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Grand Committee

Tuesday, 24 November 2015.

Electricity Capacity (Amendment) (No. 2) Regulations 2015

Motion to Consider

3.30 pm

Moved by Lord Bourne of Aberystwyth

That the Grand Committee do consider the Electricity Capacity (Amendment) (No. 2) Regulations 2015.

Relevant document: 1st Report from the Joint Committee on Statutory Instruments

The Deputy Chairman of Committees (Baroness Garden of Frognal) (LD): My Lords, if there is a Division in the House, the Committee will adjourn for 10 minutes.

The Parliamentary Under-Secretary of State, Department of Energy and Climate Change and Wales Office (Lord Bourne of Aberystwyth) (Con): My Lords, this draft instrument is an amending regulation to the main secondary legislation package for the capacity market scheme, part of the electricity market reform programme. The powers to make this implementing secondary legislation are found in the Energy Act 2013, which, following scrutiny in this House and the other place, received Royal Assent in December 2013 with cross-party support.

The two changes contained in the draft instrument are simplifications intended to make the process easier for applicants, and were overwhelmingly supported by respondents in the consultation, but before I explain them in more detail it may be helpful to the Committee if I say a few background words about the capacity market itself.

I remind noble Lords that the capacity market will address our medium-term electricity needs and ensure that there is sufficient electricity supply towards the end of the decade and beyond. In brief, the capacity market will achieve this by making a regular capacity payment to providers who are successful in capacity auctions. In return for this payment, providers must meet their obligations to provide capacity, or reduce demand, when the system is tight, ensuring that enough capacity is in place to maintain security of electricity supply.

Ensuring that families and businesses across the country have secure, affordable energy supplies that they can rely on is our top priority. That is why we already have firm mechanisms in place, working closely with National Grid and Ofgem, to maintain comfortable margins on the system over coming winters.

Beyond that, it is essential that generators have confidence that they will receive the revenues that they need to maintain, upgrade and refurbish their existing plant, and can finance and build new plant to come on stream as and when existing assets retire. Equally, we want to make sure that those who are able—without detriment to themselves and the wider economy—to shift demand for electricity away from periods of greatest scarcity are incentivised to do so.

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That is why we have the capacity market. The first auction, held in December 2014, saw a good outcome for consumers, as fierce competition between providers meant that we obtained the capacity that we will need in 2018-19 at prices below the levels that many had expected. That translates into lower consumer bills.

This instrument makes two minor changes to improve the capacity market, based on feedback from stakeholders. First, this instrument substitutes a new definition of “relevant grant” in Regulation 17, and secondly it extends from five to 15 the number of days in Regulation 59(3) of the 2014 Electricity Capacity Regulations, to permit providers a longer period in which to submit credit cover after receiving a conditional pre-qualification notice.

The amendment to the definition of “relevant grant” will ensure that grants, the purpose of which is to support feasibility studies or research and development in relation to carbon capture and storage, will not preclude participation in the capacity market. The essential feature is that the CCS support should not have provided effective material support which has put a provider at an advantage compared to others which have not so benefited. This will not be the case for such early stage grants for CCS purposes: hence the amendment. The second amendment amends the number of days from five to 15 to allow applicants, after receiving a conditional pre-qualification notice, longer to submit credit cover.

My department consulted on the two changes in March 2015 and received 22 responses. The vast majority of stakeholders who responded were content with the changes proposed. I look forward to hearing what noble Lords have to say on these proposed changes. I beg to move.

Lord Teverson (LD): My Lords, it is the first time that I have spoken in any meeting of the House since the Secretary of State announced that coal was going to come to an end within 10 years, and I congratulate the Government and the Secretary of State on that announcement, which is a major step forward. I disagree with a great deal of government energy and climate change policy but that is an excellent move forward, and I would like the Minister to note that and pass it on.

I have a couple of questions about the capacity market, although I have no issues with this statutory instrument. Will the Minister update us on interconnectors and the capacity market? There have been plans to bring on demand reduction aggregators but in the short term rather than the long term. I would like to think that we can bring on institutionalised demand reduction and aggregation much more than we have done in the past, something which is very much in the Government’s interests. On the reduction of fossil fuels, I recall that quite a number of the successful tenderers for capacity payments were coal generators. Do the Government have any plans to exclude them as we move forward to auctions?

We are now down to a very low level of margin, yet the National Grid and the Government seem fairly relaxed. Does that mean that a 20% margin in the past has been a waste of expensive resource that was not

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needed and that we should have been managing on much smaller margins? I should be interested to hear the Minister’s response on those issues.

Baroness Byford (Con): I should like to make two observations. The Minister has said that the vast majority accept the proposals, so which respondents did not? I have no difficulty with the proposed change from five working days to 15, but there has been a suggestion in the public domain that electricity supplies could be fairly fragile in the coming months, particularly if we have very cold weather. How has that been built into the system? I am glad that feasibility studies were done and were accepted, but what is the comfortable margin of security of supply in the months ahead? Those are my questions: who did not support these proposals, and what do the Government consider a comfortable margin of security supply?

Lord Grantchester (Lab): I thank the Minister for his introduction of the regulations. The amendment they contain is minor and uncontroversial, extending to carbon capture and storage the possibility that it could participate in the capacity market. The Government now seem to recognise the potential of CCS, as evidenced by the amendments recently agreed in the Energy Bill, now passed to the other place. They had previously not considered CCS as sufficiently relevant operationally to the capacity market, and this amendment allows that CCS projects which will in the first instance have received grant support or funding arrangements for early stage developments can now quality for participation in the capacity markets. The essential feature is that this early stage support should not materially put the provider at an unfair advantage compared with others without that support. The greater matter is that any provider that can shift demand away from periods of greater stress without detriment should be encouraged.

I am content that this proposal was overwhelmingly supported by respondents to the consultation. Will the Minister clarify the Government’s intention a little further? While it is true that there is not as yet any deployed carbon capture and storage in this country, is it intended that CCS will eventually pre-qualify for capacity auctions in its operational phase?

It has been understood from the Government’s scoping document earlier this year that the operation of CCS plant operational support would take place through a form of modified contracts for difference rather than through capacity auctions. I would be grateful if the Minister could signal the Government’s intentions as early and comprehensively as he can to provide certainty about the direction of travel to developers. This amendment, and future intentions, could begin to allow the development of an industry that could be very valuable for the long-term use of fossil fuels. The noble Lord, Lord Teverson, has congratulated the Government on their plans to phase out coal generation, and we certainly support this direction of travel.

Lord Bourne of Aberystwyth: My Lords, I thank the noble Lords, Lord Teverson and Lord Grantchester, for their kind words regarding the speech given by my

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right honourable friend the Secretary of State, Amber Rudd, last week in relation to the withdrawal of coal-fired power stations, with the aim of doing that by 2025. It was most kind and gracious of them to say what they did.

