever the sums are that he has to work with, we know that many demands will be made on those resources, and he wishes to target them in a particular way. I am aware that discussions are going on with third-party organisations which might be willing to step forward in this area, but we feel that it is not something for the Government themselves.

Lord Alton of Liverpool: Again, I am grateful to the noble Lord. Could he clarify what he means by civil society and third-party organisations? In my earlier remarks I was careful to distinguish between commercial organisations and, say, universities, charities and NGOs. I would be perfectly happy about any of those, but I would have some reservations about commercial organisations, which could have some direct vested interest and might not inspire the same confidence as what we might loosely call third sector groups would. Can the noble Lord explain what he means by the civil society groups which are in discussion with the Home Office at the present time?

Lord Bates: They might be better described as non-governmental groups. It could be that private sector groups or even charitable organisations are interested in putting this together. All I am saying is that there is possibly an interest out there, but the key

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element for the purpose of these regulations is twofold. First, we recognise that it would be of interest, but we should remember that the whole purpose of insisting that this was not in a published, hard-copy annual report and accounts but was a statement on a website is that such a statement is searchable. A number of people, organisations and NGOs took part in the consultation and have shown a real, forensic interest in how people are doing, and they will be able to search those. That sort of social media activism, which we see so much of in many areas, could be brought to bear in order to shine a light in this particular area. That might be more effective than simply, as it were, designating one particular organisation to take responsibility for it.

Lord Kennedy of Southwark: The noble Lord is absolutely right. We will have the company statements on the company website, but the only issue with the central repository, of course, is that if you have 7,000 to 10,000 companies, it will be difficult if they are not all in one place. I think that there has been some movement from the Minister tonight, but can he explain why he thinks that this should not be done by government? Why should it be left to civil society or a third-party organisation? It is an important point and it seems to be the missing part in all this.

Baroness Hamwee: My Lords, I wonder if I could add to that, because it is part of the same question. I am sure that the Minister does not mean it in this way, but the more it is said that this is not a matter for government, the more one worries about how the Home Secretary is going to fulfil her duties in keeping the matter under review if she does not have that facility available to her. The information is very much a matter for government and therefore the Government must have an interest in ensuring that it is easily accessible.

Lord Berkeley of Knighton (CB): In order to save the Minister from popping up and down like a jack-in-the-box, perhaps I may add one point which may help my noble friend Lord Alton. If by civil society one were able to define that by ruling out commercial interests, that would go a long way towards meeting the point being made.

Lord Bates: I am grateful for all those points. Let us remember that as this Act went through we debated whether it should be a statutory responsibility to do this or whether it should be something on which the Government should take the lead. The Act has come through in its present form. I hear the voices saying that all these points are needed. If an organisation does not file its statement on its website for the financial year, on or after 31 March, there are remedies set out in the Act as to what can happen as a result of that. Therefore, this is a very serious statement, but it is an added tool for people to use.

For example, many times we have seen stories in the press about practices in the supply chains of organisations. Now, to go along with those investigations in the press, there would be an ability for them to say, “Well,

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of course, this is what the said company said on its own website about its supply chain”. People can then draw an additional conclusion from that statement.

We are moving further down this route. These are early days and we will need to see how it comes about. Guidance will be published, on which we have consulted extensively. It will provide further information about what should be done and how it should be presented. However, we are where we said we would be when we passed the Act and we should allow these regulations to come into force so that it can be seen to work and can be evaluated after a period of examination. I beg to move.

Motion agreed.

Energy Bill [HL]

Report (1st Day) (Continued)

7.52 pm

Clause 5: Directions: national security and public interest

Amendment 19

Moved by Baroness Worthington

19: Clause 5, page 3, line 41, at end insert—

“( ) Directions given under subsection (1) may require the OGA to postpone or prohibit decommissioning of oil or gas infrastructure until such time as the Secretary of State determines that a carbon capture and storage operator is in position to utilise the infrastructure.”

