21 Oct 2015 : Column 705

(ii) in the Authority’s view, the additional capacity first formed part of the station during the period beginning with 1 April 2016 and ending with 31 March 2017, and

(iii) the grid or radar delay condition is met in respect of the additional capacity.

32LF Onshore wind generating stations accredited, or additional capacity added, on or before 31 March 2017: approved development condition met

The circumstances set out in this section are where the electricity is—

(a) generated using the original capacity of an onshore wind generating station—

(i) which was accredited on or before 31 March 2017, and

(ii) in respect of which the approved development condition is met, or

(b) generated using additional capacity of an onshore wind generating station, where—

(i) the station was accredited on or before 31 March 2016,

(ii) in the Authority’s view, the additional capacity first formed part of the station on or before 31 March 2017, and

(iii) the approved development condition is met in respect of the additional capacity.

32LG Onshore wind generating stations accredited, or additional capacity added, between 1 April 2017 and 31 March 2018: grid or radar delay condition met

The circumstances set out in this section are where the electricity is—

(a) generated using the original capacity of an onshore wind generating station—

(i) which was accredited during the period beginning with 1 April 2017 and ending with 31 March 2018,

(ii) in respect of which the approved development condition is met, and

(iii) in respect of which the grid or radar delay condition is met, or

(b) generated using additional capacity of an onshore wind generating station, where—

(i) the station was accredited on or before 31 March 2016,

(ii) in the Authority’s view, the additional capacity first formed part of the station during the period beginning with 1 April 2017 and ending with 31 March 2018,

(iii) the approved development condition is met in respect of the additional capacity, and

(iv) the grid or radar delay condition is met in respect of the additional capacity.

32LH Onshore wind generating stations accredited, or additional capacity added, between 1 April 2017 and 31 December 2017: investment freezing condition met

The circumstances set out in this section are where the electricity is—

(a) generated using the original capacity of an onshore wind generating station—

(i) which was accredited during the period beginning with 1 April 2017 and ending with 31 December 2017, and

(ii) in respect of which both the approved development condition and the investment freezing condition are met, or

(b) generated using additional capacity of an onshore wind generating station, where—

(i) the station was accredited on or before 31 March 2016,

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(ii) in the Authority’s view, the additional capacity first formed part of the station during the period beginning with 1 April 2017 and ending with 31 December 2017, and

(iii) both the approved development condition and the investment freezing condition are met in respect of the additional capacity.

32LI Onshore wind generating stations accredited, or additional capacity added, between 1 January 2018 and 31 December 2018: grid or radar delay condition met

The circumstances set out in this section are where the electricity is—

(a) generated using the original capacity of an onshore wind generating station—

(i) which was accredited during the period beginning with 1 January 2018 and ending with 31 December 2018,

(ii) in respect of which both the approved development condition and the investment freezing condition are met, and

(iii) in respect of which the grid or radar delay condition is met, or

(b) generated using additional capacity of an onshore wind generating station, where—

(i) the station was accredited on or before 31 March 2016,

(ii) in the Authority’s view, the additional capacity first formed part of the station during the period beginning with 1 January 2018 and ending with 31 December 2018,

(iii) both the approved development condition and the investment freezing condition are met in respect of the additional capacity, and

(iv) the grid or radar delay condition is met in respect of the additional capacity.

32LJ The approved development condition

(1) This section applies for the purposes of sections 32LF to 32LI.

(2) The approved development condition is met in respect of an onshore wind generating station if the documents specified in subsections (4), (5) and (6) were provided to the Authority with the application for accreditation of the station.

(3) The approved development condition is met in respect of additional capacity if the documents specified in subsections (4), (5) and (6) were provided to the Authority on or before the date on which the Authority made its decision that the additional capacity could form part of an onshore wind generating station.

(4) The documents specified in this subsection are—

(a) evidence that—

(i) planning permission for the station or additional capacity was granted on or before 18 June 2015, and

(ii) any conditions as to the time period within which the development to which the permission relates must be begun have not been breached,

(b) evidence that—

(i) planning permission for the station or additional capacity was refused on or before 18 June 2015, but granted after that date following an appeal or judicial review, and

(ii) any conditions as to the time period within which the development to which the permission relates must be begun have not been breached,

(c) evidence that—

(i) an application for 1990 Act permission or 1997 Act permission was made on or before 18 June 2015 for the station or additional capacity,

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(ii) the period allowed under section 78(2) of the 1990 Act or (as the case may be) section 47(2) of the 1997 Act ended on or before 18 June 2015 without any of the things mentioned in section 78(2)(a) to (b) of the 1990 Act or section 47(2)(a) to (c) of the 1997 Act being done in respect of the application,

(iii) the application was not referred to the Secretary of State, Welsh Ministers or Scottish Ministers in accordance with directions given under section 77 of the 1990 Act or section 46 of the 1997 Act,

(iv) 1990 Act permission or 1997 Act permission was granted after 18 June 2015 following an appeal, and

(v) any conditions as to the time period within which the development to which the permission relates must be begun have not been breached, or

(d) a declaration by the operator of the station that, to the best of the operator’s knowledge and belief, planning permission is not required for the station or additional capacity.

(5) The documents specified in this subsection are—

(a) a copy of an offer from a licensed network operator made on or before 18 June 2015 to carry out grid works in relation to the station or additional capacity, and evidence that the offer was accepted on or before that date (whether or not the acceptance was subject to any conditions or other terms), or

(b) a declaration by the operator of the station that, to the best of the operator’s knowledge and belief, no grid works were required to be carried out by a licensed network operator in order to enable the station to be commissioned or the additional capacity to form part of the station.

(6) The documents specified in this subsection are a declaration by the operator of the station that, to the best of the operator’s knowledge and belief, as at 18 June 2015 a relevant developer of the station or additional capacity (or a person connected, within the meaning of section 1122 of the Corporation Tax Act 2010, with a relevant developer of the station or additional capacity)—

(a) was an owner or lessee of the land on which the station or additional capacity is situated,

(b) had entered into an agreement to lease the land on which the station or additional capacity is situated,

(c) had an option to purchase or to lease the land on which the station or additional capacity is situated, or

(d) was a party to an exclusivity agreement in relation to the land on which the station or additional capacity is situated.

(7) In this section—

“the 1990 Act” means the Town and Country Planning Act 1990;

“1990 Act permission” means planning permission under the 1990 Act (except outline planning permission, within the meaning of section 92 of that Act);

“the 1997 Act” means the Town and Country Planning (Scotland) Act 1997;

“1997 Act permission” means planning permission under the 1997 Act (except planning permission in principle, within the meaning of section 59 of that Act);

“exclusivity agreement”, in relation to land, means an agreement by the owner or a lessee of the land not to permit any person (other than the persons identified in the agreement) to construct an onshore wind generating station on the land;

“planning permission” means—

(a) consent under section 36 of this Act,

(b) 1990 Act permission,

(c) 1997 Act permission, or

(d) development consent under the Planning Act 2008.

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32LK The investment freezing condition

(1) This section applies for the purposes of sections 32LH and 32LI.

(2) The investment freezing condition is met in respect of an onshore wind generating station if the documents specified in subsection (4) were provided to the Authority with the application for accreditation of the station.

(3) The investment freezing condition is met in respect of additional capacity if the documents specified in subsection (4) were provided to the Authority on or before the date on which the Authority made its decision that the additional capacity could form part of an onshore wind generating station.

(4) The documents specified in this subsection are—

(a) a declaration by the operator of the station that, to the best of the operator’s knowledge and belief, as at the Royal Assent date—

(i) the relevant developer required funding from a recognised lender before the station could be commissioned or additional capacity could form part of the station,

(ii) a recognised lender was not prepared to provide that funding until enactment of the Energy Act 2016, because of uncertainty over whether the Act would be enacted or its wording if enacted, and

(iii) the station would have been commissioned, or the additional capacity would have formed part of the station, on or before 31 March 2017 if the funding had been provided before the Royal Assent date, and

(b) a letter or other document, dated on or before the date which is 28 days after the Royal Assent date, from a recognised lender confirming (whether or not the confirmation is subject to any conditions or other terms) that the lender was not prepared to provide funding in respect of the station or additional capacity until enactment of the Energy Act 2016, because of uncertainty over whether the Act would be enacted or its wording if enacted.

(5) In this section—

“recognised lender” means a provider of debt finance which has been issued with an investment grade credit rating by a registered credit rating agency;

“the Royal Assent date” means the date on which the Energy Act 2016 is passed.

(6) For the purposes of the definition of “recognised lender” in subsection (5)—

“investment grade credit rating” means a credit rating commonly understood by registered credit rating agencies to be investment grade;

“registered credit rating agency” means a credit rating agency registered in accordance with Regulation (EC) No 1060/2009 of the European Parliament and the Council of 16 September 2009 on credit rating agencies.

32LL The grid or radar delay condition

(1) This section applies for the purposes of sections 32LE, 32LG and 32LI.

(2) The grid or radar delay condition is met in respect of an onshore wind generating station if, on or before the date on which the Authority made its decision to accredit the station, the documents specified in subsection (4), (5) or (6) were—

(a) submitted by the operator of the station, and

(b) received by the Authority.

(3) The grid or radar delay condition is met in respect of additional capacity if, on or before the date on which the Authority made its decision that the additional capacity could form part of an onshore wind generating station, the documents specified in subsection (4), (5) or (6) were—

(a) submitted by the operator of the station, and

(b) received by the Authority.

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(4) The documents specified in this subsection are—

(a) evidence of an agreement with a network operator (“the relevant network operator”) to carry out grid works in relation to the station or additional capacity (“the relevant grid works”);

(b) a copy of a document written by, or on behalf of, the relevant network operator which estimated or set a date for completion of the relevant grid works (“the planned grid works completion date”) which was no later than the primary date;

(c) a letter from the relevant network operator confirming (whether or not such confirmation is subject to any conditions or other terms) that—

(i) the relevant grid works were completed after the planned grid works completion date, and

(ii) in the relevant network operator’s opinion, the failure to complete the relevant grid works on or before the planned grid works completion date was not due to any breach by a generating station developer of any agreement with the relevant network operator; and

(d) a declaration by the operator of the station that, to the best of the operator’s knowledge and belief, the station would have been commissioned, or the additional capacity would have formed part of the station, on or before the primary date if the relevant grid works had been completed on or before the planned grid works completion date.

(5) The documents specified in this subsection are—

(a) evidence of an agreement between a generating station developer and a person who is not a generating station developer (“the radar works agreement”) for the carrying out of radar works (“the relevant radar works”);

(b) a copy of a document written by, or on behalf of, a party to the radar works agreement (other than a generating station developer) which estimated or set a date for completion of the relevant radar works (“the planned radar works completion date”) which was no later than the primary date;

(c) a letter from a party to the radar works agreement (other than a generating station developer) confirming, whether or not such confirmation is subject to any conditions or other terms, that—

(i) the relevant radar works were completed after the planned radar works completion date, and

(ii) in that party’s opinion, the failure to complete the relevant radar works on or before the planned radar works completion date was not due to any breach of the radar works agreement by a generating station developer; and

(d) a declaration by the operator of the station that, to the best of the operator’s knowledge and belief, the station would have been commissioned, or the additional capacity would have formed part of the station, on or before the primary date if the relevant radar works had been completed on or before the planned radar works completion date.

(6) The documents specified in this subsection are—

(a) the documents specified in subsection (4)(a), (b) and (c);

(b) the documents specified in subsection (5)(a), (b) and (c); and

(c) a declaration by the operator of the station that, to the best of the operator’s knowledge and belief, the station would have been commissioned, or the additional capacity would have formed part of the station, on or before the primary date if—

(i) the relevant grid works had been completed on or before the planned grid works completion date, and

(ii) the relevant radar works had been completed on or before the planned radar works completion date.

21 Oct 2015 : Column 710

(7) In this section “the primary date” means—

(a) in a case within section 32LE(a)(i) or (b)(i) and (ii), 31 March 2016;

(b) in a case within section 32LG(a)(i) and (ii) or (b)(i) to (iii), 31 March 2017;

(c) in a case within section 32LI(a)(i) and (ii) or (b)(i) to (iii), 31 December 2017.”

(3) In section 32M (interpretation of sections 32 to 32M)—

(a) in subsection (1), for “32LB” substitute “32LL”;

(b) at the appropriate places insert the following definitions—

““accredited”, in relation to an onshore wind generating station, means accredited by the Authority as a generating station which is capable of generating electricity from renewable sources; and “accredit” and “accreditation” are to be construed accordingly;”;

““additional capacity”, in relation to an onshore wind generating station, means any generating capacity which does not form part of the original capacity of the station;”;

““commissioned”, in relation to an onshore wind generating station, means having completed such procedures and tests in relation to the station as constitute, at the time they are undertaken, the usual industry standards and practices for commissioning that type of generating station in order to demonstrate that it is capable of commercial operation;”;

““generating station developer”, in relation to an onshore wind generating station or additional capacity, means—

(a) the operator of the station, or

(b) a person who arranged for the construction of the station or additional capacity;”;

““grid works”, in relation to an onshore wind generating station, means—

(a) the construction of a connection between the station and a transmission or distribution system for the purpose of enabling electricity to be conveyed from the station to the system, or

(b) the carrying out of modifications to a connection between the station and a transmission or distribution system for the purpose of enabling an increase in the amount of electricity that can be conveyed over that connection from the station to the system;”;

““licensed network operator” means a distribution licence holder or a transmission licence holder;”;

““network operator” means a distribution exemption holder, a distribution licence holder or a transmission licence holder;”;

““onshore wind generating station” has the meaning given by section 32LC(2);”;

““original capacity”, in relation to an onshore wind generating station, means the generating capacity of the station as accredited;”;

““radar works” means—

(a) the construction of a radar station,

(b) the installation of radar equipment,

(c) the carrying out of modifications to a radar station or radar equipment, or

(d) the testing of a radar station or radar equipment;”;

““relevant developer”, in relation to an onshore wind generating station or additional capacity, means a person who—

(a) applied for planning permission for the station or additional capacity,

(b) arranged for grid works to be carried out in relation to the station or additional capacity,

(c) arranged for the construction of any part of the station or additional capacity,

(d) constructed any part of the station or additional capacity, or

(e) operates, or proposes to operate, the station;”.”