I turn first to the questions raised by the noble Lord, Lord Teverson. Yes, we are looking at interconnectors, I think to Norway and Ireland, in addition to the existing interconnectors as part of the capacity issues that we are addressing, and we are looking at the possibility of them elsewhere, including Iceland. That is a large part of what we are doing.

The Statement on coal was of course subject to a consultation, as the noble Lord will know, which opens in spring next year, I think, subject again to ensuring that we have the necessary capacity in relation to gas-fired stations coming on stream. Still, a clear market signal was given in the speech. Demand reduction is a significant part of what we are doing, and of course there will be a demand response auction as well in the new year.

With regard to the system margin causing concern, there is a trigger for this. At the moment we are very confident of the 5.1% margin with regard to the announcement of the most recent one. To the noble Lord’s suggestion that a 20% margin is more than we need, I suppose the answer must be yes—that must follow. However, obviously one wants to stray on the side of safety so we are seeking to address this. Although the margin is comfortable, we have to look ahead. The next few years look comfortable but we need to bring on the new nuclear and look at other forms, such as small modular reactors and so on. That, too, is important.

I turn to the questions raised by my noble friend Lady Byford. First, on the consultation, I think I am right in saying—the team behind me will correct me if I am wrong—that out of the 22 responses, 21 were supportive.

Baroness Byford: That is a majority.

Lord Bourne of Aberystwyth: It is a huge majority that a lot of parliamentarians would be content with; it is roughly 95%, so it is pretty convincing. If the noble Baroness wants more information, I am happy to supply it.

The second question was a very fair one: what is a satisfactory margin? It is dependent on many factors. As I say, we are confident that 5.1% is a sufficient margin but it is on the tight side so we are trying to building additional capacity. It is dependent on many factors, most obviously the weather, as well as political factors, such as where gas is coming from. I remember from my first very first visit to the National Grid in Wokingham that someone, armed with the Radio Times, was trying to assess whether there was going to be additional demand on the system, such as England playing a football match. Notoriously, at half-time—or into penalties, as it inevitably goes—people go and put the kettle on. Work is done on looking at factors like that. So there are lots of additional factors, but 5.1% seems to be a sufficient margin although, as I say, on the tight side.

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I turn to the questions from the noble Lord, Lord Grantchester. Regarding the ongoing position with CFDs, my right honourable friend the Secretary of State announced in her speech that there would be contracts for difference in 2016, and we will set out nearer the time what the technologies are; I suspect that some will not be there, such as onshore wind, but that is just a view. We will set out closer to the time the precise way that that will work. I very much welcome his kind words.

Lord Teverson: If the Minister will allow me, I would like to come back on one point. I welcome his comments on interconnectors; they are something that over the past five years or so the Government have got more into, and they are an important part of energy supply. I recognise what he was talking about. However, I had the impression that there was an impediment to interconnectors bidding into the capacity mechanism system. That is as I understood it but I may be wrong. If that is the case, are the Government trying to rectify it? It is an important area of increasing competition that could reduce the cost to consumers.

Lord Bourne of Aberystwyth: I was unaware that there was a problem. However, 2015 is the first year in which the capacity market extends to interconnectors, so we are anticipating some activity. I hope that that satisfies the noble Lord, who asked a very fair question.

Lord Teverson: I thank the Minister and welcome that response.

Motion agreed.

Renewables Obligation Order 2015

Motion to Consider

3.47 pm

Moved by Lord Bourne of Aberystwyth

That the Grand Committee do consider the Renewables Obligation Order 2015.

Relevant document: 3rd Report from the Joint Committee on Statutory Instruments

The Parliamentary Under-Secretary of State, Department of Energy and Climate Change and Wales Office (Lord Bourne of Aberystwyth) (Con): My Lords, the renewables obligation is a long-standing mechanism for supporting renewable electricity generation in the UK. It places an annual obligation on licensed UK electricity suppliers to source a specified proportion of the electricity that they provide to customers from eligible renewable sources. The scheme is administered by Ofgem, which issues renewables obligation certificates to electricity generators in relation to the amount of eligible renewable electricity that they generate. Generators sell their certificates to suppliers, who use them towards meeting their obligation. Since it was introduced in 2002, the renewables obligation has played a key part in increasing the level of renewable electricity from 2.9% of total UK generation in 2002 to over 25% in the second quarter of this year. It supports around 22 gigawatts of accredited capacity.

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The renewables obligation scheme has been subject to a number of changes in recent years. The draft Renewables Obligation Order 2015, which I am putting before the Committee today, revokes, consolidates and re-enacts the Renewables Obligation Order 2009 and the orders that have amended it since it came into force on 1 April 2009. It also makes consequential amendments to the Renewables Obligation Closure Order—in other words, a significant part of this order is a consolidation measure. The consolidation simplifies and brings together in one document the main legislation underpinning the renewables obligation, making it more accessible to those who use it, including the Government and industry stakeholders.

The draft Renewables Obligation Order 2015 also implements outstanding policy decisions on the renewables obligation consulted on in 2013 and 2014. The changes focus on three areas: strengthening the sustainability of biomass electricity generation; providing for biomass conversion projects with an investment contract to regain eligibility for support under the renewables obligation in certain circumstances, which I will go into; and providing for the transfer of biomass co-firing and conversion projects to the capacity market mechanism.

An earlier draft of the order was published for a three-week technical consultation on 24 March 2015. Comments were received from 18 respondents, mainly representing the biomass sector. The majority of responses focused on the detail of how the biomass sustainability land criteria had been incorporated in the draft order. We have considered all of the points raised carefully and have taken them into account where appropriate.

I turn now to the detail of the new provisions in the draft order. The first set of new measures is aimed at strengthening biomass sustainability criteria. The Government are committed to achieving sustainable and cost-effective bioenergy deployment, which drives carbon savings, minimises the environmental risks and makes best use of the biomass resource available, both for energy and non-energy purposes. Currently, there are mandatory sustainability criteria in the renewables obligation for the use of bioliquids, which transpose certain requirements in the renewables energy directive. Since April 2014, generating stations of 1 megawatt and above capacity, using solid or gaseous biomass, have been required to report only on whether they meet greenhouse gas emissions and land use criteria. This draft order consolidates previous changes and makes compliance with the greenhouse gas emissions and land criteria mandatory for generating stations using solid or gaseous biomass, in order to receive support under the renewables obligation, as is the position for bioliquids.

These measures will ensure that renewable generation from home-grown or imported solid or gaseous biomass receives financial support only where that biomass delivers genuine greenhouse gas emissions savings compared with fossil fuel, and where it is sourced from land that is sustainably managed, not from land with a high biodiversity value or carbon stocks. This area of forestry and timber will be an important part of negotiations in the Paris climate change discussions on 1 December, the day after the conference opens.