Baroness Worthington (Lab): My Lords, the next group of amendments have been tabled under the heading of decommissioning and the risks associated with the,

“decommissioning of oil or gas infrastructure”,

and safeguards. In speaking to Amendment 19, I shall speak also to Amendment 77. As we have said previously, we are grateful to the Minister for listening to some of the concerns raised during the passage of this Bill. Under the previous group, we talked about carbon capture and storage and use. The other aspect of this Bill which we felt needed more attention was decommissioning. This afternoon, the noble Lord, Lord Howell, who is not in his place, kicked off by reminding us that the world is changing very fast. The very low prices, which look likely to be sustained, have had a big impact on the North Sea and the pipeline of investment into and operations within it. We are seeing a somewhat contracted timetable for decommissioning as a result of that change in the global oil price.

It is fair to say that the resource discovered in the North Sea in the 1970s has been an absolute mainstay of our economy and our public finance. It has paid a huge sum—some £300 billion, I think—in tax income since then. Obviously, it has helped to generate many jobs, to bring about world-class engineering and has been a considerable boon to the UK. However, all good things seem to come to an end and, particularly when it comes to fossil fuel reserves, that end can come

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rather more swiftly than one might expect. That is partly because of oil and gas prices and the commodity market, but also because we are now entering a world in which we know that we can no longer burn and combust oil and gas without paying heed to the fact that that is contributing to global warming.

Obviously, the recent oil price reductions have not yet been directly related to policy interventions on climate change, but they may be a foretaste of things to come as more nations move to a low carbon economy. I am thinking specifically of the US, China and Europe—the three big economic blocs where it is clear that the commitment to tackling climate change is real and the desire to move to cleaner energy systems is starting to be witnessed.

We are now seeing decommissioning occurring. In tabling these amendments, our concern is that this is happening on a more condensed timetable than we might have expected or perhaps wished. On the one hand, we have a desire to develop a new industry in the form of carbon capture, storage and utilisation, which obviously requires the fitting of equipment to capture the gases that are transported and potentially stored in areas of the North Sea, or onshore in saline aquafers and other locations.

The move to deploy these projects has been very slow. It was way back in 2005, under a Labour Government, when we first said that we were going to pay for such projects. There have been several iterations of that policy since and here we are, 10 years later, still awaiting the first sods to be turned and projects to go ahead. We know that we now have a funding mechanism—at least, we hope we do—in the form of the contract for difference. We expect those projects to be successful and to see at least two, or possibly three, demonstration projects in the UK, which will then result in relatively large volumes of CO2 needing to be stored. But that is all taking rather a long time.

In the mean time, we see the major players in the North Sea wishing to withdraw. Therefore, the decommissioning of their infrastructure may happen sooner than we are able to reuse it through CCS, which poses quite a significant challenge. Our purpose in tabling these amendments is to explore the extent to which the OGA will have and should have powers to manage decommissioning, so that, if a large oil and gas operator wants to move out of the North Sea, it cannot simply begin the decommissioning process without giving due notice to government and considering the reuse of that infrastructure.

For avoidance of doubt, I am sure the Minister will explain that government Amendments 73, 74, 84 and 85 are relevant to this discussion and seek to address the misalignment between potential decommissioning and the need for that infrastructure, which is welcome. Our amendments are perhaps a little more explicit. Certainly, Amendment 19 would give the Secretary of State a specific power to direct,

“the OGA to postpone or prohibit decommissioning”.

8 pm

Of course, the next obvious question is: should costs be incurred, who should pay? We would need to explore where the balance of that payment should

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rest, but in that context it is worth remembering that, although the oil and gas sector has paid handsomely into the public account over the decades, it is now in the very secure position of having tax rebates to help to pay for its decommissioning. Provisions created under the Finance Act have now been converted into private contracts between oil and gas operators and the Government, which essentially compensate for any changes in the tax regime. In essence, they have their own form of a contract for difference to pay for decommissioning. It does not allow the Government to change the tax breaks without providing compensation. It is an interesting model that I am not sure has had enough scrutiny.

Obviously, there are financial flows between the state and the sector. It is not as simple as it once was, when tax revenues simply flowed in, we thanked the industry and, by and large, left it to its own devices—not without some regulation, but it is not as highly regulated as energy is on land. We now see the subtle shift in the contract between the sector and government. Indeed, the creation of the OGA is another example of that subtle shift, where arm’s-length regulation is perhaps no longer fit for purpose. There is a need for independent intervention and government intervention to help manage what is happening in the North Sea. Again, if the Government are making loans or provisions—or, indeed, providing the staff of the OGA with pensions under Civil Service terms—that changes the nature of what is occurring in the North Sea, making the relationship between the Government and the private sector different and more fluid.