21 Oct 2015 : Column 711

Lord Wallace of Tankerness: My Lords, we have already debated this. I think that Amendment 78RA would improve Amendment 78R, so I would wish to test the opinion of the House, but perhaps the Minister would clarify. Is he still insisting on his Amendment 78R, or is our amendment otiose?

Lord Bourne of Aberystwyth: Perhaps the noble and learned Lord can tell me what it is about.

Lord Wallace of Tankerness: My understanding is that Amendment 78R contains the new clause to embrace the grace periods. As Clause 66 has fallen, I am not sure whether he wants to insist on it. If he does, I will want to press our Amendment 78RA, but I want clarification, because there is no point dividing the House if he does not insist on his new clause, which incorporates the grace periods.

Lord Bourne of Aberystwyth: I am certainly not pushing this amendment.

Amendments 78RA to 78RG, as amendments to Amendment 78R, not moved.

Amendment 78R not moved.

6 pm

Baroness Worthington: My Lords, in this group of amendments we are considering the wider implications of the Government’s energy policy as set out in the Bill. We are again touching on issues to do with investor confidence. The amendments in this group relate to the need to preserve investor confidence in the UK’s energy system and energy infrastructure so that we can continue to see the good work we have seen over the past few decades of reinvestment in modern clean energy systems that will propel us into the remaining years of this century and clean up the energy system in view of our climate change obligations.

During the passage of this Bill and during the passage of the Energy Bill 2013, we had many debates about the right way to incentivise investment in clean

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technology. As noble Lords are aware, the current policy is that contracts for difference administered by the Secretary of State are granted to contract owners to enable them to have a stable income. They have the wholesale price topped up to a strike price. That policy was put in place in the Energy Act 2013.

The first part of that Act relates to the setting of a decarbonisation target, which was seen as the clearest signal we could give that we will continue to move towards a cleaner energy system after 2020. The period after 2020 is important because until then we are propelled forward by EU targets, including specifically for renewable energy. In the consideration of energy policy beyond 2020, the European Union was persuaded, partly by Ministers from the UK Government, that it should no longer pursue renewables-only targets, and I supported the Government in that argument. We believed that we still needed to see decarbonisation in the power sector but that it was no longer necessary to state that it must be through a group of technologies classed as renewables and that a wider range of technologies could play a part. That is the situation we find ourselves in.

In the EU 2030 climate and energy package, there is no legally binding renewables target for member states from 2020. That leaves open what guidance there is that would give investors confidence that there will be a market or support for technologies that are not yet able to stand fully on their own two feet in competing in the market. The reason they are not able to stand fully on their own two feet is partly to do with the failure of another EU policy: the EU Emissions Trading Scheme. For many reasons which I will not bore the House with, the EU Emissions Trading Scheme has failings and has not been sending a strong enough carbon price signal to enable low-carbon technologies to compete with the more emitting technologies. So we have a potential signal in the form of the EU Emissions Trading Scheme, but that signal is not sufficient or stable enough to give investors confidence—hence the need for domestic policy and the UK Energy Act 2013 to supplement it.

We need something that supplements the contracts for difference process because it is held by the Secretary of State. One person administers oversight of the contracts that are awarded and the timing of the auctions of those contracts, and the department, in conjunction with the national grid, has to try to arrive at a set of technologies that it thinks will deliver our climate change targets. The problem is that it is very difficult to predict the future. Having spent time as I civil servant, I can say with confidence that it is very hard for the Civil Service to keep pace with all the information out there in the energy market, and that it would be far more sensible if we allowed the market to play more of a role in determining the mix of our energy.

I am a fervent believer in least-cost decarbonisation, and at the moment we run the risk of having a centralised system that is too political. There are too many levers in the hands of the Secretary of State and not enough in the private sector, which ultimately will have to raise the finance and do the projects. The Government are not doing that; they are simply governing the number of auctions they make available.

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The amendments in this group attempt to address the problem of insufficient investor confidence in the period 2020 to 2030 in the light of the change in EU policy. Amendment 78S revisits an idea we looked at in Committee. I have retabled it because I believe it is a very important principle, and I hope that the Government are beginning to see its merit and take it seriously. It is that rather than have the administratively burdensome process of contracts for difference and the mechanisms underneath it, we should move to a simpler system where supply companies are responsible for delivering decarbonisation. They interface with customers and provide us with the electricity that keeps our businesses and homes powered, so they should take on the responsibility for selecting projects that will help decarbonise at least cost and do so through a framework in which they are given a target to reduce the carbon intensity of the power that they supply.

I think that this idea might be coming of age. Recently, OVO Energy, a welcome new entrant in the market, has declared itself to be coal free. I think that is probably the first example of a tariff that is structured to demonstrate a commitment to climate change by eliminating coal from the mix. OVO Energy has done that through the use of certificates that it purchases from gas stations. Through the certificates it can show that it is purchasing only gas and therefore keeping coal out of the mix and giving customers a low-cost option for demonstrating their concern about climate change. That announcement is based on the same principle as Amendment 78S, which is that suppliers are able, through their choice of who they purchase from, to drive markets. They can support gas and perhaps disfavour unabated coal through the use of market mechanisms.

I hope that the Government will fully support this, because it is completely in keeping with their principle of having the private sector play more of a role in decarbonisation. Time has gone by. We have all, in a rather amusing way, reflected on how odd it was that the Energy Act 2013 oversaw almost the full renationalisation of energy policy—not quite, but it felt like that at times—under a Conservative Government. I am hoping that as the Government get into their stride in their current role, they will see the merit of shifting to a more market-based system. Then we will be able to avoid the kind of arguments that we have just had to endure over Clause 66, which is symptomatic of the fact that the Government are now in the driving seat and that it is not a really comfortable place to be. I think that the Minister may agree.

I am hoping to hear from the Minister some words of encouragement and reassurance that the idea in Amendment 78S is being considered seriously by the department, because I think it offers a good solution to our dilemma over how to achieve the things we want—reducing our carbon emissions and making sure that the lights stay on. The suppliers could play an important role here.

Amendment 78T relates to the concerns that I expressed in a previous debate, so I will not reiterate them, that at the moment contracts for difference are suspended. “Suspended” may be a strong word but there has been no auction this year for contracts for difference, despite the fact that we would have anticipated

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that there would have been by now if we had followed the pattern of previous years. We are left with something of a hiatus. We do not yet know whether the contract for difference auctions will be scheduled. I am sorry to keep asking this of the Minister, and I know I will get the same response, but it is important to have clarity on this. I hope that by the time the Bill reaches the other place we will have clarity, and certainly before it leaves that place I strongly encourage the Government to provide that clarity over what is happening to the contracts for difference regime.

Amendment 78T would require that auctions were held at least annually for as long as the carbon intensity of electricity was more than 100 grams per kilowatt hour. That is for as long as the contracts for difference regime continues: I am aware that should we adopt Amendment 78S, we would not very much need to carry on with Amendment 78T. This is designed to say that if we continued with the contracts for difference process, we would hold those auctions annually so that there would be certainty for investors and we would have a regular process by which people could plan—and that the guiding principle would be that we are trying to get our carbon intensity down to 100 grams. The reason for that, as noble Lords may know, is that our carbon intensity remains fairly stubbornly high at around 400 grams per kilowatt hour, despite all our good efforts in supporting renewable energy.

Renewable energy has actually made a considerable difference in displacing thermal power and reducing emissions—but instead, while that has been happening, we have burned more coal because coal prices have reduced relative to gas. That has meant that for every step we take forward on renewables we see ourselves taking a step back, because we are switching from gas, which is a phenomenally valuable and clean fuel that I am sure we will be using for some time, back to using inefficient old coal stations for prolonged periods. I am happy to say that the economics are shifting again and we are seeing coal playing much less of a role. That is partly to do with the introduction of the carbon price floor, which is helping gas to compete, but the truth of the matter is that we still have stubbornly high carbon intensity and we need to see it reducing. The reason why we need power in particular to reduce is that we need to have clean power in order to then power our vehicles and maybe provide heat to our homes in a low-carbon way. There is no point electrifying transport if our power remains dirty. It therefore seems logical and sensible that we should pursue power sector decarbonisation in a faster way and get that carbon intensity down to the point where electrification in those other sectors will then make complete sense.

I turn to Amendment 78UA. I must explain that this is a manuscript amendment, for which I apologise to the House. The reason is that we had tabled an original version in a previous Marshalled List but had been advised to change the wording. On reflection late last night, however—this has been one of those Bills on which we have been putting in rather late hours—we reverted to the original wording because I felt that the original wording should stand.

My apologies to the House if I descend into what may seem to be a level of detail that might perhaps not be of great interest to everybody. I suspect that

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I should declare that I was partly involved in the drafting of the Climate Change Act as a civil servant in the Department for Energy and Climate Change, so this is an area that I know in some detail and feel quite strongly about. I shall attempt to explain what we are trying to do here in a way that I hope will hold people’s interest.

6.15 pm

The Climate Change Act, as we know, is a world-leading piece of legislation that I am immensely proud to have played a small part in. I am delighted that it received cross-party support when it was signed into law. At that period, the UK was at its best in demonstrating the degree of cross-party support for tackling climate change, and for the role that the UK could play in demonstrating leadership. The rationale we gave at the time was, “If we don’t lead, who will?”, and, “If we lead, others will follow”. That is exactly what happened: we passed our Act and, I am glad to say, over 100 countries have subsequently passed their own versions of climate change legislation. Not all of them have followed our model exactly, and some have been much more partial in the issues that they have taken on, but climate change legislation is now proliferating around the world and that is in large part to do with the UK. I pay tribute to all noble Lords and Members of the other House who helped the UK to display that leadership; it has been having a big impact.

The Climate Change Act as envisaged creates carbon budgets in order to manage our emissions. The reason why it does so is that we were very keen on trying to convey the fact that in many ways, just as Governments and Treasuries try to balance the books financially for public spending in terms of income and outgoings, carbon emissions are very similar: you could give yourself an allowance to emit, and then you could use sound budgetary principles to ensure that you stayed within that allotted amount. It was the area under the curve of the emissions that we were hoping would be managed well by the Government. The carbon budgets were created for a five-year period, and three carbon budgets were then to be set in law at any given period. We have now set the fourth carbon budget and are about to set the fifth.

As we drafted the Act we were very aware that it does not really matter where carbon dioxide is emitted—it could be emitted anywhere in the world and it would have the same effect—so if you reduce carbon dioxide anywhere in the world, you can make a difference. Hence trading in carbon emission reductions has been an accepted part of climate policy. We were mindful of this and ensured that the Climate Change Act as a whole incorporated an element of trading to allow the Government flexibility to meet their targets.

That was how I left the situation when I left the draft Bill team, and subsequently it has been enacted and implemented. Along the way, an interpretation of the legislation has been accepted that says that, for just less than half of our emissions, that flexibility should translate into not actually counting our emissions in terms of what is emitted from the smoke-stack. It is actually the contribution that power and heavy industry make that is counted in relation to an EU scheme.

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Essentially, we are not required to reduce emissions at home as a result of carbon budgets; we can simply emit what we like and then settle the difference through the trading scheme at company level. This means that carbon budgets, while incredibly welcome, and they certainly provide confidence, do not actually have any influence over power sector decarbonisation in this country. That is a fact that few people properly understand; very often I get people coming up to me and saying, “Well, the Government can’t do that, can they, because of our carbon budgets”. If it relates to the power sector, I am afraid that the answer is yes, the Government can; strictly, the Government can do whatever they like because it is not the actual emissions that we emit that count towards our budgets.

I am sure that noble Lords will be glad to know that I am now getting to the point. Amendment 78UA seeks to turn the fifth carbon budget into a much more useful guide for investors, and certainly a much more useful guide for investors in the power sector, by making it no longer the case that those trading emissions from Europe count towards the meeting of our domestic targets. In doing so, we would be moving towards the system that other countries in Europe adopt, which is to measure our actual emissions. That would provide the backdrop and the backstop that we need to ensure that we continue from 2020 to 2030 in our efforts to decarbonise the power sector. This is, therefore, a simple surgical change in legislation, but it would have the effect of shoring up investor confidence and making sure that we decarbonise the power sector.

For those reasons—its simplicity, and that in this instance I feel confident that the Government will not say that it falls foul of their manifesto commitments, because it is not a new target on the power sector, as it is simply an accounting procedure within the existing Climate Change Act regulations—this is something we could come together on and agree. We could do so now because we will see the fifth carbon budget recommendations being made later in the year, before the end of the year, and next spring we will have the debate on the fifth carbon budget. It is therefore right and proper that we now consider on what basis we want that fifth carbon budget to be made. That budget covers exactly that 2018 to 2032 period, which is so crucial for investor confidence. This is, therefore, a timely moment for us to consider this.