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On greenhouse gas criteria, biomass power generation is already required to meet a greenhouse gas savings target of at least 60% compared with the EU fossil fuel average, and this target becomes tighter in 2020 and 2025, increasing in 2025 to 75%. This draft order introduces a new methodology for calculating an annual average greenhouse gas emissions figure for all biomass used by a generating station, excluding certain types of waste. The purpose of this calculation is to ensure that generators are not penalised if an individual biomass consignment exceeds the greenhouse gas target due to circumstances beyond their control, such as bad weather increasing transport distances. This is subject to the provision that each individual consignment of biomass must not exceed an overall ceiling. This prevents mixing extremely high-emission consignments with lower-emission consignments as a means of ‘washing through’ fuel consignments with unacceptably high greenhouse gas values. I am sure that noble Lords will appreciate that the intention is to be fair in relation to acts of God, extreme weather and so forth, but without providing an opportunity to circumvent what is a sensible provision.

On land criteria, the draft order requires generators using wood fuel to comply with specific land criteria, derived from the Timber Standard for Heat & Electricity—a domestic regulation, not influenced by Europe—which draws on the principles set under the Government’s timber procurement policy. There are some exemptions introduced for certain low-risk categories of wood, such as arboricultural residues—basically hedges—and material removed from non-forest land for ecological reasons. These criteria have been developed following engagement with interest groups and were consulted on in August 2013 and in 2014. They take into account a range of social, economic and environmental issues, including protecting biodiversity, land-use rights, sustainable harvesting and regeneration rates.

The draft Renewables Obligation Order also makes minor technical adjustments to the sustainability criteria for non-woodfuel biomass which correspond to the land criteria for bioliquids, for example, to implement recent EU legislation. It amends the reporting requirements for wood fuel to enable government to monitor more effectively the use of different types of wood by the bio-energy sector, as well as making the reporting provisions more workable for industry. Ofgem will regulate compliance with the mandatory greenhouse gas and land criteria. Generating stations using biomass which have a capacity greater than or equal to 1 megawatt must prepare and submit an annual sustainability assurance report which is compiled by a third party auditor or verifier.

The second new measure relates to implementation of the final element of the renewables obligation to contracts for difference transition policy. The first competitive contract for difference auction for renewables support was completed earlier this year and has allowed us to support low-carbon electricity projects at a lower cost to the consumer. This draft order provides for a biomass conversion unit or station which has previously entered into an investment contract under the final investment decision enabling for renewables process to regain its eligibility for support under the renewables

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obligation, including conversion-level support, if the contract is terminated for a “permitted termination event”, such as failure to secure, or a delay in securing, state aid approval from the European Union. This specific transition measure is necessary because the investment contract process commenced in 2014, ahead of the rest of the electricity market reform, and contracts were awarded ahead of state aid clearance. It aims to provide the assurance and comfort needed to encourage ongoing investment, safeguard security of electricity supply and ensure value for money for consumers. It may well affect two ongoing projects.

The third new measure in the draft order provides for combustion units to bid into the capacity market and leave the renewables obligation if successful in that bid. As we know, the purpose of the capacity market is to ensure that there is sufficient investment in the overall level of reliable capacity—both supply and demand side—needed to ensure secure electricity supplies. It will bring forward investment at least cost to consumers by allowing the market to set a price for capacity competitively. The first capacity market auction was held at the end of last year for delivery of capacity in 2018-19.

Biomass co-firing or conversion stations or units which wish to transfer from the renewables obligation into the capacity market will be able to claim support under the renewables obligation until the last day prior to the first day of the delivery year under their capacity market agreement—so it will be seamless—as long as they have given a capacity market transfer notice to Ofgem. This will ensure that all stations which are primarily coal-firers but have at some point claimed low levels of biomass co-firing renewable obligation certificates, and remain accredited under the renewables obligation, have a chance to enter the capacity market.

In addition, a biomass co-firing unit or station can withdraw from its capacity market agreement to fully convert under the renewables obligation prior to the first day of the delivery year under its capacity agreement—so it applies in both directions—or before closure of the renewables obligation to new generating capacity from 1 April 2017, whichever is earlier. The aim of this order is therefore mainly consolidation but with some necessary amendments in relation to biomass which I have set out. With that, I beg to move.

Lord Teverson (LD): My Lords, I declare an interest in that I was in front of a very warm wood-burning stove over the weekend in my house, and therefore am a great supporter of wood biomass at a domestic level. There is great pressure these days from various NGOs to take biomass out of the renewables mix. I think the approach of the last Government and this Government has been absolutely right in tightening the definition of sustainable biomass, as this SI does, rather than throwing the baby out with the bathwater and saying, “This is all wrong”. That is the right approach.

4 pm

I understand the enforcement processes to some degree but the Minister mentioned that there had to be an audit of the process. Will he reassure us that

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there will be enforcement in this area? Biomass comes in globally, as well as locally. It comes from all sorts of sources, and monitoring those supply chains, as we know from the food industry equivalent, is very difficult indeed. Enforcement is almost more important than the rules themselves. I ask the Minister how he sees the state of that enforcement and how it can be made to work effectively. How can we reassure ourselves that the biomass that we support is what we want to be in our generating system?

I was going to ask the Minister to explain the formula at the top of page 75 in paragraph 6 of Part 2 as I could not quite work it out. Perhaps he will write to me.

Baroness Byford (Con): My Lords, I shall follow the noble Lord again—we seem to be following each other around this afternoon. The Minister referred to the fact that some of the products will be imported, but the agreement was a domestic standard rather than an international one. My query merely follows on from what the noble Lord has just said. Are we requiring a higher standard of our producers here than perhaps of those coming from abroad? How does the Minister justify that in relation to what we are trying to do, which is to allow us to include biomass as a worth-while product while, again, looking at sustainability for land, particularly forestry and woodland? I do not have a wood fire but I burn logs that fall off our trees from time to time. If we have a domestic standard, how is that different from the international standard and how will it be reviewed at the end of each cycle? That is not clear within the order.

Lord Moynihan (Con): My Lords, I find it difficult to believe that it was 25 years ago when I was the Minister responsible for energy that I introduced the first non-fossil-fuel obligation, which has subsequently moved into an excellent series of initiatives that I very much support.

I have just two comments. The first picks up on the capacity market, which the Minister has just raised, and which the noble Lord, Lord Teverson, referred to in the context of interconnections. I understand from what the Minister has just said that renewable technologies will certainly be able to bid into that.

I have a question on sovereignty with regard to the development of interconnections. A country just across the Channel will face similar weather conditions to ourselves, and we are focusing our capacity market not only on bitterly cold weather but when the wind is not blowing during that bitterly cold weather for an extended period of time. That is more than likely to be the same in the neighbouring country, which will no doubt have a high level of demand for energy in its own right. How will the Government address the question of sovereignty over contractual arrangements?

My second question is a specific one from the recent consultation on adjustments to sustainability and reporting provisions for biomass. I note that the majority of responses were very positive to the Government’s proposals but there was one exemption to that, which related to the exemption from the land criteria on the timber standard when a number of

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respondents suggested that the exemption should be applied to a wider range of wood and wood residues. In that context, I see that the Government rejected that series of representations and I wonder if the Minister could give the Committee a little more detail on the reasons for that rejection.