Clearly, there are ways that money could be found to enable this to happen. It is important that we debate this and get a clear sense from the Government of where we are going. Can the OGA postpone the removal of essential infrastructure if it is deemed necessary for reuse for other energy purposes? I know that the noble and learned Lord, Lord Wallace, the noble Lord, Lord Teverson, and the noble Baroness, Lady Maddock, will speak to a similar amendment. I know that they feel similarly that this is getting to the nub of what we can do with the OGA.

Amendment 77 relates to my worry that we are entering a phase where we have inadvertently—or perhaps knowingly—taken an unlimited liability on the public purse through the deeds of contract that have been agreed between the sector and the Government, which compensate for any changes in Finance Act tax arrangements. We need from the Government a clear sense of how much of a liability we have created. I have seen estimates that the loss of revenue from decommissioning costs that will fall to the Exchequer—to the public purse—will be in the region of £5 billion between now and the end of the decade. Those will rise swiftly thereafter, potentially reaching £20 billion or higher in the next decade. These are not insignificant sums when we live in a time of austerity.

As I said, we now have these contracts, which have been signed and essentially bind the hands of future Governments—they are not time-limited. Rather a large amount of tax will be paid back to the sector. Of course, the taxes were paid by the sector in the first instance, but you cannot have it both ways. You cannot

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say, “We are the great providers and we have been paying in tax; aren’t we wonderful? Oh, by the way, we’d like it all back now because we have to pay for decommissioning”. That simply will not wash. It is not as if, during those decades of providing tax revenues, they were not also providing massive profits—huge profits—to their shareholders and all their investors.

It is fine to say that the industry is on its knees and running out of money. Times might be hard now, but times have been very good. It is prudent to plan for your future, knowing that you will be able to pay for your decommissioning and not be caught out. If you have prudent management, you should never find yourself unable to pay for the things you have caused to be created in the first place.

The reason for Amendment 77 is that we simply want to make the House, lawmakers and policymakers aware that this is the current arrangement: that there are these deeds of contract, that they are creating a liability and that we ought to be well informed of what the cost will be. This is obviously not the precise wording—it is very much a probing amendment—but I would like to hear from the Minister the Government’s thinking on these decommissioning costs and the liability they create.

To return to Amendments 19 and 21, which I am sure noble Lords from the Lib Dem Benches will speak to, what can we do to ensure that we are not simply rushing to decommission, and that we have a planned strategy? What can the OGA do and not do? Ultimately, I suspect that the hardest question will be: who pays? I look forward to hearing from the Minister and from other contributors to the debate.

Lord Teverson (LD): My Lords, I thank the Minister for the meetings that we have had. I found one of them particularly useful because we had a wide range of representatives, from both the department and the OGA. One of the issues that came up, which perhaps I should have understood more but did not, was that oil and gas infrastructure, particularly in the North Sea, was of particular importance, as well as the importance of managing that infrastructure in terms of decommissioning and making sure of other uses, such as CCS. What came out was that a lot of this infrastructure could well be critical to the nation, not just in the context of carbon capture and storage, but even in how the oil and gas market might move.

The question then came down to: if there was critical infrastructure and this decommissioning took place, what happened if the commercial sector— the industry—decided that there was no way that it wanted to keep particular assets operational and they should therefore be decommissioned, but the Secretary of State, the Government and the nation had a different view? Who carries the financial can for that in the future? If industry was not there, who else would step in?

I ask the Minister to forgive me for this: in a way our amendment is a probing amendment, which of course we should not really do on Report, but it is an important point to understand. My question is a fundamental one: if we have critical infrastructure in this industry—in the North Sea, say—and it is to be

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decommissioned, yet the OGA sees it as critical for future development, whether with greenhouse gases or the future of oil and gas itself, what happens when the private sector will no longer pay for that asset to remain operational, or at least be mothballed? Our amendment asks that question, but it also lays down that the OGA should have a specific responsibility to bring it to the attention of the Secretary of State, should such a situation arise. To solve that, the Secretary of State should be able to pay out of public funds for that critical infrastructure to remain.