I have also tabled this because I, like many people, I think, assumed that we might see with the fifth carbon budget the setting of a decarbonisation target as was set out in the Energy Act 2013. However, in the course of the Bill, it has become clear—I am grateful to the Minister for clarifying—that the Government do not intend to set the decarbonisation target for the power sector for 2030. The Government are perfectly within their right to choose to do so. However, here is another way of creating that investor certainty, solving some quite difficult accounting issues that the Committee on Climate Change has to do to do this net accounting—it is not an easy job to work out what the EU portion of our trading budget should be; it is a bit of a headache. With Amendment 78UA, we have the opportunity to do something quite precise but impactful, which would have the effect, as I say, of creating a much higher

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degree of investor confidence. This is certainly the right time to think about this, before we go on to debate the level of the fifth carbon budget.

I hope that I have explained this, and not gone on for too long. The three amendments here are all designed to enable us to have a debate about the bigger picture of how we will proceed in helping investors to plan for the future. I look forward to the Minister’s response, but certainly on Amendment 78UA we should seize the moment, because now is a good time for us to do this.

Lord Howell of Guildford: My Lords, I congratulate the noble Baroness on the ingenuity of the proposals in this amendment; they are fascinating and make one think very hard, because these are hugely complex issues. Perhaps I may put two questions to her and perhaps also to my noble friend.

First, will this switch to this way of trying to achieve our carbon obligations and decarbonisation lead to cheaper power in the power sector? That must be an important question. We discussed earlier the problems in the power sector and the fact that pushing it too far and too fast may not necessarily help decarbonisation but will have to be paid for in lost jobs. That is bound to be on people’s minds when looking at this kind of amendment.

The second and even more obvious question is whether these arrangements will get the combined-cycle gas turbines built. At present speed, under the contracts for difference regime, and the capacity payments auction and so on, will they get them built in time? We are now entering a very worrying period, with a very low margin of safety in our electricity system—I believe that it will be down to 1.2 gigawatts. When I had some responsibility for these matters, years ago, it was 17 gigawatts. That gives noble Lords an idea of how far we have come down thanks to the rapid closure of many coal-fired stations and so on. Will this pattern lead to that result? These may be layman’s questions addressed to a very complex issue but I would be interested to know the answers. If the implication is the other way, we will have additional costs on power and get further out of line with our competitors. We always have to remember that in the Climate Change Act—behind which the noble Baroness was one of the founding figures and driving forces—there was the reservation that we should not get too far out of line with our competitors. In some areas, we clearly have done; we are out of line. In the steel industry, as we were saying earlier, we have energy charges that fall on at least parts of that industry at twice the level of charges in Germany and, in turn, are far higher than those throughout Europe. I saw one figure showing that they are 10 times the levels in China—which might account for our present woes in the steel industry. In examining this, can we please be guided on whether this will deliver the goods? That is my question.

Lord Teverson (LD): My Lords, I particularly wish to speak to Amendment 78UA, to which I have added my name, but I will start with Amendment 78S, which is the decarbonisation debate. I was certainly very disappointed that the Minister confirmed—he was very clear, and I welcome clarity—that the Government will not take advantage of the opportunities opened to

21 Oct 2015 : Column 718

them under the previous Energy Act and declare a decarbonisation target. We have had a lot of discussion about the Conservative manifesto, and in fact the Minister referred to it in the context of saying why that would not happen. However, the words of the Conservative manifesto were completely clear. They suggest that a decarbonisation target would meet both the Government’s objectives. The manifesto says:

“We will cut emissions as cost-effectively as possible, and will not support additional distorting and expensive power sector targets”.

That is very clear.

The point about a decarbonisation target—exactly as the noble Baroness, Lady Worthington, said—is that it moves on from the distorting targets that we had for renewables in terms of decarbonising our energy sector. In fact, because it brings in proper mechanisms in terms of markets and all of that, it is actually less expensive. So, it seems that a decarbonisation target will not only help us very specifically meet our Climate Change Act targets—which the Conservative manifesto fully supports—but provide a route for those targets to be met with a non-distorting and less expensive method than we had under the renewable targets under the EU’s 2020 system and so on. This is therefore a very good and logical amendment. It is almost a vital amendment that the Government should be able to accept to fulfil their own manifesto commitments. I do not say that to make a clever lawyer’s argument; I say it because it is how I read it. It is in plain English in the manifesto.

I move on to Amendment 78UA, to which I have put my name. I pay credit to the noble Baroness, Lady Worthington, for the great role that she played in bringing the Climate Change Act into being. I played a much more modest role in those days on the Front Bench of the Liberal Democrats in opposition—strangely, we are back in opposition again; but there we are. I was going to mention the noble Lord, Lord Taylor of Holbeach, and the fantastic work that he did with me and the noble Lord, Lord Rooker. We helped to deliver, right across the House, together with the Cross Benches, the fantastic Climate Change Act. The noble Lord, Lord Taylor, did a great piece of work.

One of the things that I did then was to try to bring to the attention of the Bill team and Ministers the fact that although those carbon budgets were great, they excluded 50% of the country’s emissions because they took into account the EU ETS trading. So, in effect, government policy only controlled, or had an effect on, about 50% of UK emissions. The Bill team did not seem to understand this—albeit that at the time the department was not DECC but Defra—and nor did the Ministers particularly take an interest in it. I think that the trouble was that, once those in the Treasury understood it—at least, they certainly understood it well ahead of anybody else—they decided that they did not want this at all. Ironically, that was under a Labour Government. However, as the noble Baroness said, the Climate Change Act was a great thing.

6.30 pm

This amendment provides an opportunity to put right something that was wrong then. As I see it, it aligns our international obligations with how we measure

21 Oct 2015 : Column 719

our own carbon budgets and our own Climate Change Act targets. They come into one in that they mean what everybody would understand them to mean—that is, what the emissions of UK plc are. It would get rid of all those strange accounting distortions and bring us back to common-sense accounting and what people would understand carbon budgets and our own carbon emissions to be.

That is why I am delighted that the amendment has been brought forward. It concerns a matter that I have felt strongly about since 2008, when the Climate Change Bill became an Act and, at the time, was a world leader. This gives us an opportunity to cement that leadership in this area, even if, unfortunately, we are rather backtracking in others.

Lord Bourne of Aberystwyth: My Lords, I thank noble Lords who have participated in the debate on this part of the Bill. I shall take the amendments in the order that they are marshalled.

With regard to Amendment 78S, we are committed to ensuring that the UK continues to do its part to tackle climate change, in line with the Climate Change Act, but we want to do so as cost-effectively as possible to make sure that our energy is secure and affordable, as well as lower carbon. We believe that locking ourselves into an expensive and inflexible target for the power sector is not the way to do that. There are just too many things that we cannot predict about how the energy system will develop up to 2030, and the costs of getting it wrong would be picked up by consumers for many years to come.

The amendment would, in effect, require the Government to introduce an additional power sector target in the form of an obligation on electricity suppliers in the United Kingdom. As has been referred to, the Conservative manifesto, upon which this Government were elected, stated that we will not support additional distorting and expensive power sector targets, but it is our belief that this is what the amendment would lead to.

Noble Lords will know that setting a decarbonisation target for the power sector, which would be the effect of the amendment, was debated in this House during the passage of the then Energy Bill 2013, which has been referred to, and the then Infrastructure Bill 2015. The topic of power sector decarbonisation targets was also discussed during the Committee stage of this Bill. In that discussion, I set out the Government’s intention not to set a power sector decarbonisation target, following that manifesto pledge. As has been confirmed, I also wrote to noble Lords after that further reiteration of the position, explaining that, instead, the Government have already committed to set out totals for the levy control framework beyond 2020, providing a basis for electricity investment into the next decade. I shall not restate the position on contracts for difference, as I think it is already clear that we are committed to making a statement on that this autumn. Therefore, I know that noble Lords will be familiar with the arguments against setting a target such as this.

We have an extensive range of targets at the domestic, EU and international levels. These require action across the economy to meet targets in 2020, 2030 and 2050

21 Oct 2015 : Column 720

on carbon, renewables and energy efficiency. Domestically, we have a legally binding target to reduce greenhouse gas emissions by 80% by 2050. We have carbon budgets setting out targets to 2027 and will be setting a further budget next year, covering the period to 2032. We are also subject to EU targets on carbon, which cover 2020 and 2030. On renewables, these run to 2020 and include interim milestones along the way. Internationally, we are subject to the requirements of the Kyoto Protocol and the compliance periods that these set up.

These targets are comprehensive, far-reaching, and mutually reinforcing. What makes the United Kingdom unusual by comparison with our European partners is the fact that we have a carbon budget system with comprehensive reporting and independent scrutiny. Investors want to know that we have clear, credible and affordable plans. The CBI has said that clarity on future financial support for low-carbon electricity will be more important than targets in driving investment. That is why we have said that we will set out totals for the levy control framework beyond 2020, providing a basis for electricity investment into the next decade, as well as setting out plans in the autumn in respect of future contract for difference allocation rounds.

In relation to Amendment 78T, I acknowledge that it is important that developers and investors have some foresight as to the frequency of CFD allocation rounds. However, this must be balanced with LCF budget availability, which, as noble Lords know, is funded by a levy on consumer bills. The function of the levy control framework is to limit the amount paid by consumers. It is therefore crucial that the Government are able to take decisions in the light of the latest evidence around deployment projections and costs.

The United Kingdom is continuing to make progress towards the 2020 renewables target of 15% of final energy consumption from renewable sources, with provisional 2014 figures showing that on we are on target to meet the 2020 target. No carbon intensity targets for electricity generation have been set in order that we retain flexibility around how we achieve our 2050 target. Committing to annual CFD allocations, even only in certain circumstances, would inhibit the Government’s ability to respond to evidence around levels of deployment in renewable electricity generation, costs to consumers and opportunities in other sectors, such as heat and transport.

The noble Baroness’s amendment would unnecessarily commit the Government to a course of action that would neither benefit the consumer nor provide any certainty to renewable energy generators or investors. We are committed to our energy targets and continue to make progress towards meeting them. For this reason, I do not accept the amendment.

Amendment 78UA seeks to make a fundamental change to the Climate Change Act which—as, in fairness, I think the noble Baroness acknowledged—runs contrary to how the carbon budget regime was designed and implemented by the last Labour Government. The noble Baroness played a significant part in that, I know. I think that this is much more than a small, technical amendment and it has huge implications for the Climate Change Act. It changes the focus of the United Kingdom’s approach to decarbonisation and, I believe, sends a wrong message about our faith in the

21 Oct 2015 : Column 721

EU emissions trading system. I may have misquoted the noble Baroness in terms of it being a radical change. If I did, I apologise. I think that it is a radical change. She is shaking her head, so I have misinterpreted her position and I apologise for that.

We believe that the amendment would make a fundamental change to the basis of carbon budgets and, if it were accepted, it is likely that we would need to revisit the levels of all current budgets. It would be an unnecessarily and overly burdensome process, as carbon budgets reflect the EU ETS.

Instead, we want to focus on driving the action to deliver decarbonisation at least cost. We are committed to ensuring that the United Kingdom continues to do its part to tackle climate change in line with the Climate Change Act and international obligations. However, we want to do this as cost-effectively as possible to make sure that our energy is secure and affordable, as well as lower carbon.

The EU emissions trading system is a central component of the United Kingdom Government’s policy for delivering emissions reductions in the UK and further afield in a cost-effective and technologically neutral way. The EU emissions trading system is designed to deliver least-cost decarbonisation of particular sectors across the EU, and we are supportive of this approach. We are also supportive of international efforts to price carbon, such as the EU emissions trading system, which is the first, and largest, cap-and-trade system of allowances for emitting greenhouse gases in the world.

We recognise that the EU emissions trading system requires reform, and the United Kingdom has been one of the leading advocates of measures to strengthen the scheme, such as negotiating the market stability reserve. However, on what is, I think, at the very least a significant change, we need to beware of throwing out the baby with the bath-water. We do not want to imply a loss of faith in the EU emissions trading system as a means of achieving least-cost decarbonisation by decoupling our carbon budget regime from it. Instead, we are focused on continuing to work with other member states to strengthen the EU emissions trading system.

Finally, it must be noted that our approach is in line with the Committee on Climate Change’s advice on the use of emissions trading system allowances. It renewed its advice in 2013 that we should include emissions trading system allowances in the net carbon account and proposed an approach for doing so, which the then Government broadly accepted.

My noble friend Lord Howell made significant points during the debate about ensuring that we keep energy affordable. I think that this would jeopardise that, at the very least.

In the light of those comments, I hope that the noble Baroness and the noble Lord have found my explanation reassuring and will not press their amendments.

Baroness Worthington: My Lords, I am grateful to the Minister for his response and to the noble Lord, Lord Teverson, for his support for this amendment and for lending his name to it.

I am afraid that I am not reassured. I have listened to and understood the argument. However, it is not a radical change but an important change—there is a distinction there.

21 Oct 2015 : Column 722

In answer to the specific question from the noble Lord, Lord Howell, about whether it will be cheaper to do it this way, I honestly believe that, for UK plc, it will be. At present, the way the budgets work is that, essentially, we pay other people to decarbonise and then we import the certificates. That can be done for a while, and it makes economic sense to do so. In fact, for the first three carbon budgets, while the system has been bedding down, it probably made sense to use a traded system—the rules and the allocations from Europe were clearer and we were all finding our way to see whether the EU ETS would deliver. The closer that we get to our 2050 target, the more that that approach starts to be a false economy. We find then that, potentially, we are repeatedly paying other countries to decarbonise and not investing in our own country.