Lord Grantchester (Lab): I thank the Minister for his explanation of the order. It is not particularly controversial. The Minister underlined that the RO scheme has been particularly successful in increasing the level of renewable electricity from the 3% generated in 2002 to 25% today. It is helpful that the order will consolidate into one document the Renewables Obligation Order 2009 and the orders that have since amended it, and that it will be the main instrument underpinning the RO, thus making it more accessible. We should perhaps note that the Renewables Obligation Closure Order 2014 remains valid pertaining to the closure of the RO to onshore wind in particular, something that the Government have been keen to amend through the Energy Bill that was recently in your Lordships’ House. The Renewables Obligation Closure (Amendment) Order 2015, regarding solar renewable electricity, also remains pertinent.

This order also implements outstanding policy decisions that were subject to consultation in 2013 and 2014, predominantly concerning biomass electricity generation—not only in consolidation, as I said, but also in regulations relating to its sustainability. We welcome the fact that the order should ensure the sustainability of biomass throughout the chain of biomass procurement, transport and production. Providers will now be eligible to enter the capacity market through giving advance notice to Ofgem that they have complied with the list of requirements concerning specific land criteria and other issues. This has been admirably developed from engagement with interest groups, taking account of social, economic and environmental aspects. Co-firing is also within the order, which is welcome.

I ask the Minister for further clarification concerning compliance with mandatory greenhouse gas emissions. To be able to receive financial support, biomass must deliver emissions savings in comparison with fossil fuels. In the submission of sustainability and emissions reductions, are the criteria likely to be accumulative throughout the chain? Will there be a total score to be complied with, in addition to providing evidence of sustainability at each stage? I ask this because it could be envisaged that further development of the methodology could be incorporated through amendments to the order at a later date, or even that greenhouse gas emissions relative to fossil fuels could be tightened further, beyond the level that the Minister stated. Perhaps the Minister could outline whether Ofgem will provide guidance on this issue, especially in relation to EU directives on biofuels. Is the Minister satisfied that there is no formal sanction for not meeting sustainability criteria beyond the so-called “acts of God” that he outlined?

Lord Bourne of Aberystwyth: My Lords, I thank noble Lords who have participated in the debate on the draft order. I seek to deal with the points raised by noble Lords in the order in which they were raised.

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I turn first to the points raised by the noble Lord, Lord Teverson. I thank him for declaring his interest in his own coal-fired facility—I apologise: I meant to say “wood-fired facility”. We are indeed tightening the definitions of what is eligible. The audit process is significant. First, there are some de minimis exceptions for small suppliers; I shall write to noble Lords who participated in the debate to outline what those exceptions are. Secondly, I think that the noble Lord was making the point that enforcement overseas is more difficult. We require limited assurances in relation to what is happening overseas, and once again I will write with details of that process.

I move on to points raised by my noble friend Lady Byford in relation to the standard that we are setting. I think it fair to say that we are ahead of the game, but for a good reason: the European standard will almost certainly be the same. Work on that is going on at the same time as on our own domestic standards. It is just that we are there first, so we do not have to catch up; we are ahead of the game. My noble friend noted that she does not have a wood fire. The noble Lord, Lord Teverson, will have picked up that point and will no doubt want to ask her over to experience his. I am glad to be able to bring them together in this way.

I turn to points raised by my noble friend Lord Moynihan. I thank him for his early pioneering work in this area, which we continue to take forward. He made a fair point about the interconnections and the weather effect on the continent, which is likely to be the same as here. That is absolutely true. This is only one factor that influences the capacity issue, although it is a significant one. An interesting issue that we are researching arose recently in one of the Sunday newspapers: to switch to double British summer time. Not only would that reduce demand per se, it would put us out of line with peak demand on the continent. That is something worth looking at. It is an indication of the imaginative ways in which we can do fairly painlessly the things that we are looking at.

My noble friend Lord Moynihan also raised the issue of the range of woods required to be reported on in relation to the tightened requirements. It is true that some people suggested tightening that range while others wanted the requirements not to be so tight. All these things are a question of balance. One issue that was raised in the consultation on the tightening grip of requirements, and I will give more details on this in the letter, is that this reporting requirement is quite a burden for some businesses, so we are trying to get the balance right there.

I thank the noble Lord, Lord Grantchester, for his comments on the consolidation and in general on biofuels and the tightening of the conditions in relation to this area. I will write to him on specifically how we deal with the supply chain, because that was a fair question that demands a fuller answer. In relation to fuller answers, my officials were delighted with the question about the formula on page 75, so we will ensure that the noble Lord receives a fuller response on that if he really requires one.

Motion agreed.

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Onshore Hydraulic Fracturing (Protected Areas) Regulations 2015

Motion to Consider

4.12 pm

Moved by Lord Bourne of Aberystwyth

That the Grand Committee do consider the Onshore Hydraulic Fracturing (Protected Areas) Regulations 2015.

Relevant documents: 3rd Report from the Joint Committee on Statutory Instruments, 8th Report from the Secondary Legislation Scrutiny Committee

The Parliamentary Under-Secretary of State, Department of Energy and Climate Change and Wales Office (Lord Bourne of Aberystwyth) (Con): My Lords, we are today considering an instrument which sets out definitions for the “protected groundwater source areas” and “other protected areas” in which hydraulic fracturing will be prohibited. The powers to make this secondary legislation are found in Section 4B of the Petroleum Act 1998, as inserted by Section 50 of the Infrastructure Act 2015, which, following scrutiny in this House and in the other place, received Royal Assent in February 2015.

Before outlining what the draft regulations seek to do, I will take this opportunity to restate the Government’s commitment to a low-carbon and affordable future for energy. Gas, the cleanest fossil fuel, still meets a third of our energy demand and we will need it for many years to come. It is vital that we seize the opportunity to explore the United Kingdom’s shale gas potential while maintaining the very highest safety and environmental standards. We have established these standards as world leaders in extracting oil and gas over decades.

Shale can and will be developed safely. The UK has over 50 years’ experience of safely regulating oil and gas exploration. We have world-class, independent regulators who will not allow operations that are dangerous to local communities and the environment to go ahead. Safety is and always will be absolutely paramount. Highly respected independent bodies such as the Royal Society, the Royal Academy of Engineering and Public Health England have reported that risks associated with developing shale gas in the UK can be managed effectively if operational best practices are implemented and enforced through regulation. We have a strong regulatory regime for exploratory activities, which we will look to review continuously as the industry develops. We insist on the highest safety standards, and all this is backed up by independent checks from the regulators.

4.15 pm

There is no denying it: 80% of us use gas for heating and cooking, and industry uses gas in many everyday products. At the moment we import around 40% of our gas needs, and by 2030 we could be importing three-quarters of the gas that we use. Shale is vital, not just to reduce our reliance on imports but because it can also create an energy “bridge” while we further develop renewable energy, improve energy efficiency

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and build new nuclear generating capacity. Importantly, studies have shown that the carbon footprint of electricity from UK shale gas would likely be significantly less than unabated coal and lower than imported liquefied natural gas. Shale offers a valuable decarbonisation route from where we are today to where we want to be in future. Exploring for shale will also help to create jobs and grow local economies. Investment in shale could reach £33 billion and support as many as 64,000 jobs in the oil, gas, construction, engineering and chemical sectors.