I am not completely naive in this area. Clearly, if the private sector sees that the taxpayer is likely to underwrite an asset into the long-term future, perhaps not surprisingly people in that sector might be rather quicker to decommission, move out of these assets and move that cost across to the taxpayer. There is clearly that risk. However, we on these Benches seek through this amendment to obtain clarity on how we defend and preserve the national interest in terms of these assets while at the same time making sure that any taxpayer commitment will be protected—namely, that we keep these strategic assets when the OGA and the Secretary of State believe that they are critical for the nation’s future.

The Parliamentary Under-Secretary of State, Department of Energy and Climate Change and Wales Office (Lord Bourne of Aberystwyth) (Con): My Lords, I thank the noble Baroness, Lady Worthington, and the noble Lord, Lord Teverson, for these amendments. I wish to speak to the non-government amendments before addressing the government amendments. Following discussions held during the dinner break, I am happy to revisit Amendment 72, which we looked at before the dinner break.

Amendment 19 seeks to amend Clause 5 to give the Secretary of State the power to direct the Oil and Gas Authority to postpone or prohibit decommissioning of infrastructure until such time as she determines that a carbon capture and storage operator is in a position to utilise the infrastructure. I must first clarify that it is not the intention that the Bill will give the OGA the power to prohibit or postpone decommissioning. The ultimate power to approve, or disapprove as necessary, a decommissioning plan lies with the Secretary of State under Part 4 of the Petroleum Act 1998, and will continue to do so.

In any event, taking a power to delay or prohibit decommissioning on an open-ended basis for the purpose suggested would appear to require an owner of relevant infrastructure to pay for the ongoing maintenance of the infrastructure on an indefinite basis until the CCS development is ready. These would be significant costs, running to tens of millions of pounds for ongoing maintenance every year, simply to keep the relevant infrastructure safe until such time as it might be reused for CCS. When, as we all hope will quickly become the case, CCS is a proven technology, we can be certain of how and when relevant infrastructure can be reused for CCS and a commercial deal is viable, preventing decommissioning of existing assets to make way for CCS may be sensible and permissible under the current proposals the Government have made. However, as we debate the merits of this amendment

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today, we cannot say with any certainty when or how such infrastructure could be reused for CCS. I fear that this amendment risks making the United Kingdom continental shelf less attractive to investors and jeopardising the vital investment we need for the future of the basin. This would put us in significant conflict with the recommendations set out in the Wood review, and would be perilous given the challenging economic realities in the United Kingdom continental shelf today.

I hope that this explanation is helpful in setting out why this amendment is not workable from a structural perspective, since it will be the Secretary of State, not the OGA, who will hold the key power to decide whether to approve or reject an abandonment programme. In addition, as I will outline shortly, the government amendments brought forward on Report today aim to strike the right balance between keeping the continental shelf open for business while putting rigorous checks in place to ensure that the preservation and reuse of North Sea infrastructure, including for CCS, is appropriately considered before any decommissioning can take place.

The Government’s proposals would allow the Secretary of State to ensure that decommissioning takes place in accordance with an approved decommissioning plan, enabling her to ensure that alternatives to decommissioning are taken into account and that the costs of plans are kept to the minimum reasonably practicable. The intention is very much to bring consideration of such reuse to the forefront of the process and ensure that opportunities are identified early, allowing for adequate commercial arrangements to be made between parties and preventing situations requiring a party to maintain an asset against their will.

I turn to non-government Amendment 21. This amendment seeks to insert a new clause after Clause 7. The new clause would require the Oil and Gas Authority to report to the Secretary of State if the operability of any element of critical oil and gas infrastructure is at risk due to the financial condition of the owner, or for any other reason. It would also enable the Secretary of State to provide financial support to maintain such assets, if she considers the asset is at risk of closure or becoming inoperable, and it is in the national interest for it to remain in operational order.

I, too, am concerned to ensure that critical oil and gas infrastructure is properly identified and safeguarded in the national interest. This is an area already being addressed by the Oil and Gas Authority. Its recent Call to Action: Six Months On report highlighted actions being taken to protect critical infrastructure. However, we will continue to monitor this work and provision in this Bill will already enable the Secretary of State to require action from the OGA if necessary.