Lord Bourne of Aberystwyth: I can follow the argument that the noble Baroness is making very clearly. However, does she not agree that the great danger with the proposal is that it takes away the flexibility of being able to use the trading system? At the moment, it does not have to be used but it can be used if it is appropriate. If we were to go down this path, we would be throwing away that tool.

Baroness Worthington: I am grateful to the Minister for that question. However, that is not the case. There are two versions of flexibility in the Climate Change Act: there is an overarching flexibility created by the budget system, and there is a flexibility that the Government maintain to settle their accounts using credits that they can then take from the EU budget that they are given, by simply not auctioning them, or purchase from offsets that are relatively cheap. There is always a limited amount of offsetting that the Government are able to do if they find themselves out of an account. This would not change that; it simply changes how we count emissions and what counts toward the budget. In this sense, we are saying that actual emissions—what happens in our territorial waters —is what we count. Then, we do the settling up, using credits, to a certain extent, as the budget management system. That is an important point and I hope that people can follow it.

As to whether this would take us out of step with other countries, as I have said, other countries use actual accounts for their targets. Germany is the most obvious example, where there are domestic climate change targets that go beyond European targets. There is a reason for that: Germany is investing in business, infrastructure, companies and enterprise that will be future proofed and provide an export market long into the future. Germany has been very smart about that. We, on the other hand, have a slightly more liberalised market view. In this case, because the ETS is not working as it was meant to, that is potentially damaging our ability to stay within our targets, to do so cost-effectively and to drive investment here. We want to see jobs here and money flowing here, not necessarily pass money overseas for the abatement that someone else has invested in.

For those reasons, I believe that this is an important but not radical move that squares the circle. In response to Amendment 78S, the Minister said that we do not

21 Oct 2015 : Column 723

want to set any more distorting new targets in the power sector. I am happy to concede that point. However, this is a very good way of doing what we all agree that we need to do, which is to create investor certainty that this is an enterprise that we remain committed to. As we get closer and closer to that 2050 target, we need to start looking not just at what is happening Europe-wide but at what is happening in the UK economy, so that we are benefitting from the supply chains, the investment and the projects happening here.

I hope that I have made it quite clear why I think this is important, why it is timely and why it has arisen in the course of this Bill. I am encouraged by the support that I have seen from the House. I feel confident that I can answer the question from the noble Lord, Lord Howell: this will be cheaper in the long run; it will be cheaper for UK plc to do this in a way that enables us to drive investment here. For those reasons, I am minded to test the opinion of the House on Amendment 78UA.

Amendment 78S withdrawn.

Amendments 78T not moved.

Amendment 78U withdrawn.

Baroness Worthington: I beg to move, and I seek the opinion of the House.

6.47 pm

Division on Amendment 78UA

Contents 189; Not-Contents 166.

Amendment 78UA agreed.

Division No.  2

CONTENTS

Adams of Craigielea, B.

Addington, L.

Allan of Hallam, L.

Allen of Kensington, L.

Alli, L.

Alton of Liverpool, L.

Anderson of Swansea, L.

Andrews, B.

Ashdown of Norton-sub-Hamdon, L.

Bach, L.

Bakewell of Hardington Mandeville, B.

Bassam of Brighton, L. [Teller]

Beecham, L.

Blunkett, L.

Bonham-Carter of Yarnbury, B.

Brooke of Alverthorpe, L.

Brookman, L.

Browne of Belmont, L.

Burnett, L.

21 Oct 2015 : Column 724

Campbell-Savours, L.

Carlile of Berriew, L.

Cashman, L.

Chidgey, L.

Clancarty, E.

Clark of Windermere, L.

Clinton-Davis, L.

Collins of Highbury, L.

Corston, B.

Cotter, L.

Crawley, B.

Cunningham of Felling, L.

Davies of Oldham, L.

Davies of Stamford, L.

Dean of Thornton-le-Fylde, B.

Dholakia, L.

Donaghy, B.

Doocey, B.

Drake, B.

Dubs, L.

Dykes, L.

Elder, L.

Falconer of Thoroton, L.

Falkner of Margravine, B.

Farrington of Ribbleton, B.

Faulkner of Worcester, L.

Foulkes of Cumnock, L.

Gale, B.

Garden of Frognal, B.

German, L.

Gibson of Market Rasen, B.

Giddens, L.

Glasgow, E.

Goddard of Stockport, L.

Gould of Potternewton, B.

Grantchester, L.

Greaves, L.

Grender, B.

Grocott, L.

Hamwee, B.

Hanworth, V.

Harris of Haringey, L.

Harris of Richmond, B.

Harrison, L.

Hart of Chilton, L.

Haworth, L.

Hay of Ballyore, L.

Hayter of Kentish Town, B.

Healy of Primrose Hill, B.

Henig, B.

Hollis of Heigham, B.

Howarth of Newport, L.

Howells of St Davids, B.

Howie of Troon, L.

Hoyle, L.

Hughes of Woodside, L.

Humphreys, B.

Hunt of Kings Heath, L.

Hussain, L.

Hussein-Ece, B.

Irvine of Lairg, L.

Janke, B.

Jones, L.

Jones of Cheltenham, L.

Jones of Whitchurch, B.

Kennedy of Cradley, B.

Kennedy of Southwark, L.

Kennedy of The Shaws, B.

Kinnock, L.

Kinnock of Holyhead, B.

Kirkhill, L.

Kirkwood of Kirkhope, L.

Kramer, B.

Lawrence of Clarendon, B.

Lea of Crondall, L.

Lee of Trafford, L.

Lister of Burtersett, B.

Loomba, L.

Low of Dalston, L.

McAvoy, L.

McDonagh, B.

McFall of Alcluith, L.

McIntosh of Hudnall, B.

MacKenzie of Culkein, L.

McKenzie of Luton, L.

McNally, L.

Maddock, B.

Manzoor, B.

Marks of Henley-on-Thames, L.

Maxton, L.

Mendelsohn, L.

Miller of Chilthorne Domer, B.

Mitchell, L.

Monks, L.

Morgan of Ely, B.

Morgan of Huyton, B.

Morris of Handsworth, L.

Morris of Yardley, B.

Newby, L.

Northover, B.

Nye, B.

O'Neill of Clackmannan, L.

Parekh, L.

Patel of Blackburn, L.

Pendry, L.

Pitkeathley, B.

Prescott, L.

Prosser, B.

Purvis of Tweed, L.

Ramsay of Cartvale, B.

Randerson, B.

Razzall, L.

Reid of Cardowan, L.

Rennard, L.

Richard, L.

Roberts of Llandudno, L.

Robertson of Port Ellen, L.

Rodgers of Quarry Bank, L.

Rosser, L.

Rowlands, L.

Royall of Blaisdon, B.

Sawyer, L.

Scott of Needham Market, B.

Scriven, L.

Sharkey, L.

Sharp of Guildford, B.

Sherlock, B.

Shipley, L.

Shutt of Greetland, L.

Simon, V.

Smith of Basildon, B.

Smith of Gilmorehill, B.

Smith of Newnham, B.

Snape, L.

Soley, L.

Stephen, L.

Stevenson of Balmacara, L.

Stone of Blackheath, L.

Stoneham of Droxford, L.

Storey, L.

Strasburger, L.

Symons of Vernham Dean, B.

Taverne, L.

Temple-Morris, L.

Teverson, L.

Thomas of Gresford, L.

Thomas of Winchester, B.

Thornton, B.

Tope, L.

Tordoff, L.

Touhig, L.

Truscott, L.

Tunnicliffe, L. [Teller]

21 Oct 2015 : Column 725

Tyler, L.

Tyler of Enfield, B.

Wall of New Barnet, B.

Wallace of Saltaire, L.

Wallace of Tankerness, L.

Walmsley, B.

Watson of Invergowrie, L.

Watson of Richmond, L.

Wheeler, B.

Whitaker, B.

Whitty, L.

Wigley, L.

Wood of Anfield, L.

Woolmer of Leeds, L.

Worthington, B.

Wrigglesworth, L.

Young of Old Scone, B.

NOT CONTENTS

Aberdare, L.

Ahmad of Wimbledon, L.

Altmann, B.

Anelay of St Johns, B.

Arbuthnot of Edrom, L.

Arran, E.

Ashton of Hyde, L.

Astor, V.

Astor of Hever, L.

Attlee, E.

Balfe, L.

Bates, L.

Berridge, B.

Bew, L.

Black of Brentwood, L.

Blencathra, L.

Borwick, L.

Bottomley of Nettlestone, B.

Bourne of Aberystwyth, L.

Bowness, L.

Brabazon of Tara, L.

Bridgeman, V.

Bridges of Headley, L.

Brougham and Vaux, L.

Browning, B.

Byford, B.

Callanan, L.

Carrington of Fulham, L.

Cathcart, E.

Chester, Bp.

Chisholm of Owlpen, B.

Colville of Culross, V.

Colwyn, L.

Cooper of Windrush, L.

Cope of Berkeley, L.

Cormack, L.

Courtown, E.

Craigavon, V.

Crathorne, L.

Crickhowell, L.

De Mauley, L.

Denham, L.

Dixon-Smith, L.

Dobbs, L.

Dunlop, L.

Eaton, B.

Eccles, V.

Eccles of Moulton, B.

Elton, L.

Empey, L.

Evans of Bowes Park, B.

Faulks, L.

Fink, L.

Fookes, B.

Forsyth of Drumlean, L.

Fowler, L.

Framlingham, L.

Freeman, L.

Freud, L.

Gardiner of Kimble, L. [Teller]

Gardner of Parkes, B.

Garel-Jones, L.

Geddes, L.

Gilbert of Panteg, L.

Glendonbrook, L.

Glentoran, L.

Gold, L.

Goodlad, L.

Grade of Yarmouth, L.

Green of Hurstpierpoint, L.

Greenway, L.

Hamilton of Epsom, L.

Harding of Winscombe, B.

Hayward, L.

Helic, B.

Hodgson of Abinger, B.

Hodgson of Astley Abbotts, L.

Holmes of Richmond, L.

Hooper, B.

Hope of Craighead, L.

Horam, L.

Howard of Rising, L.

Howe, E.

Howell of Guildford, L.

Hunt of Wirral, L.

Inglewood, L.

James of Blackheath, L.

Jenkin of Kennington, B.

Jopling, L.

Keen of Elie, L.

King of Bridgwater, L.

Lang of Monkton, L.

Lawson of Blaby, L.

Leigh of Hurley, L.

Lexden, L.

Lindsay, E.

Listowel, E.

Liverpool, E.

Lothian, M.

Lyell, L.

McColl of Dulwich, L.

Mackay of Clashfern, L.

Magan of Castletown, L.

Mancroft, L.

Marlesford, L.

Masham of Ilton, B.

Mawson, L.

Meacher, B.

Mobarik, B.

Mone, B.

Moore of Lower Marsh, L.

Morris of Bolton, B.

Moynihan, L.

Naseby, L.

Neville-Jones, B.

Neville-Rolfe, B.

Newlove, B.

Noakes, B.

Northbrook, L.

Norton of Louth, L.

O'Cathain, B.

Perry of Southwark, B.

Polak, L.

Popat, L.

Prior of Brampton, L.

Ribeiro, L.

Ridley, V.

Risby, L.

Rogan, L.

Russell of Liverpool, L.

21 Oct 2015 : Column 726

Ryder of Wensum, L.

Sanderson of Bowden, L.

Seccombe, B.

Selkirk of Douglas, L.

Selsdon, L.

Sharples, B.

Sheikh, L.

Shephard of Northwold, B.

Sherbourne of Didsbury, L.

Shields, B.

Skelmersdale, L.

Smith of Hindhead, L.

Spicer, L.

Stedman-Scott, B.

Stoddart of Swindon, L.

Stowell of Beeston, B.

Strathclyde, L.

Suri, L.

Taylor of Holbeach, L. [Teller]

Taylor of Warwick, L.

Trees, L.

Trefgarne, L.

Trenchard, V.

Trimble, L.

True, L.

Tugendhat, L.

Ullswater, V.

Verma, B.

Wakeham, L.

Wasserman, L.

Wellington, D.

Whitby, L.

Wilcox, B.

Williams of Trafford, B.

Young of Cookham, L.

Younger of Leckie, V.

6.59 pm

Baroness Worthington: My Lords, I reassure the Minister that this is not a matter on which I intend to seek the opinion of the House. It is an issue which I believe we need to discuss in the context of an Energy Bill, but I hope that a discussion can be had outside the Chamber. I just wanted to alert the House to the issue because it is materially relevant to the energy policy as it is being played out.

One pillar of the Energy Act 2013 was the introduction of a new support mechanism to help fund extra capacity in the market, designed to complement the contracts being signed for low carbon. It is a very detailed policy with many aspects.

It has come to my attention that the annual auctions of new capacity under the capacity mechanism are bringing forward rather a lot of applications for 15-year contracts from distributed, very small-scale generating plant. Many of those plants are diesel-powered and many others are open-cycle gas turbines of a small scale which are much less efficient than the full-scale CCGTs that are normally built for capacity.