I turn to the draft regulations. As noble Lords may be aware, Sections 4A and 4B of the Petroleum Act 1998 set out further safeguards for onshore hydraulic fracturing in England and Wales to provide the public with confidence that the developing shale industry is being taken forward in a balanced and measured way. The Act contains a number of conditions that must be satisfied before a hydraulic fracturing consent is issued by the Secretary of State. This includes two conditions specifying that associated hydraulic fracturing cannot take place within “protected groundwater source areas” or “other protected areas”. These two terms are not defined in the Act. Instead, the Act contains a requirement for the Government to produce draft regulations with the definitions and to lay them in both Houses by the end of July this year. Honouring this commitment, we laid the instrument, in draft, on 16 July.

The draft regulations will afford greater protection to some of our most precious areas, in a manner that meets the Government’s broader policy objective of supporting the long-term development of the UK’s shale gas industry. Regulation 2 defines “protected groundwater source areas”. The definition is equivalent to the regulators’ existing definition of source protection zone 1, which applies to those areas close to drinking water sources where there is the greatest risk associated with groundwater contamination. As required by Section 4B of the Petroleum Act, we consulted with the Environment Agency and Natural Resources Wales when formulating our proposed definition of “protected groundwater source areas”. Both agencies confirmed that they were content with the definition being aligned with source protection zone 1, as this reinforces their approach to controlling risks from other groundwater activities.

The draft regulations ensure that the process of hydraulic fracturing cannot take place at depths above 1,200 metres within these areas. The vast majority of drinking water supplies are located at depths above 400 metres. This limit therefore provides a buffer of at least 800 metres between the depth of most drinking water sources and the highest possible level at which hydraulic fracturing can take place. This exceeds the safety depth recommended by the most cautious scientific reports.

It is worth noting that if the environmental regulators assess that more stringent controls are needed to protect groundwater, these can still be applied as conditions in the environmental permits required for all developers. The environmental regulators have successfully influenced operators not to apply for sites in these zones and have made sure that pipelines do not run through these areas. What is more, if either of these agencies assess

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that more stringent controls are needed to protect groundwater, these will be applied as conditions in the environmental permits required, as I say, for all developers. The proposed definition would not impact on the environmental regulators’ current powers to refuse permit applications within source protection zones 1, 2 or 3, or wider on a case-by-case basis, if they consider that an activity poses an unacceptable risk to the environment. So, in addition to the regulations a discretion can be applied via the environmental regulators that is more stringent even than those in the regulations, if it is considered that an activity poses an unacceptable risk to the environment.

I turn to Regulation 3, which really comes in two parts. One part relates to the depth at which the fracking can be carried on, which is always at least 1,200 metres below ground. I will come to some specific areas where it will be more than that and where there will be a control on what happens on the surface, as it were. Regulation 3 defines “other protected areas” as national parks, the Broads, areas of outstanding natural beauty and world heritage sites. The regulations ensure that the process of hydraulic fracturing cannot take place above 1,200 metres in these areas.

In defining protected areas there is a need to strike the right balance between affording them additional protection and stifling the nascent shale industry. The Government firmly believe that the depth limit chosen, 1,200 metres, strikes this balance. In addition, national parks, the Broads and areas of outstanding natural beauty are our finest landscapes and are afforded the highest protection within the planning system in relation to landscape and scenic beauty. Similarly, world heritage site status is the highest international heritage designation. Our world heritage sites are irreplaceable, and the Government take their responsibility to conserve and protect them very seriously.

We recognise that concerns have been expressed about fracking from wells drilled at the surface of some sensitive areas. The draft protected areas regulations can relate only to the subsurface process of fracking, in accordance with the requirements and provisions of the Infrastructure Act 2015. However, we have separately committed, in a way that is not intended to impact on conventional drilling operations, to ensure that fracking cannot be conducted from wells that are drilled at the surface of our most valuable areas. That will be reflected in the licensing and environmental permits process. We are minded to apply the surface restrictions in sites of special scientific interest, in Ramsar and Natura 2000 sites, which are very similar—Natura is a European designation, Ramsar an international one—as well as in the areas covered by the draft regulations. We are currently consulting industry and other interested parties on how best to implement these surface restrictions.

I stress that, even with these draft regulations, a company looking to develop shale will still need to obtain all the necessary permissions, including planning and environmental permits, before hydraulic fracturing can be carried out. Those are in addition to these requirements. As part of the licence, permission and permit procedures, the environmental impact of operations, and any risks associated with them, are assessed by regulators and through the planning system

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on a case-by-case basis. All oil and gas sites need permits under the Environmental Permitting (England and Wales) Regulations 2010, as well as planning permission from the relevant planning authority. The National Planning Policy Framework and supporting practice guidance clearly state that, in respect of minerals like shale oil and gas, new development should be appropriate for its location. Let me be clear: if the risks of a proposed shale activity are deemed unacceptable, the environmental regulators will simply not allow it to go ahead, irrespective of the area or depth.

In line with the Small Business, Enterprise and Employment Act 2015, Regulation 4 commits us to carry out a review of the regulations in five years’ time and every five years thereafter, and to publish a report setting out the conclusions of the review.

Before we start what I am sure will be a helpful and insightful debate, I emphasise that shale gas may hold huge potential for adding to the United Kingdom’s energy sources, helping to improve energy security, create jobs and meet carbon targets. We need more secure, home-grown energy supplies, and shale gas has a vital role to play. It is much better that we use what we have at home than rely on supplies from overseas. I beg to move.

Lord Judd (Lab): My Lords, I have given notice to the Minister that I was going to raise this point, but before doing so, I should say that I take second place to nobody in supporting the priorities spelled out in the statement that the Minister took the opportunity of making. We have to build up our sustainable energy resources. That is crucial to our survival. Our survival is not just an end in itself; it is to have a country worth living in. That is why areas of special exception are so crucial because that is part of a decent civilised society.

Quite serious issues have begun to register as a consequence of this statutory instrument. For example, in the Peak District there are complex geology and water quality issues that raise particular concerns with regard to the potential for harm arising from fracking. That is why it is essential to have a precautionary approach. We need to avoid removing important protections from the national park and to avoid potential risk to the deeper geological features, including show caves, potholes and systems enjoyed by thousands each year. Water quality and sensitive wildlife habitats in areas of the Peak District national park could consequently suffer. They are, of course, protected under primary legislation.

I should declare an interest because I am vice-president of the Campaign for National Parks and an honorary patron of Friends of the Lake District. In saying that, I should also emphasise that there is no pecuniary interest whatever—quite the contrary—in holding these roles.