8.15 pm

The existing drafting of Clause 5 “Directions: national security and public interest” and Clause 6 “Directions: requirements to notify Secretary of State” cover all the circumstances and issues identified in proposed new subsection (1) of the amendment. If this is not the case, the Pepper v Hart case of 1993 can be used on the basis of the debate today to indicate that that is the view of the operation of the clause.

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Under Clause 5, the Secretary of State has the power to issue a direction to the Oil and Gas Authority as to the exercise of its functions, if the direction is either necessary in the interests of national security or otherwise is in the public interest. We believe that the operability of critical oil and gas infrastructure is in the public interest, and as such it is something in respect of which the Secretary of State could issue a direction. In support of this power, Clause 5(7) requires the OGA to notify the Secretary of State of any cases, matters or circumstance which have arisen or are likely to arise in relation to which she may issue a direction. The potential closure or shutdown of a nationally significant oil and gas infrastructure asset is an issue on which the Secretary of State would expect the OGA to report to her under the above provisions.

Where infrastructure is critical, there will almost certainly be a commercial deal to be done. It will be the role of the OGA to facilitate this by bringing parties together. Only once the market had failed to provide such a commercial deal would the Government step in. We are not yet in that place but, should it be necessary, we are of the view that sufficient financial mechanisms already exist that, in the event that such support was necessary, it could be provided by government, subject to approval by Her Majesty’s Treasury. However, before such support could be given, the Government would need to ensure that they were acting in compliance with state aid rules. I hope noble Lords have found this explanation reassuring.

Non-government Amendment 77 seeks to insert a new clause into the Bill requiring the Secretary of State to report annually to both Houses of Parliament on the estimated cost of decommissioning North Sea oil and gas infrastructure. As we have discussed previously, the inevitable consequence of a maturing basin means that the future cost of decommissioning activity in the North Sea is expected to be substantial. This forthcoming increase in decommissioning activity presents a major opportunity to increase efficiencies and reduce costs to both the industry and the taxpayer.

We recognise that the reporting of costs plays an important role in this. Most importantly, we recognise the need for transparency regarding the costs that may ultimately fall to the taxpayer as a result of tax relief mechanisms for decommissioning costs mentioned by the noble Baroness, Lady Worthington. Our current estimates are that between 2015 and 2041, the cost to Her Majesty’s Treasury would be £16 billion. Industry’s costs would be well in excess of that. Those are, of course, estimates. To this end, Her Majesty’s Revenue & Customs provides a detailed account of expected decommissioning liability in its annual accounts, which are publicly available.

The approach by which that liability is accounted for has recently been revised in order to provide a more long-term estimate of the costs of decommissioning. This provides both industry and government with a much fuller picture of the expected future cost landscape, allowing these costs to be robustly managed and ensuring that decommissioning is executed as efficiently as practically possible. I hope that this explanation, coupled with the relevant government amendments aimed at ensuring that the cost of decommissioning plans is

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kept to the minimum reasonably practicable, reassures noble Lords that the reduction of decommissioning costs is at the forefront of the Government’s agenda. For these reasons I ask that Amendment 77 be not moved.

Government Amendment 84 inserts a new schedule into the Bill relating to decommissioning. This schedule is introduced by Amendment 73, and Amendment 85 amends the title of the Bill to ensure that Amendment 84 is within the scope of the Bill. We agree that decommissioning is an integral part of the life cycle of oil and gas infrastructure. There is a real need to manage the interrelationship between extending economic production, retaining facilities and utilities to optimise decommissioning, and preserving assets for future use where appropriate. As the inevitable consequence of a maturing basin, decommissioning activity in the North Sea is expected to ramp up significantly in the coming years. This increased activity will bring increased cost, as I have indicated. While the industry will bear the upfront cost of the decommissioning, a significant portion will be borne by the Government, as I have set out.

The forthcoming increase in decommissioning activity presents a major opportunity to increase efficiencies and reduce costs to both the industry and the taxpayer. It is imperative that costs are robustly managed and that decommissioning is executed as efficiently as practically possible, while ensuring that the highest safeguards for health and the environment are satisfied.