The amendment was tabled to enable us to have a debate on the Floor of the House on an issue which is time-critical, because the next auction will take place in December. Three gigawatts’ worth of small generating plant are prequalified. That is on top of a number of megawatts that were granted in the previous auction that took place last year. So my fear is that, over time, we are starting to see a substantial amount of distributed thermal energy coming forward under the capacity mechanism. Of course, the capacity mechanism creates

21 Oct 2015 : Column 727

an incentive to new-build. Having read the Government’s gas strategy, I believe that the Government intended those 15-year contracts to be made available to larger-scale, very efficient, state-of-the-art gas turbines to be there as back-up and to provide us with base-load power. Instead of that, we are seeing coming forward, as a result of significant market distortion, investment in much smaller kit that is far less efficient and much more polluting. The danger is that this drift towards distributed diesel generators and open-cycle gas will significantly affect our ability to decarbonise.

One argument that will be made will be that such generators are there just to catch the peaks and will not operate more than that. However, there is nothing in government policy or legislation that prevents them operating for far longer periods. My fear is that, because of the scale of these plants, they will not be paying a carbon price: they are not subject to the EU carbon price, nor are they subject to the Government’s carbon price support mechanism which tops up the EU price. That is a significant distortion that we should be mindful of. Markets are nothing if not efficient and nothing if not good at finding loopholes. It will be an unintended consequence of the capacity mechanism rules as they are currently drafted that this will be the market’s answer to our capacity issues.

I visit my mother-in-law in India. Building an energy system in which diesel generators are providing back-up is not a modern-economy solution. There are many other ways to provide safe and reliable power. We should not rely on diesel generation, which is much more what you would find in developing countries that have fewer options and are not able to deliver secure and stable supplies of electricity. We have been doing that for decades and have a world-class grid that enables us to do it. So we are concerned that while we are not letting contracts for clean power, we are continuing to let contracts for traditional fossil-fuelled power, and that there is this loophole in the capacity mechanism rules which allows a far greater volume than anyone would have anticipated of small distributed diesel generators.

In addition to paying no carbon price, such generators also have very loose air quality standards applied to them—far looser than are applied to larger plant. I do not need to bring the House’s attention to the fact that we have had a rather high-profile problem with diesel in the past few months. “Dieselgate” and VW’s cheating on the standards is a serious issue which helps to explain why we might be struggling to hit our legally binding air quality standards in the European Union, because if everyone is cheating it is no wonder that our emissions are higher than we thought they should be according to our inventory calculations. So we have an air quality issue; in fact, the Government have been taken to court over their failure to comply with those air quality standards. Having a large number of distributed diesel generators operating potentially for long periods through the winter months will not do anything to alleviate our air quality problems. There is a definite correlation between exposure to the particulates that emerge from diesel and ill-health, especially in younger and older people. So, not just for climate reasons but for air quality reasons, we should not allow a huge

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proliferation of this very inefficient and very polluting smaller generating plant—and that we should be giving them 15-year contracts really concerns me.

We know that all Governments in the UK hold as sacrosanct the fact that if you sign a contract with the private sector, you will not then go back on it. That is a tenet that we hold dear in order to preserve our investor credibility. Once those contracts are signed, there will be nothing we can do for 15 years, which worries me greatly. I am not expecting a full and detailed response from the Minister today; I hope that I can just convey the reason for my concern. I hope that I will hear some reassurance that the department is alive to this problem, that it is indeed seen as an unintended consequence and a loophole, and that we are not simply saying, “Ah, well, that’s what the market’s delivering”. That is not sufficient, especially as there are distortions in relation to carbon and not paying the carbon price, and especially in relation to air quality.

Amendment 78V would therefore require that any fossil fuel-generating plant granted a 15-year capacity contract under the capacity mechanism created under the Energy Act 2013 would be subject to a carbon price, so that the Government would apply a taxation policy to such plant; that such plant would be required to fit best-available technology to mitigate air pollutants; and that the Government’s emissions performance standard as was introduced in the Act would apply as well, which would act as a constraint and a break on the number of hours that such stations could run—it would not be a full answer to the problem because it would still allow them to run for considerable periods, but certainly it would not allow them to run unimpeded for an entire year.

Given the position of leadership that the UK rightly enjoys in terms of our sensible policies for decarbonisation and our Climate Change Act, the idea that the energy policy in front of us should lead to us relying on diesel generators fills me with alarm. I hope that we can do something collectively, across all sides of the House, to address this issue before the contracts are signed in December. I think that I have said enough. I do not wish to detain the House any further and I look forward to hearing a response from the Government.

Lord Teverson: My Lords, I shall not detain the House very long. I am not sure that the amendment as written is precisely right, but the important principle that comes out of it—I come back to what I said briefly at Second Reading—is that, at the end of the day, the UK economy has to crowd out coal by other generating fuels. Before the election, the Prime Minister, the then Deputy Prime Minister and the then leader of the Opposition together bravely pledged that coal should come out of UK generating capacity. For whatever reason, after the election only one of those people is left in office—the Prime Minister—so on his shoulders rests that responsibility as our Prime Minister to achieve that pledge.

I do not see a great deal of movement from the Government in fulfilling it. It needs to be addressed and this amendment goes some way towards that. But it is a much larger issue which we could solve so easily, probably by using an active emissions performance

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standard rather than one that is fixed, as it is at the moment, in primary legislation. I hope that the Government—indeed, the Prime Minister and the Cabinet Office—will bring forward proposals to deliver this. In Scotland, they talk about vows; I see this as a vow that is fundamental to our climate change obligation not just to the UK but to the rest of the world.

The Lord Bishop of Chester: My Lords, once again very briefly, could the Minister also make some comment in his response about what the cost to the consumer will be of electricity which is generated by plant under contracts under the capacity mechanism?

Lord Bourne of Aberystwyth: My Lords, I thank all noble Lords who have participated in the debate on Amendment 78V and the noble Baroness, Lady Worthington, for introducing it. We missed each other late last night to discuss this amendment, but I am grateful that she rang before breakfast this morning so that we could discuss it then. That is how seriously we both take our jobs. Again, I am grateful to the noble Baroness because otherwise it would have taken us on the blind side that the amendment was coming up today. I am also grateful to the noble Baroness for what she has said in relation to this issue and for confirming that she will not push it to a vote. The comments made by the noble Lord, Lord Teverson, are right, but as framed there would be difficulties with the amendment anyway.

Perhaps I may say something about the purpose of the capacity market for the benefit of the House and then say something about the particular issue that has been raised. The purpose of the capacity market is to ensure security of electricity supply by providing all forms of capacity with the right incentives to be on the system and to deliver energy when it is needed. The first capacity market auction was successfully concluded in December 2014, contracting 49.3 gigawatts of capacity at a clearing price of £19.40 per kilowatt—and with that I have addressed the particular and very valid point raised by the right reverend Prelate. The outcome was great news for consumers, as fierce competition between participants drives down costs. The results will ensure that enough of our existing capacity will remain open at the end of the decade, as well as unlocking new investment.

I accept that there is an issue about emissions. Other government policies that were referred to by the noble Baroness, Lady Worthington, including the emissions performance standard and the carbon price floor, limit potential emissions from thermal plant for larger producers in keeping with our aims of decarbonising the power sector. For example, the emissions performance standard for larger generators limits carbon emissions to around half of that produced by unabated coal. The carbon price floor obviously provides an incentive for investment in low-carbon electricity generation. I accept that, as things stand, small generators are not covered by that. The department is aware of the issue, but we believe that the EPS represents the best way of looking at the smallest generators, perhaps within the review cycle for the EPS rather than in the context of the capacity market alone because that clearly seeks to ensure that the capacity we need is delivered. I am

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happy to discuss this further outside the Chamber. It is worth recognising that, at least at present, most of the small generators in the capacity market run for only a limited number of hours per year, but I appreciate that there is no guarantee on that. However, I recognise that this is an issue.

I turn now to what might have been the point that, given his background, the noble Lord, Lord Teverson, was referring to. There is not a state aid issue here. The capacity market state aid clearance is based on the current design of the mechanism, including the concept of technology neutrality, so accepting the amendment in its present form would have required state aid renotification, which as we know typically takes nine months or longer. That would have introduced uncertainty into the market and would have caused problems. But I am happy to continue a discussion on how to tackle what is a very real issue, and I thank the noble Baroness for her comments.

Baroness Worthington: I thank the Minister for his response, and our conversation was welcome just so that this did not come completely out of the blue. I am reassured by his comments and I think that this is something we can work on together to try to find a solution. I am certain that the wording I came up with was not perfect.

I would just say that state aid absolutely does require technology neutrality, and it is something that we need to think about in general for the whole of the EMR Bill. State aid clearance was on the basis of technology neutrality and that relates to the CFDs that we let as much as the capacity mechanism. I am grateful to the noble Lord for indicating that we can continue to work on this, and I am happy to withdraw the amendment.

Amendment 78V withdrawn.

7.15 pm

Clause 67: Regulations

Amendments 79 to 82 agreed.

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Clause 68: Commencement

Lord Bourne of Aberystwyth: My Lords, in view of the earlier defeat of Clause 66, I shall withdraw this amendment.

Amendment 82A withdrawn.

Amendment 82B not moved.

Clause 69: Short title and extent

Amendment 83 agreed.

After the Schedule

21 Oct 2015 : Column 732

persons, or otherwise) that the cost of carrying it out is kept to the minimum that is reasonably practicable in the circumstances.

(2B) When consulted under paragraph (a) of subsection (2A) the OGA must (in particular) consider and advise on—

(a) alternatives to abandoning or decommissioning the installation or pipeline, such as re-using or preserving it, and

(b) how to comply with paragraph (b) of that subsection.”

(4) In subsection (3), after “such” insert “other”.

4 (1) Section 32 (approval of programmes) is amended as follows.

(2) After subsection (2) insert—

“(2A) The modifications or conditions may (in particular) include modifications or conditions—

(a) which are intended (whether by means of the timing of the measures proposed, the inclusion of provision for collaboration with other persons, or otherwise) to reduce the total cost of carrying out the programme, provided that they do not increase the total costs to be met by any person who is to be subject to obligations under the programme or under any other abandonment programme;

(b) requiring the persons who submitted the programme to carry out and publish or make available to the Secretary of State and the OGA a review of the programme and its implementation including, where relevant, recommendations as to the contents and implementation of future abandonment programmes.”

(3) At the end insert—

“(6) Before reaching a decision under this section the Secretary of State must—

(a) consult the OGA, and

(b) take into account the cost of carrying out the programme that has been submitted and whether it is possible to reduce that cost by modifying the programme or making it subject to conditions.

(7) When consulted under subsection (6)(a), the OGA must (in particular) consider and advise on—

(a) alternatives to abandoning or decommissioning the installation or pipeline, such as re-using or preserving it, and

(b) whether section 29(2A)(b) has been complied with and, if it has not been, modifications or conditions that would enable it to be complied with.”

5 In section 33 (failure to submit programme), after subsection (3) insert—

“(3A) When preparing an abandonment programme under this section the Secretary of State must—

(a) consult the OGA, and

(b) frame the programme so as to ensure (whether by means of the timing of the measures proposed, the inclusion of provision for collaboration with other persons, or otherwise) that the cost of carrying it out is kept to the minimum that is reasonably practicable in the circumstances.

(3B) When consulted under paragraph (a) of subsection (3A), the OGA must (in particular) consider and advise on—

(a) alternatives to abandoning or decommissioning the installation or pipeline, such as re-using or preserving it, and

(b) how to comply with the requirement in paragraph (b) of that subsection.”

6 (1) Section 34 (revision of programmes) is amended as follows.

(2) After subsection (4) insert—

“(4A) A person who makes a proposal under subsection (1) that is likely to have an effect on the cost of carrying out the programme must frame it so as to ensure (whether by means of the timing of the measures proposed, the inclusion of provision

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for collaboration with other persons, or otherwise) that the cost of carrying out the programme as proposed to be altered is kept to the minimum that is reasonably practicable in the circumstances.

(4B) Where the Secretary of State makes a proposal under subsection (1)(a) the purpose of which is to reduce the total cost of carrying out a programme, the proposal may not increase the total costs to be met by any person who is to be subject to obligations under the programme or under any other abandonment programme.”

(3) After subsection (7) insert—

“(7A) If it appears to the Secretary of State that what is proposed under subsection (1) is likely to have an effect on the cost of carrying out the programme, the Secretary of State must, before making a determination under subsection (7)—

(a) consult the OGA, and

(b) take that effect into account.

(7B) When consulted under subsection (7A)(a) the OGA must (in particular) consider and advise on—

(a) alternatives to abandoning or decommissioning the installation or pipeline, such as re-using or preserving it, and

(b) whether subsection (4A) applies and, if so, whether it has been complied with.”

7 After section 34 insert—

“34A Amendment of programmes

(1) This section applies where an abandonment programme approved by the Secretary of State includes provision by virtue of which the programme may be amended.

(2) A person who proposes to make an amendment under such a provision that is likely to have an effect on the cost of carrying out the programme must frame the amendment so as to ensure (whether by means of the timing of the measures proposed, the inclusion of provision for collaboration with other persons, or otherwise) that the cost of carrying out the programme as proposed to be amended is kept to the minimum that is reasonably practicable in the circumstances.

(3) If it appears to the person who proposes to make the amendment that subsection (2) applies, the person must consult the OGA before making the amendment.

(4) When consulted under subsection (3) the OGA must (in particular) consider and advise on—

(a) alternatives to abandoning or decommissioning the installation or pipeline, such as re-using or preserving it, and

(b) whether subsection (2) applies and, if so, whether it has been complied with.

(5) Any person who has the function of approving amendments made under a provision mentioned in subsection (1) must, when exercising the function, take into account the effect of the proposed amendment on the cost of carrying out the programme.”