The Environmental Audit Committee inquiry into the environmental risks of fracking made a recommendation for protected areas. Recommendation 8 states:

“Fracking must be prohibited outright in protected and nationally important areas including National Parks, the Broads, Areas of Outstanding Natural Beauty, Sites of Special Scientific Interest and ancient woodland, and any land functionally linked to these areas”.

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The Government response was given on 26 March this year that the Infrastructure Act ensured that no associated hydraulic fracturing would take place within protected groundwater source areas and other protected areas, and that that would be clarified in secondary legislation by the end of July. The Minister referred to that. They confirmed that that would include—again, the Minister underlined this—national parks, areas of outstanding natural beauty and sites of special scientific interest.

However—this is the issue—the proposed draft statutory instrument defines “other protected areas” as,

“areas of land at a depth of less than 1,200 metres beneath … a National Park … the Broads … an area of outstanding natural beauty … a World Heritage site”.

The draft statutory instrument, therefore, allows for associated hydraulic fracking within a national park at depths below 1,200 metres, and incorrectly states in paragraph 3(3) that the national park,

“has the same meaning as in the National Parks and Access to the Countryside Act 1949”.

It seems that by default the draft statutory instrument is altering primary legislation by limiting the extent of the national park to a depth of 1,200 metres, and in so doing is potentially placing at risk the national parks’ ecosystem services.

4.30 pm

The Peak District raises particular anxieties in this respect. It is, of course, a unique landscape with a unique geology, deep geological features and a complex set of historical mines beneath it. The House of Commons Environmental Audit Committee stated:

“The UK has complex geology and more effort is required to understand and map specific local geological conditions and the influence of historic mining activity”.

In its evidence to the British Geological Survey, it stated:

“There is also very limited knowledge of the properties of the sub-surface (geological and other) pathways along which pollutants might migrate. This makes assessment of the risks very difficult. More work is needed to develop tools for assessing the vulnerability of groundwater and the risks from deep activities”.

The report continues:

“The difficulty lies in the fact that below c.200m there is very little information and data on the hydrogeological properties and potential for movement of pollutants through rocks below this depth”.

Given this limited knowledge and experience of hydrogeological fracturing in the UK and of the deep geological features and the water resources of the Peak District National Park, there is a risk of allowing secondary legislation to remove the precautions that are in place for this valued and environmentally significant land, when a precautionary approach is essential. That is why I raise this matter at this point. Why do I stress the Peak District National Park? We are yet to see whether—life is life and things work this way—as other people register, it will become clear that there are similar serious issues in other national parks.

There is another point, which concerns constitutional propriety. I suggest—indeed, I am fairly convinced of this—that the statutory instrument potentially conflicts with primary legislation. What is now in question is

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how secondary legislation, in the form of a statutory instrument, is able to reduce the extent of land in a national park, when all the land is within the national park and benefits from the protection of two pieces of primary legislation—the National Parks and Access to the Countryside Act 1949 and the Infrastructure Act 2015.

The National Parks and Access to the Countryside Act does not state that national parks end at a depth of 1,200 feet. The Infrastructure Act states that the associated hydraulic fracking will not take place within other areas. The deep geological features below 1,200 feet are still within the national park. The national parks authorities are custodians of land valued by the nation for its clean air, earth and water, biodiversity, geodiversity and inspirational landscapes, and which provides tourism opportunities that are valued worldwide. These special qualities should not be undermined. Indeed, that would be against the primary legislation and contrary to the recommendations of the Environmental Audit Committee. In the Lake District we have a park which is being put forward for world heritage status. That again underlines the Government’s commitment to not in any way counter world heritage status.

The impact assessment for the secondary legislation SI that defines “protected areas” under Section 4B of the Petroleum Act 1998, and the commencement of Section 50 of the Infrastructure Act 2015, has not considered the statutory purposes of the national parks as required under Section 11A(2) of the National Parks and Access to the Countryside Act 1949, which states the duty of certain bodies and persons to have regard to the purposes for which the national parks were designated:

“In exercising or performing any functions in relation to, or so as to affect, land in a National Park, any relevant authority shall have regard to the purposes specified in subsection (1) of section five of this Act and, if it appears that there is a conflict between those purposes, shall attach greater weight to the purpose of conserving and enhancing the natural beauty, wildlife and cultural heritage of the area comprised in the National Park”.

For the purposes of this section, the “relevant authority” means, as stated in the Act,

“any Minister of the Crown … any public body …any statutory undertaker, or … any person holding public office”.

It continues in Section 5, entitled “National Parks”:

“The provisions of this Part of this Act shall have effect for the purpose … of conserving and enhancing the natural beauty, wildlife and cultural heritage of the areas specified in the next following subsection; and … of promoting opportunities for the understanding and enjoyment of the special qualities of those areas by the public”.

Of course, in the Peak District, those wonderful caves that some of us may have experienced are very much part of that enjoyment and understanding.

I therefore suggest that some quite serious issues are raised by the drafting of the regulations as they stand. I hope that we will not have to have a great confrontation at the next stage but I suggest that it would be helpful if the Minister could not only answer convincingly on these points—I know that he takes all these issues seriously; he has been most courteous and

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kind in his responses to me—but also give us some indication that the Government are prepared to look again at getting this right, because it would be a great shame if we did not get it right.

Baroness Parminter (LD): My Lords, I will raise two matters, which the Minister skated over slightly in his introduction. The first is the definition of the protected areas, which is a different definition to that which was brought into force when the Infrastructure Act was introduced by the previous coalition Government. The Minister made it clear that at that stage it included national parks, AONBs, world heritage sites and triple SIs, which are excluded from the definition in this regulation. SSSIs are some of our most valuable areas of wildlife and nature protection. If any noble Lords saw “Countryfile” on Sunday they would have seen the care with which many farmers ensure that triple SIs are managed sensitively because of their importance to the nation and to our biodiversity but in a way that is consistent with them getting an economic return as farmers. It is important that this Committee reflects on the fact that SSSIs have been dropped by this Tory Government; I will come on to the process of decision-making in a moment. I also highlight a point that was touched on by the noble Lord, Lord Judd—that this legislation no longer prevents the drilling of wells in national parks. I just want to make that clear.

The Minister went on to talk about the fact that there will be a concentration on drilling in national parks, but these draft regulations do not prevent a well being drilled from the surface in protected areas. I would be grateful if the Minister could say a few more words about the wording of the proposed consultation because I really do not understand it when it says,

“from wells that are drilled in the surface of National Parks and other protected areas, but without having an impact on conventional drilling operations”.

I would be grateful for more clarification of what the consultation will mean.

My main point is on the main process of decision-making, about which the Minister said nothing. What disappoints me so much about the impact assessment is that the Government have not looked at the environmental, economic and social impacts equally, and then, on the basis of a rational consideration of the three, decided that, “For the following good reasons, we are going to take this route”. No, they are quite honest and open; on page 3 they say:

“The environmental benefits from preventing hydraulic fracturing in protected areas has been considered, but not quantified”.