8 After section 36 insert—

“36A Reduction of costs of carrying out programmes

(1) This section applies where an abandonment programme approved by the Secretary of State has effect in relation to an installation or pipeline.

(2) The Secretary of State may, for the purpose of reducing the total cost of carrying out the programme, by written notice require any person who submitted the programme to take, or refrain from taking, action of a description specified in the notice.

(3) The notice may, in particular, require—

(a) changes to the times at which the measures proposed in the programme are to be carried out;

(b) the persons who are under a duty to secure that the programme is carried out to collaborate with other persons.

(4) The programme, and any condition to which it is subject, has effect subject to any notice given under this section.

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(5) A notice given under this section may not increase the total costs to be met by any person who is to be subject to obligations under the programme or under any other abandonment programme.

(6) The Secretary of State may not give a notice to a person under this section without first giving the person an opportunity to make written representation as to whether the notice should be given.

(7) A person to whom a notice is given under this section who without reasonable excuse fails to comply with the notice is guilty of an offence.

(8) If a notice under this section is not complied with, the Secretary of State may—

(a) do anything necessary to give effect to the notice, and

(b) recover from the person to whom the notice was given any expenditure incurred under paragraph (a).

(9) A person liable to pay any sum to the Secretary of State by virtue of subsection (8) must also pay interest on that sum for the period beginning with the day on which the Secretary of State notified the person of the sum payable and ending with the date of payment.

(10) The rate of interest payable in accordance with subsection (9) is a rate determined by the Secretary of State as comparable with commercial rates.”

9 In section 37 (default in carrying out programmes), after subsection (1) insert—

“(1A) If it appears to the Secretary of State that the proposed remedial action is likely to have an effect on the cost of carrying out the programme, the Secretary of State must—

(a) consult the OGA before giving a notice under subsection (1), and

(b) take that effect into account when deciding whether to give the notice.

(1B) When consulted under subsection (1A)(a), the OGA must consider and advise on the likely effect of the proposed remedial action on the cost of carrying out the programme.”

10 In section 40 (offences: penalties)—

(a) after “section” insert “28A,”, and

(b) after “33,” insert “36A,”.

11 (1) Section 41 (offences: general) is amended as follows.

(2) In subsection (1)—

(a) after “section” insert “28A,”, and

(b) after “33,” insert “36A,”.

(3) In subsection (2)—

(a) after “section” insert “28A,”, and

(b) after “33,” insert “36A,”.

(4) In subsection (3)—

(a) after “section” insert “28A,”, and

(b) after “33,” insert “36A,”.

(5) In subsection (5), after “section” insert “28A, 36A or”.

12 (1) Section 42 (validity of Secretary of State’s acts) is amended as follows.

(2) In subsection (2), after paragraph (e) insert—

“(ea) the giving of a notice under section 36A(2);”.

(3) In subsection (5), after paragraph (e) insert—

“(ea) in relation to the giving of a notice under section 36A(2), means the requirements of section 36A(6);”.

Energy Act 2008

13 (1) Section 30 of the Energy Act 2008 (abandonment of carbon storage installations) is amended as follows.

(2) In subsection (1), after “subsections” insert “(1A),”.

(3) After that subsection insert—

“(1A) For the purposes of subsection (1), the amendments made to Part 4 of the 1998 Act by Schedule (Abandonment of offshore installations) to the Energy Act 2016 are to be disregarded.”

21 Oct 2015 : Column 735

(4) For subsection (4A) substitute—

“(4A) The power in subsection (4)—

(a) may (in particular) be exercised to make modifications corresponding to the amendments made by Schedule (Abandonment of offshore installations) to the Energy Act 2016, and

(b) is subject to section 30A.””

Amendment 84 agreed.

In the Title

Amendments 85 to 87 agreed.

English Votes for English Laws

Motion to Take Note

7.17 pm

Moved by Baroness Stowell of Beeston

That this House takes note of the Government’s proposals on English Votes for English Laws.

The Lord Privy Seal (Baroness Stowell of Beeston) (Con): My Lords, as always I am pleased to be able to open a debate in your Lordships’ House. The debate this evening is about the Government’s proposals for English votes for English laws. The last time we convened to discuss this subject, I made it clear that I was keen for the House to have a further opportunity to put its views on the record before the other place makes its decisions on the proposals, and that is what we are here to do. Noble Lords will know that the Government are passionate supporters of the Union. We are determined to strengthen it and secure its future, and greater devolution to all parts of the country is part of that plan. It runs alongside measures and the commitments and promises we have made to the people of Scotland and the other powers that we are devolving to other parts of the United Kingdom. We believe that for this settlement to be fair and lasting, it means giving English MPs a decisive say on matters that affect only their constituents.

That is what our proposals for English votes for English laws will do. It will give the English a strong voice on English matters while at the same time respecting the right of every MP from every part of the United Kingdom to debate and vote on every piece of legislation in the House of Commons.

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Lord Foulkes of Cumnock (Lab): My Lords, I am sorry to intervene at such an early stage. The noble Baroness will recall that this House divided on a Motion to set up a Joint Committee of the Commons and the Lords. I wonder if she can tell the House what response we have had from the Commons to that proposal.

Baroness Stowell of Beeston: The noble Lord is quite right and I can assure him that I will come to that matter in my remarks. There is no way that I would seek to ignore that important point.

As I have said, our proposals will give the English a strong voice on English matters and we will respect the right of every MP from every part of the UK to debate and vote on every piece of legislation in the House of Commons. What we would argue is that our approach is pragmatic and proportionate. As noble Lords know, we do not propose to give English MPs a Parliament or the right to initiate legislation alone. What we are proposing instead is simply that where legislation affects England or England and Wales only, it cannot progress against the will of English or English and Welsh MPs. Just as the proposals are pragmatic, so they are flexible. Before the Summer Recess, Members of both Houses called for more time for reflection, and my right honourable friend the Leader of the House of Commons pledged to take the proposals away and consider them further, and that is what he has done. In that time he has listened to representations from a variety of sources, and has given evidence to and engaged with several committees in the other place. He has now come forward with his revised proposals which take account of the concerns raised. The end result is a workable and sensible model to deliver English votes for English laws.

Lord Wallace of Tankerness (LD): My Lords, I have raised the question before of what happens when your Lordships’ House passes an amendment to a Bill which then goes, in the normal way, to the House of Commons and the House of Commons agrees with the amendment, but English, or English and Welsh, Members do not. As I understand the proposals, that would not then become law. However, we have a piece of legislation—a clause, perhaps—that has been passed by both Commons and Lords. What are the implications of the Government’s proposals for the sovereignty of Parliament; and what actually constitutes law?

Baroness Stowell of Beeston: Your Lordships are asking questions that I am going to cover: I can assure you that this speech will not take me long. We have all had a busy day and want to crack on. The simple answer to the noble and learned Lord is that this House will consider legislation in exactly the same way as we do now, and when the Commons considers our amendments it will send us a message. I will deal with the noble and learned Lord’s point in a moment, when I come to precisely how things are going to work.

This is the fourth time that we have debated these proposals. I do not want to go through them all again in great depth, but I will remind noble Lords of the four main stages where they bring about changes to the work of the other place. The first is the certification

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process, where Mr Speaker will decide whether these new provisions are engaged when a Bill reaches the House of Commons. In previous debates, some noble Lords were concerned about the burden that that might place on Mr Speaker, as well as the procedure in the Commons. In response, the proposals have been revised to allow him to draw upon the advice of two members of his Panel of Chairs, nominated for the purpose, enabling him to call on assistance where he thinks it is required.

The second significant element of these proposals is the introduction, for Bills which wholly affect England only, of an England-only Committee stage. We consider that to be a simple, effective way to strengthen the voice of English MPs in the legislative process and so that element remains unchanged.

The third is the inclusion of a new step in the legislative process—a legislative Grand Committee—for Bills affecting England, or England and Wales only, before Third Reading. This will ensure that such legislation can pass only where a majority of English, or English and Welsh, MPs agree to it. However, our revised proposals set out explicitly that although only English, or English and Welsh, MPs may vote in legislative Grand Committee proceedings on Report, all MPs will be able to speak and contribute in that Committee. Members of the other place were concerned to make it absolutely clear that that was the case and my right honourable friend the Leader of the Commons has revised the proposals to do just that.

Finally, returning to the point made by the noble and learned Lord, where our amendments are considered in the other place, and the English votes for English laws procedures are engaged, although all Members of Parliament will vote on them where they affect England, or England and Wales only, they will need the support of a double majority in the House of Commons of both the whole House and of English, or English and Welsh, MPs in order to pass. This too remains unchanged.

Under these proposals, MPs from across the United Kingdom will continue to vote at Second Reading, in most Committees, on Report and at Third Reading and when considering Lords amendments.

Lord Forsyth of Drumlean (Con): My Lords, I am most grateful to my noble friend for giving way. Would the English issues which this English Grand Committee would deal with include English income tax?

Baroness Stowell of Beeston: That is something which we have clarified. The English votes for English laws procedures will relate to English tax measures. My noble friend asked this question last time we debated the subject. The amended procedures, which the other place will debate tomorrow, will clarify that English votes for English laws procedures will apply on taxation matters which relate only to England. The way in which MPs consider supply estimates remains unchanged: all MPs will be involved in supply estimates in the same way in the future as they do now. My noble friend rightly made the point about English taxation when we debated this last time, and the greater devolution powers that will be in place for Scotland. We have clarified this for those who quite rightly want to know that that is the case.

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Lord Forsyth of Drumlean: What if a Government have to raise taxation through income tax? If we had a Labour Government who relied on Scottish MPs for their majority but did not have a majority in England, would they be unable to get their income tax proposals through the House of Commons because there would, in effect, be a veto from the English MPs? Does that not drive a coach and horses through the whole system?

Baroness Stowell of Beeston: What I would like to do, if my noble friend will allow me, is to finish laying out the basic provisions and propositions as they have been put forward by the Government and will be considered tomorrow. I will wind up this debate and will be absolutely clear in my closing remarks.

As well as being pragmatic and proportionate, these proposals are being introduced in a way which allows some flexibility. Should they be approved by the House of Commons tomorrow, they will be subject to a rigorous process of review to make sure they work as intended. That reflects just how much we want to get them right and how the spirit of careful consideration and reflection shown so far will continue as we move forward. That review process will not be a matter just for the House of Commons. I said before the summer—and I say again now—that these proposals are not intended to make any changes to the procedures of this House. The powers we have, and our role in the legislative process, will remain exactly the same. Yet our debates before the summer demonstrated the concerns of noble Lords, which were properly rooted in the desire to preserve the important role that this House plays in the legislative process. I see it as my duty to reflect that within the Government and that is why I am pleased to say that, after consultation with my right honourable friend the Leader of the Commons, he has invited the Constitution Committee of your Lordships’ House to feed in its views on these changes. I am pleased to hear that that committee has considered the invitation and intends to take up the opportunity. I note that my noble friend Lord Lang will speak this evening and he may want to expand on this in his contribution.

I know that some noble Lords hoped to set up a Joint Committee to examine these issues, as the noble Lord, Lord Foulkes, has highlighted. I recall that there were very strong feelings expressed in your Lordships’ House when we debated this in the summer. The House divided on the matter and that made it clear that noble Lords felt strongly about it. However, I see that an amendment has been tabled in the other place to the proposed English votes for English laws Standing Orders which proposes to agree to the Lords’ message about a Joint Committee. Whether that amendment is selected will be a matter for Mr Speaker, but the Government’s view about the Joint Committee could not be more clear. As I said during our previous debate, we were elected with a clear mandate to take forward English votes for English laws as part of a fair and balanced settlement in the United Kingdom. Just as we are getting on with devolution elsewhere, we believe that we have a clear mandate to get on with English votes for English laws as well. There will never be a perfect solution, which I said when we debated

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this previously. This matter has been around for a long time. It has been debated for many years and considered in many forms.

As I said in the summer, there has been a lack of political will to see progress in this area. That is no longer the case. This Government want to get on with the job that we have been elected to do. I assure noble Lords that the involvement of the Constitution Committee is a good part of the review process. It is clear that that contribution will be important to the review process taking place next year. No one will be more vigilant than me in ensuring that any potential effects of these proposals on this House will be considered when we look at that review process. I will be mindful of the responsibility on me, not just as a member of Her Majesty’s Government but also as the Leader of this House. I hope very much that I have been able to give noble Lords an opening. I will of course respond at the end of this debate with the assurance that noble Lords are looking for that we will have an opportunity to feed into the process of review in due course. I beg to move.

7.31 pm

Baroness Smith of Basildon (Lab): My Lords, I listened carefully to the noble Baroness and I have to say that I had a sense of déjà vu. I had heard a lot of the content of that speech before because it was similar to previous ones. I do not intend to raise all the constitutional arguments that I have raised before. Other noble Lords are far better qualified that I am to address such issues. Perhaps I may say that the concern of this House is not how these measures will operate in the House of Commons. A lot of the noble Baroness’s speech was devoted to how they affect how legislation is dealt with in the House of Commons. The concern expressed by your Lordships’ House is how it impacts on how we address issues and our role. I do not consider that that was addressed properly.

When the noble Baroness came to the end of her comments, she did not address the remarks made by the noble Lord, Lord Forsyth, which are of enormous concern. As she knows, any Government have a right to get their legislation through. They are unable to do so if they lose the right over their taxation powers for the UK. I suggest she comes back to that at the end of her comments because it was rather confused. She used the word “clarify” a number of times. She said that the proposal was pragmatic and proportionate, which has left me feeling rather puzzled.

The noble Baroness will recall our conversations in September just prior to the September sitting, for which this debate was originally scheduled. She made a decision to remove the debate on this issue from the September sitting and instead have a debate on the size of your Lordships’ House. We did not concur with the judgment on that but she explained that one of the reasons she did not want this debate during that sitting was because we had not yet had a response from the House of Commons to our request for a Joint Committee to look at this issue. Last Friday, I wrote to the noble Baroness—the letter was delivered to her office—to ask her whether I was right to assume that a response was now available since the debate had

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been rescheduled for today. I have not had a response. Neither am I aware of there having been any response from the House of Commons to your Lordships’ House on that request. I know that there is a debate tomorrow but that is not the issue. Why are we having the debate today? What has changed since September? Perhaps I can answer my own question: if we are very clear about it, the only reason we have this debate today is because tomorrow there is to be a debate in the House of Commons and the Government have tabled pages and pages of amendments to the Standing Orders to be voted on. Therefore, this convoluted and complicated measure will be voted on in the House of Commons tomorrow, without any response having been received by this House to our request for a Joint Committee.

I note what the noble Baroness said about Graham Allen’s amendment on the setting up of a Joint Committee and how that would inform this House, but that will be tomorrow. We will not have the benefit at all of knowing the view of the House of Commons on this debate. I ask her to explain why the debate was scheduled for today when we have no response from the House of Commons and it is not debating the matter until tomorrow. I do not think that her response was good enough. I presume that she talks and liaises with Chris Grayling, the Leader of the Commons. It is very unfortunate that the Government’s choice of timetable for debates in the House of Commons has not provided the opportunity before this debate to have the debate on the specific issue of whether it would have a Joint Committee with your Lordships’ House to look at the implications. Why could that not have been done before now and before our debate? It would have been very helpful for informing this debate.

As the noble Lords, Lord Butler and Lord Lisvane, have said previously, there is no urgency about these changes. That is what I do not quite understand about why there is this rush for the debate tomorrow. The changes proposed by the Government will not make any difference in this Parliament. It would have been courteous to this House, as well as for good governance, for the Government to have allowed the House of Commons a full debate at our request. That worries me because it appears that we have a Government who do not like scrutiny or challenge, which are very important in ensuring good governance and good legislation.

I would be very happy to be corrected on this and I hope that the noble Baroness can do so but I am pretty sure that the Government will be whipping their MPs to vote against a Joint Committee when this is debated tomorrow. If she can tell me otherwise, I would be very grateful. I would give way instantly to allow her to correct me on whether the Prime Minister is whipping his Members to vote against a Joint Committee with your Lordships’ House.

Baroness Stowell of Beeston: The noble Baroness is asking me to provide information on whipping arrangements in the other place. The point I make to the noble Baroness and to the House—I have already made it—is that I was very clear when we debated this matter in the summer that we as a Government did not support a Joint Committee to look at the constitutional implications of these measures. We felt,

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and still feel, that there is no perfect solution to English votes for English laws, and that it is of great importance and goes to the heart of delivering fairness within the United Kingdom. We have come forward with a set of proposals which build on the many different debates that there have been on this matter. We want to implement them and ensure that they are properly reviewed after they have been tested in real time in this Parliament. That was our position then; it remains our position now. Clearly, it is for the House of Commons to consider the message that we sent and I am pleased that an MP has tabled an amendment in order for the House of Commons to consider that issue. But it is the Government’s position that we do not support a Joint Committee.

Baroness Smith of Basildon: I always like to be helpful to the noble Baroness and give way when she asks, although it might have been better for her if I had not given her the opportunity on that occasion. Without being too unkind, she consistently refers to “we” and the Government. I understand that. But in this case—the proposal for the Joint Committee—the “we” in question is her role as Leader of this House. I say that in all sincerity. All I was asking was whether the Government were whipping their Members to vote against a Joint Committee, which would be very helpful to know. It was not a party-political issue when it was raised. It was raised by all parties and no parties.

Lord Tyler (LD): I wonder whether this is the right moment to remind the House and the Leader of the House that what happened after she made that Statement by the Government about their lack of support for this proposal, was that this House, of which she is a servant, voted by 320 votes to 139 votes to express clear support for that mechanism. Is she now saying that she is ignoring a vote of this House?

Baroness Smith of Basildon: I am not quite sure that that was an intervention on this speaker. The point I want to make to the noble Baroness is that, when a Motion is passed, it is the property of this body, of which she has the great opportunity to be Leader. I think she is probably not the only person in your Lordships’ House who aspires to that.

I want to go back to this. If there had been such a debate in the House of Commons, it would have given some comfort to the noble Lord, Lord Butler, that it had been properly considered by Members of the House of Commons, even if it had been rejected. It would have given us some confidence that it had been considered and that it was their considered judgment that they did not think it necessary. If it had been rejected, the House of Lords would have been able to say, “Right, what should we do? What processes should we go through to reassure ourselves that we can properly investigate and assess whether those measures have any impact on how we operate?”. That is all that was being asked. It would have been preferable to work together, for both Houses to examine this, rather than just one House—your Lordships’ House—looking at it alone. A debate in the other place on this issue prior to today would have helped inform our deliberations and discussions this evening. Very important constitutional

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issues are being raised. If any constitutional issue is rushed when it is not essential or necessary to do so, every opportunity should be taken to consider it properly.

I ask the noble Baroness a very specific question: has she at any time raised the request from the House of Lords for a Joint Committee directly with the Leader of the House of Commons or the Prime Minister, either in Cabinet or in a Cabinet committee? I appreciate that it is not always straightforward and easy. As the noble Baroness indicated, she has a responsibility as a Cabinet member, as a member of the Government and as the Leader of the Government in your Lordships’ House. However, she also, as she has been reminded by noble Lords, has a role as Leader of your Lordships’ House across the parties. I appreciate that it can be difficult; every Leader has to navigate that. However, the point was made by the noble Lord, Lord Tyler, that the majority in favour of a Joint Committee was 101.

Lord Foulkes of Cumnock: It was 181.

Baroness Smith of Basildon: Sorry, it was 181. I am glad to be corrected on that. When the noble Baroness commented, she said that “some” noble Lords would have preferred a Joint Committee. More than 300 Lords wanted a Joint Committee. It was a massive majority. I do not recall another majority like that. She should have heard those voices loud and clear. All she said at the Dispatch Box today was, “We in the Government don’t think it’s a good idea”. Actually, we in the House of Lords think that it is a very good idea.

The Government are suggesting a significant and unprecedented change to Standing Orders. As a House, we should not comment on the effect of the Government’s proposed changes on the other place other than on how it affects the Government as a whole, not on how it affects debates in the other place. I know that the noble Baroness used the word “clarity”, but there is a distinct lack of clarity as to how it affects us and in what way.

I listened carefully to what the noble Baroness said when she said that Chris Grayling, as Leader of the House of Commons, has invited our Constitution Committee to, in I think her exact words, “work with” the Commons Procedure Committee to monitor the working of the new Standing Orders in the first year. What does that mean? If he wants the committees to work together, what is so wrong about having a Joint Committee to look at these issues? If she is talking about looking at how the new Standing Orders work in the first year, can she tell the House which Bills the Government expect to be affected in the first year so that the committees will have an opportunity to evaluate how they will work?

I am disappointed to say this, but this whole saga is becoming symptomatic of the Government’s approach more generally. It is not good government to rush such matters through without proper consideration. I would like to see much greater analysis of the constitutional position, as well as examination of the consequences, intended and unintended, so that any potential problems and difficulties are addressed now. As I said to her before, I would much rather know early on whether there are potential difficulties and problems so that

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they can be dealt with and addressed, rather than, two or three years down the line, having a constitutional crisis that nobody has thought how to address.

In raising this issue, as in others, it seems that the Government see any opposition as a threat or challenge, not as an opportunity to improve legislation or to get things right. I am convinced that the only reason why your Lordships’ House raised this is because it was concerned that the Government should make good legislation and not get into a constitutional crisis over this. All Governments have the right to get their promised legislation through Parliament. That is an absolute. However, we have seen half-baked and half-formed legislation put before this House. I understand that that happens. I was a government Minister myself; we all know that these things happen. However, my serious concern, which is relevant to this debate and to the wider operations of your Lordships’ House, is that the Government either seek to ignore what we do or overreact to the House of Lords expressing a different view and offering advice or suggestions to the Government.

On Monday evening, we had the Government briefing journalists that if this House voted against the tax credits statutory instrument then the House would be “suspended”. That is nothing short of outrageous and appalling. Parliament does not belong to the Government and the Government cannot dictate how Parliament acts, just as the House of Lords does not and should not dictate to the Government how they act. We know our role—you could say we know our place—but we have a duty and a responsibility sometimes to get the Government to think again or look at something again. There needs to be a much greater understanding of our respective roles and respect for them.

Your Lordships’ House made a simple, moderate request to the House of Commons that a Joint Committee be established to examine any possible effects of the proposed changes they are considering in the other place on the way we operate our business. That does not stop the Government proceeding with the proposals or hinder them from going ahead with them. It merely asks that we work together, in a Joint Committee, to find a way through any potential problems. What could possibly be so dangerous or difficult about that?

I have raised this simple question to the Leader of the House before in a different way: can she tell us what action she has taken to advocate and express the views of this House on this issue of how English votes for English laws affects the House of Lords? Can she tell me what response we have had, in the absence of any response to our request to the Commons so far?

Lord Forsyth of Drumlean: The noble Baroness made a very passionate speech, much of which I agree with, explaining the importance of maintaining the conventions between the two Houses of Parliament. Should that not extend to the convention that we do not vote on secondary legislation?

Baroness Smith of Basildon: If the noble Lord looks at the various documents in your Lordships’ House from the committee on conventions, he will find that there are circumstances where it is appropriate to vote

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on secondary legislation—not many, I grant him; it is not something that should be done easily, regularly or without great thought. This is the point I am making: these are things that we have to look at, consider and not ignore in looking at our respective roles. I can assure him that we remain signed up to the Salisbury/Addison convention, but we also look for opportunities where we should act within those conventions and the guidance we have to challenge the Government to say, “Think again, look again; you do not always get it right first time”.

7.47 pm

Lord Tyler: My Lords, I can respond directly to the noble Lord, Lord Forsyth, because I served on the Cunningham committee on conventions. There is no such convention on secondary legislation. Indeed, I recall a number of occasions when the Conservatives moved fatal, wrecking amendments to SIs during a Labour Government. His point can be dealt with quite quickly.

Normally my noble and learned friend Lord Wallace of Tankerness would lead for these Benches, but as Members will know he took a leading part on the previous debate on the Energy Bill. Since he has unique experience in this House, the other House and Holyrood—and in government at both ends of the country—I have benefited from his wisdom in preparing my contribution.

I and my colleagues have long argued that we need proposals for devolution within a federal constitutional framework, so we accept that there is a question to answer. We are not people who think that the English question is best not asked. Indeed, we gave evidence to the McKay commission on that basis—I was involved in that myself. We also acknowledge that the Leader of the Commons and the Procedure Committee in the other place have attempted to meet some of the concerns expressed in debates both in this House and in the other place during July. However, a number of other, very fundamental concerns remain. I shall touch on them speedily. Whether this is the only or best way to resolve them is still a matter for debate. I share the concerns of the noble Baroness, Lady Smith, and I will return to this point later.

Meanwhile, we should dispel some of the myths that grew up during the summer and were expressed in your Lordships’ House. First, there was an illusion that somehow these proposals affect only the House of Commons, are entirely discrete to that House and are appropriately dealt with by a simple introduction of new Standing Orders. Frankly, that has been blown to smithereens, not least in your Lordships’ House but also in the other place. I illustrate that by the fact that the revised proposals from the Leader of the Commons have now expanded the consideration of certified Motions or amendments relating to Lords amendments and other messages from one page to two. The proposed Standing Order 83O—not 830—which the Commons will consider tomorrow, is now very extensive. Page 27 of the new Explanatory Memorandum contains this firm statement:

“Paragraphs (2) to (6) ensure that English, or English and Welsh, MPs have the opportunity to veto Lords amendments that may make changes to the bill or parts of the bill that relate to England or England and Wales”.

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Colleagues will recall that we were told there was no veto. It is now very firmly there. As the noble Lord, Lord Forsyth, has already indicated, this could relate to some extremely important decisions of Parliament. But what this does is to provide for a veto by a subset of that House. For the first time, one House of Parliament is to be overruled by a devolved mechanism in the other. Members of your Lordships’ House will note that there is now no hesitation in using the word “veto”. Members of the Government are fond of quoting the core importance of the sovereignty of the full Westminster Parliament—that is, the full House of Lords and the full House of Commons. Here we have an example of where a subset has a veto over the full Westminster Parliament. If that does not raise important constitutional issues, what does? Indeed, perhaps we should reflect that, topically, Holyrood, Cardiff and Stormont could ask: “What are the implications for us of this change?”. That brings me to my second major concern.

These proposals alter the delicate balance of power and responsibility between the two Houses of Parliament. Ministers have suggested—and it has been suggested again this evening—that in addition to monitoring and review undertaken by the Commons Procedure Committee at the end of this process, not in preparation for it, our own Constitution Committee might be involved in some way. I am the first to respect the work of the noble Lord, Lord Lang of Monkton, and his colleagues on our Constitution Committee. I just ask: what would happen if there were two quite separate investigations, monitoring and reviews of these processes, and they came to different conclusions? What do we expect will happen then? The Constitution Committee of our House reports to our House. The Procedure Committee reports to the House of Commons. What happens if they are not clearly in complete agreement? The noble Baroness has said that there will be a rigorous attempt to look at what has happened. I suggest that this is just a recipe for duplication, confusion and conflict between the two Houses.