They then go on to say, on page 11:

“Extreme uncertainty attaches to the key parameters underlying this estimate; most if not all of the assumptions are subject to very wide margins of error”.

So they are taking figures from the industry but taking no evidence from anyone else. They accept that there are extreme uncertainties attached to the key parameters, yet they base the definition of “protected areas” solely on consideration of those economic costs provided by a wholly biased source, those in the industry, and the department does not even say that there is any certainty attached to those figures. Does the Minister really believe that that is the right way for a Government to

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make decisions—not looking at environmental impacts and basing decisions entirely on questionable costs provided by industry? That does not give me confidence in solid decision-making by the Government.

On the point about decision-making, the Minister did not mention that the Secondary Legislation Scrutiny Committee rightly challenged the Government over why there was no public consultation or indeed any ministerial Statement. I thought that the response provided by the department was pretty thin, but then of course I am sure that is because it was very worried about bad publicity, particularly in the Weald and Bowland, when this regulation came forward. Even if the department is worried about that, though, it strikes me that the public have a right to know. A lack of transparency will just breed more cynicism in the process and that will make it even harder for the Government to get what they want, which is more fracked gas, so this seems to be a rather short-sighted approach.

In conclusion, I am disappointed in how the Government have come to make this decision. It is disappointing that SSSIs have been taken out on that basis. It shows an extremely cavalier approach to environmental protection that does not serve this Government well. I fully understand that they want to have a dash for gas but they have to accept that we have to do that in a way that takes people with this and, rightly, protects what is special and precious about our countryside. The process of bringing about this piece of secondary legislation does not do that.

Lord Young of Norwood Green (Lab): My Lords, I welcome the statutory instrument. I listened with great interest to my noble friend Lord Judd and the noble Baroness, Lady Parminter. I declare straightaway that I have no pecuniary/financial interests. I have an interest in energy and in the area of fracking in particular because I think there has been so much misinformation put about about the process. All the sources that I quote from are independent; I do not rely on the oil and gas industry to supply me with information. If I do not agree with much that the noble Baroness said, I agree on the point that we should not rely just on the industry.

One phrase that the noble Baroness used made me smile, albeit ironically. She used the phrase “dash for gas”. Would that we were doing so! There has been no dash for gas, that is for sure. I forget for how long exactly, but one exploration well in Lancashire has been delayed for over three years. Considering the amount of experience out there, including in some quite sensitive areas, there has certainly been no dash, and there has been plenty of environmental examination.

4.45 pm

I was also interested in my noble friend Lord Judd’s remarks. By coincidence, I was on a cycling tour this year in the Peak District and I went down the mines he referred to. Of course, it is a wonderful area and nobody in their right mind would want to damage one of the great natural resources we have in this country. They are of inestimable value, both to those who live

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near them and those who visit them for tourism. I share my noble friend’s concerns about water quality and wildlife and I do not want to place either of those at risk.

Nevertheless, I note as a matter of interest that oil has been produced in the UK for over 150 years, with production from oil shales in Scotland in 1851. In 1896 a water well was sunk during the construction of Heathfield railway station in the High Weald of East Sussex, and natural gas was discovered at 312 feet. The gas was used to light the station and the local hotel until February 1934. In 1973 the Wytch Farm oil field in East Dorset was opened in an area of outstanding natural beauty, and today it is the largest onshore oil field in western Europe. The 1979 oil crisis again accelerated onshore activity, and many of the fields operated today were discovered and developed during this period. In all, over 2,000 wells have been drilled in Britain, with more than 200 wells having been hydraulically fractured to improve their performance—so we are not talking about a new science by any means.

As for the experience in the States, the only thing I want to say is that we are not using the rather poor environmental protection that they had over there, inasmuch as that some of the fracking agents that they used were doubtful. However, the recent study by the Environmental Protection Agency—which is not a soft touch by any means—

“did not find evidence that these mechanisms have led to widespread, systemic impacts on drinking water resources in the United States”.

That study was the most comprehensive ever done, having taken five years and investigated over 38,000 wells.

That was in the US; our regulations in relation to fracking are much tougher. It is unfortunate that there is so much misinformation, in some cases deliberately put about. The worst example recently was when one of the green organisations alleged that there are carcinogenic problems with silica. Are we going to ban people from beaches next, since it is mostly sand that is used? The organisation went on to talk about acrylamide. In fact, the substance that has been used for fracking—polyacrylamide—is the same substance that has been used to bathe contact lenses. It does not strike me as a highly polluting substance.

In my view, what the Government are doing here is sensible. I think my noble friend had a slip of the tongue when he referred to 1,200 feet—in fact, it is 1,200 metres, which is more than three times greater. There is very significant protection in the statutory instrument that is proposed.

I will not repeat all the points made by the Minister about the benefits of having a source of home-grown energy. It is, however, somewhat ironic—

Lord Judd: I thank my noble friend. I have checked my notes. I misquoted, and I accept the correction: it is 1,200 metres.

Lord Young of Norwood Green: I assumed that that was the case. I thank my noble friend for that.

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We are going to be dependent on gas for 30 years, and some would say for even longer than that. It is ironic that we are prepared to import it. We know that importing liquid natural gas is not good in terms of emissions. Gas, certainly in comparison with coal and with liquid natural gas, will reduce carbon emissions significantly.

I am not by any means opposed to renewables. Since we are burnishing our own contributions, I would mention that the solar panels on my roof are working very effectively and I have ensured that my local primary school has just installed solar panels. I am as committed as anyone to renewables.

This, however, is a sensible and measured approach to developing shale gas and it takes into account the understandable concerns that we should have about protecting sites of outstanding natural beauty, national parks and so on. All the agencies that have been involved with this, including the Environment Agency and the Health and Safety Executive, consider it to be low-risk. We are talking about drilling to very deep levels before the fracking turns and goes underneath: 1,200 metres is a long way below the natural water aquifers, which the Minister referred to as being at 400 metres.

So I welcome the statutory instrument because it is important that we have a balanced and integrated approach to energy. It is unfortunate that it has taken us so long. It would have been interesting to see, if we had produced our own natural gas and if the costs of energy had been reduced, whether the Redcar situation would have been impacted. I do not want to make unreasonable assumptions.

Another point about assessing the potential economic benefits was made by the noble Baroness, Lady Parminter. Most of the figures are usually obtained from the Royal Geological Society. Where I would partially agree is that no one can be sure until you start drilling. I have spoken to some of the world’s leading experts on fracking and they all tell me the same thing: you can drill a well and it may or may not produce. You can move along a few hundred metres and you may strike lucky. There is no certainty.

We know that that there are very significant amounts of shale gas there. We need to be able to assess the situation and do the drilling safely wherever we are doing it. It does not matter whether we are in an area of outstanding natural beauty or somewhere else: we want it to be safe. We want it to be justified in terms of an integrated approach to energy. We also need to take into account whether there is potential for jobs. There is a mothballed training college in the north-west that is ready to go and would give us probably a few thousand apprenticeships and many thousands of jobs. There has been no dash for gas; there has been a sensible, measured and proportionate approach. I welcome the introduction of this statutory instrument.