I see that the noble Lord, Lord Young, is present. I am not sure what his new title is. He and I have sat on a number of Joint Committees. I think that they are an extremely important vehicle for the two Houses to reach sensible conclusions on all sorts of matters. Here is a classic case for this. The case for a Joint Committee of Peers and MPs proposed by the noble Lord, Lord Butler, and endorsed by a huge majority of your Lordships on 21 July, to which I have already referred, is clearly the sensible parliamentary way to approach this issue, with the whole of Parliament in mind, and to avoid the confusions that could otherwise occur.

As has already been said, tomorrow MPs will be invited to respond positively to the Motion of 21 July in your Lordships’ House, which was carried by a large majority. Sadly, this will not take the form of a proper response from the Leader of the Commons on behalf of the Government. No doubt the Leader of this House will be able to explain in her response at the end of this debate why we have not had the courtesy of a proper response from the other House. Instead, as has again been referred to, there will be an amendment endorsed by, I gather, several Members of several

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parties. I have counted six who have signed up to this amendment in the name of Mr Graham Allen, which reads as follows,

“this House concurs with the Lords Message of 21 July, that it is expedient that a joint committee of Lords and Commons be appointed to consider and report on the constitutional implications of the Government’s revised proposals to change the Standing Orders of the House of Commons in order to give effect to English Votes for English Laws, and that the committee should report on the proposals by 30 March 2016”.

That is not kicking the issue into the long grass but is a very sensible approach, not least, of course, because the Government have already said that there is no huge urgency for this. They are not anticipating in the immediate future that there will be any Bill which raises these particular concerns and different issues for different parts of the United Kingdom. That brings me to my third point.

This is a classic case of the dangers of piecemeal, ad hoc attempts to deal with apparent anomalies in our only partially written and codified constitution. Remove one anomaly and you create a potential host of others. If any Member of your Lordships’ House still thinks, after listening today, that this can be resolved in isolation, I suggest they look back at the debates in your Lordships’ House and, indeed, the other place in July which contain a wealth of practical experience. I refer to just a few who contributed in your Lordships’ House—the noble Lords, Lord Butler of Brockwell and Lord Lisvane, the noble Baroness, Lady Boothroyd, the noble Lord, Lord Reid of Cardowan—I hope I have pronounced that name right—and my noble and learned friend Lord Wallace, all of whom have a right to be heard by the Government, given their past responsibilities in Parliament and in government. If any Member still has further doubts, they should read the contribution of the former Attorney-General, Mr Dominic Grieve, in the debate in the Commons on 15 July. That leads me to my fourth point.

There is such a head of steam now for a constitutional convention of some sort. I am not suggesting that there is any one model. It is supported on all sides of your Lordships’ House and is evidenced by the Bill introduced by my noble friend Lord Purvis of Tweed. Surely the Government must agree to see these proposals in their wider context. I confess that in the past I have been something of a sceptic of the sort of all-purpose constitutional convention—put it all in the pot, stir it around and hope consensus comes out at the other end—but the confusion over these proposals over the past few months surely adds strength to the argument heard regularly from the other side of the House that too many of these ad hoc piecemeal attempts to update our constitution are neither coherent or comprehensive. My noble friend Lord Purvis, whose service here and in Holyrood, and in the Scottish body politic generally, gives him special experience, will deal with this aspect in more detail later.

Therefore, I believe that there is some urgency now for agreeing to set up some form of constitutional dialogue which looks at the relationship between the different parts of the union and their various political institutions. I accept that to make it a success we should be clear about how that convention—whatever

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form it might take—should begin its work. There are all too often false parallels drawn between vague ideas about a constitutional convention for the United Kingdom and what happened in Scotland in 1996, but, as both my colleagues here will confirm, the Scottish convention was a process which started with some measure of agreement on the outcomes that the parties wanted. Indeed, the Conservative and Scottish National parties refused to take part precisely because neither would commit to that level of agreement, so we should seek some agreement on principles before setting up a convention. It is, of course, no coincidence that many Conservative Members are now ardent advocates of EVEL, when so much of their support comes from England, while, on the other hand, it is no particular coincidence that Labour Members are more prone to cavil about EVEL, when so much of their historic support was in Scotland. Therefore, a public element of any such discussion, or any other form of widespread consultation, must involve putting these political prejudices on a sort of jury trial. It could then be hoped that the outcome would command public confidence.

But if the Government are to achieve any consensus—indeed, any unanimity—in their own ranks, they cannot continue to adopt a narrow, partisan, piecemeal approach to these great issues. Today, I have reread Command Paper 8969, The Implications ofDevolution for England, introduced by the now much regretted departed Leader of the Commons, William Hague, who claimed:

“Both the parties to the coalition wish to continue this major process towards decentralisation in England”.

The present proposals do not meet that challenge.

I note that my right honourable and honourable friends in the Commons have today tabled a further amendment to the Leader’s Motion as follows:

“This House believes that a constitutional convention should be established to report by the end of 2016 to ensure the legitimate demand for English voices to be heard on English matters is delivered within the context of a carefully considered settlement for the UK, Scotland, Wales, Northern Ireland, England and the authorities participating in the Government’s devolution agenda”.

That should surely be the context for these discussions, not a little bit of ad hocery. It is certain that the proposals that will go before the other House tomorrow simply do not rise to the challenge of the White Paper of Mr Hague, as he then was. As a result, they will satisfy nobody. Those who favour an English Parliament—with the inevitable English Executive that would be required to implement its decisions—will attack them as a weak and weedy bureaucratic jungle. Incidentally, I do not know how many Members of your Lordships’ House have looked at the revised proposals but it is significant that the Leader of the Commons has not dared to produce a revised flow chart this time—I think it would look like somebody’s inadequate attempt at knitting. Those others, like many Members of your Lordships’ House, who identify constitutional hostages to fortune will plead for a more considered, comprehensive and consensual approach.

I think many Members of your Lordships’ House will join us in appealing to Ministers to listen to your House; to agree to a Joint Committee to examine these proposals more fully before experimenting with the

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current draft; to incorporate a sunset clause in the eventual changes to the Standing Orders; and, most important of all, to accept in principle the case for some form of convention to discuss the future of our part-written constitution in this era of post-devolution settlement.

8.02 pm

Lord Butler of Brockwell (CB): My Lords, I apologise to the Leader for having missed the first moment or two of her speech. I contribute to this debate more in sorrow than in anger—but with an element of anger. The Leader promised that the House should have an opportunity to express views. This debate is providing that opportunity; I welcome that. What I do not welcome is that the Government are going ahead with their Motion for changes in the Standing Orders tomorrow, when they will hardly have had the opportunity to read in Hansard what has been said in this evening’s debate. Nothing could make it more clear that the Government do not propose to take any serious account of your Lordships’ views on this matter.

As has been pointed out, on 21 July this House passed by a very large majority a Motion inviting the Commons to set up a Joint Committee to look into the constitutional aspects of these proposals. We have not had a reply from the Commons to that proposal. As she has said, the Leader made it very clear in that debate on 21 July that the Government were opposed to a Joint Committee. But this is not just a matter for the Government. This was a message from the House of Lords, which the House of Lords passed by a large majority, to the House of Commons—and the House of Commons has not replied to it. The Leader said that such a reply might be provided tomorrow as a result of the House of Commons voting on an amendment put down by Mr Graham Allen, a Back-Bencher. But that is not adequate. The Leader herself said that the amendment might not be selected by the Speaker. The House of Commons should have replied to this proposal from the House of Lords. It is a gross discourtesy that it has not and that the Government have not made sure that it replied.

There is a precedent for the House of Commons to go ahead without taking any account of a Motion from the House of Lords proposing a Joint Committee. The precedent was in 1911. Not for 104 years have the Government proceeded without taking any notice of a proposal such as this from the House of Lords. Why are the Government treating your Lordships’ House with such disregard? Mr Grayling has made clear his reasons on a couple of occasions. In reply to a question in the other place on 15 October, he said that,

“this is a debate about the Standing Orders of the House of Commons and it would be quite a big step for us to take a move towards inviting the House of Lords to rule, consider and act on our own Standing Orders”.—[

Official Report

, Commons, 15/10/15; col. 506.]

That is an obtuse answer and I am afraid that it is deliberately obtuse. These proposals are about the constitutional relationship between different parts of the United Kingdom. As the noble Lord, Lord Reid, said, that is a matter on which the Government should proceed with extreme caution—and they are not doing so.

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However, blessed is he who repents. We hear tonight that the Leader of the House of Commons has asked the chairman of the House of Lords Constitution Committee to take a part in monitoring the constitutional aspects of the operation of the Standing Orders. The Leader has played some part in achieving that repentance—but it is merely satisfactory as far as it goes, and the discourtesy to this House has not been removed.

The Government propose to go ahead tomorrow regardless with their changes to the Standing Orders. I have said from the outset that I welcome the Government’s seizing the nettle of the West Lothian question. I advised the Conservative Party’s task force under the right honourable Kenneth Clarke, which proposed one of the three solutions rehearsed in the White Paper of Mr Hague, as he then was, at the end of the previous Parliament. That solution was better, in my view, than the one now put forward. I note that in addition to the comments of the noble Lord, Lord Tyler, about a diagram that would look like knitting, even the Procedure Committee in the other place described the Government’s proposals with adjectives such as “complex”, “rococo” and “over-engineered”. For that reason, the Select Committee had great reservations about them.

The Government have not explained why a simpler solution has not been proposed. My objection to the Government’s proposals is, as the noble Lord, Lord Tyler, said, that for the first time it gives a veto to a group of MPs in the Commons—English or English and Welsh MPs—over legislation that Parliament as a whole wishes to pass. That is unprecedented. The proposal of Kenneth Clarke’s Democracy Task Force put it the other way round. It gave English or English and Welsh MPs the opportunity to amend a Bill in Committee and on Report and then the whole House the final say on accepting or rejecting the result. That seems both simpler and more in line with our parliamentary traditions than a veto.

Why does the difference matter, apart from a veto being a constitutional innovation? I suggest it matters for this reason, among others. If a veto is to be given to English MPs, or English and Welsh MPs, over legislation affecting only their areas, is a similar veto to be given to Scottish MPs on legislation in the Westminster Parliament that affects only Scotland? There is such legislation. An example which was brought to my notice is the Partnerships (Prosecution) (Scotland) Act 2013. If such a veto is not going to be given to Scottish MPs, why not? What is sauce for the English and Welsh goose should be sauce for the Scottish gander. If the Government do not give similar rights to Scottish MPs to those that they propose to take for English and Welsh MPs, they are giving Scotland a legitimate grievance. In the current state of the union, that is a dangerous and unwise thing to do.

There are many other questions about the Government’s proposals, which other noble Lords have raised. The Hansard Society has produced a paper entitled Five Early Questions about them. Why are the Government rushing into these proposals without waiting for the Public Administration and Constitutional Affairs Committee, the Scottish Affairs Committee and the final report of the Procedure Committee in

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another place to give their advice on these issues? It is very unwise of the Government to be doing so. Their answer is, “Let’s give our proposals a try and review them in a year’s time”. We have heard that sort of argument before. It is like saying, “We will jump over the cliff and grab a bush on the way down so that we can review our decision about whether we were right to do so”.

As has been pointed out, there is no need for this impetuous rush. The current position is that there is both an overall majority for the Government, and a majority in England and Wales for the Government, in the House of Commons. The Government can easily afford to allow their proposals to be properly considered by both Houses of Parliament. They are acting like a bull in a china shop—if that is not an inappropriate analogy in this particular week. However, it is clear that whatever we say tonight, the Government will push ahead with their proposals in the Commons tomorrow. There is only one chance that prudence will prevail and that this House’s invitation to the House of Commons to set up a Joint Committee will be adopted, which is that the House of Commons passes Mr Allen’s amendment tomorrow and accepts our proposal for a Joint Committee. The matter is now in their hands.

8.13 pm

Lord Lang of Monkton (Con): My Lords, I hope your Lordships will forgive me if I do not enter into the heat of this debate this evening, tempted though I was by the intriguing announcement by the noble Lord, Lord Butler, that he has discovered that rare nugget, a new Scottish grievance—I thought we had mined them all pretty well. I will not even rise to that particular fly because there are other Scottish Members of this House to speak later, and the noble Lord, Lord Foulkes, for example, does grievance far better than I can.

However, I thought it would be helpful to the House if I sought to explain the context of the Constitution Committee’s proposed involvement in monitoring, for a period, the operation of the reformed Standing Orders for the other place, which I understand are to be brought forward tomorrow—assuming, of course, that they will be passed. I do so because it is an unusual matter for our committee to become involved in, and it is not a task that we would have sought. Normally, we never comment on the internal procedures of the other place. However, when one is expressly asked by the Leader of the House of Commons to undertake this task—reflecting, I suppose, the fact that this House had sought, through the Motion it passed in the summer, to be involved in further scrutiny and consideration of EVEL through a Joint Committee with the other place—that changes things. It would, I believe, be wrong to refuse such a request. So in the expectation that the Joint Committee will not now materialise—and conditional on that and on the other place approving the proposals of the Leader of the House of Commons—our committee agreed at its meeting this morning to accept the task. The Procedure Committee and the Committee on Public Administration and Constitutional Affairs in the other place will also, I understand, be involved, although separately from our committee.

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