Baroness Byford (Con): My Lords, I thank my noble friend the Minister for introducing this statutory instrument today, which I welcome. I have listened very carefully to the contributions made by others, and I should like to thank the noble Baroness, Lady Parminter, for her expressions of appreciation to the

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farming community, which cares very deeply about biodiversity. I should declare an interest as we have a farm in Suffolk, although not where any fracking will be taking place.

Can my noble friend tell us a little more about the urgency of the need to get shale gas into action, bearing in mind the various aspects of gas and oil production that we have been debating over the past year? As noble Lords will know, we had a big debate on setting up the Oil and Gas Authority. At the moment gas seems to be in fair profusion—they are not the words I really want to use but I cannot think of the right ones, so I apologise to noble Lords. I think that we in Committee are all agreed that we need to have a balanced approach to energy production. That is what we are really after and I am grateful to noble Lords for their support in that.

I listened with great care to the noble Lord, Lord Judd, who is rightly very passionate about his concerns on areas of outstanding natural beauty. I also take up the point made by the noble Baroness, Lady Parminter, which I had not picked up, that SSSIs were not included, so I shall be interested to hear what the Minister has to say on that.

In the scenario that I have set out, I wonder if we have slightly more time to review the way in which we use, and explore for, shale gas. I am sure that it is the right thing to be doing, but the gas that has been referred to is not as great as it might have been considered a couple of years ago. That is not to say that I am not in favour of shale gas exploration, because clearly I am. However, I wonder whether the Minister can tell us a little more about the costs involved, or if there are costs that I missed in the impact assessment, because of the decline in the cost of oil and gas, and whether fracking has less of a drive than it perhaps had a little while ago when energy costs were so expensive. I can well understand if the Minister wishes to write to me on that because it might be argued that that is why we are having this debate today. I thought it was important to include it because certainly we need to be looking to the future for a sustainable supply of gas—shale is but one option—and at the same time having a very balanced approach to the biodiversity of the land above the soil and obviously, as noble Lord, Lord Judd, said, to that beneath. I take the point that it is a long way down; it is in fact metres, not feet.

I have raised one or two questions in the broader context and I wonder whether there is slightly less pressure than there was in the circumstance before. It gives us a wonderful opportunity to use the shale gas that is there to be used while at the same time ensuring that we use it in the wisest way and that we have time to review how that development is going. If there are issues on which the Minister does not have briefing, I am more than happy for him to write to me later on.

5 pm

Lord Grantchester (Lab): I thank the Minister for his explanation of the regulations. He has explained the Government’s approach to providing added protections and assurances relating to the major public concerns regarding fracking in environmentally sensitive

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areas around water catchment zones, national parks, areas of outstanding natural beauty and world heritage sites. We regard this as largely beside the point, though, so we have severe reservations about these regulations.

The point is that from the passage of the Infrastructure Bill earlier this year in the other place the outlined areas were thought to have been excluded altogether from fracking explorations and production. As has been said, the Secretary of State is quoted as agreeing that there will be an outright ban on fracking in natural parks and these other environmentally sensitive areas. This is rightly leading to grave public concerns. It cannot be bypassed by, in these regulations, permitting fracking to proceed with only the added conditionality of being driven further underground. Quite simply, there was agreement that there would be no-go areas within which fracking would not take place, and with these regulations the Government are now backtracking.

Furthermore, the Government have not gone to consultation on the regulations. This has rightly become the subject of the eighth report from your Lordships’ Secondary Legislation Scrutiny Committee. The Minister’s department refers to consideration of the Infrastructure Act as justification for there being no public consultation about the definitions within these regulations. The Committee takes the opposite view that both public consultation and a ministerial Statement could be justified.

Are the Government trying to avoid embarrassment and controversy? Are they once again trying to put forward measures that they want through secondary legislation that cannot be amended? Instead of public consultation, the Government have merely consulted the environmental regulators on the proposed definition of “protected groundwater source areas” so that their proposal of excluding depths of above 1,200 metres was workable in light of the existing groundwater regulatory practices. I also express concern at the exclusion of SSSIs from the definition, as has already been expressed by the noble Baroness, Lady Parminter.

Can the Minister state the evidence that 1,200 metres is the correct extra precautionary level? The Environment Agency and Natural Resources Wales refer to sensitive areas for groundwater sources as source protection zones. These regulations will now provide a formal definition of how deep beneath the surface these SPZs extend, where before there was none. Can the Minister provide the Committee with any consideration or comments given to this specific depth by the regulators? Can he also clarify that these regulations would also apply to Scotland, in that the Scottish Parliament does not yet have legislative competence on this issue?

There is the further point of where the proposed wellhead of a fracking operation may be situated. These regulations do not prevent a fracking well being drilled from within the protected zone. Present guidance to planning authorities suggests that developments in these sensitive areas be refused unless demonstrably exceptional circumstances exist and they are in the public interest. Can the Minister confirm reports that the Government will consult on the question of whether wells can be drilled from the surface of natural parks and other protected areas? If these drills located outside

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protected areas can proceed down to 1,200 metres before changing direction and then cross underneath the surface of a national park, is this provision largely irrelevant? There will be understandably grave misgivings regarding the integrity of drilling levels should wellheads be situated within striking distance of national parks and other protected areas.

These serious issues, and others expressed around the Committee today, translate into our view that these regulations should not be proceeded with. We believe that Britain must pursue a socially just energy policy that is sensitive to the impact on the environment and climate change and how it impacts people’s lives, as well as the need for secure, affordable energy. These regulations should be deferred for further consideration by the Government. Indeed, that seems to be the Government’s position at the moment in the other place, where they have deferred further consideration on these regulations.

Lord Bourne of Aberystwyth: My Lords, I thank noble Lords who have taken part in this debate and I will endeavour to cover the points that they have made. I shall address myself first to the points made by the noble Lord, Lord Judd, who, in a meeting yesterday evening in a corridor, did indeed tell me that he was going to be raising issues today. I have looked closely at what he said last night and have listened carefully again to what he said today. We have followed a precautionary principle: 1,200 metres below the surface is well below where normal drinking supplies will be sourced from in protected areas. The noble Lord might be making a point about these regulations being ultra vires or not within scope or perhaps running contrary to the national parks Act regarding access. I think I am right in saying that the deepest pothole in the UK is 198 metres, so there should not be any issue about access to 1,200 metres below the surface. That is not what was envisaged then or indeed feasible now, so I do not think there is an access issue relating to the areas that we are talking about in national parks.

What is happening in the regulations and the statement that we are making about surface developments is that there can be no development on the surface of a national park, as it were; any drilling has to come down and then across, and it has to be at that depth. I am able to offer that reassurance and say that, like the noble Lord, I am a great fan of national parks, particularly the Peak District, where I walk frequently. I do not pothole, but I would not be able to pothole at a depth of 1,200 metres anyway because that is just not feasible.

Lord Judd: The concern is that we do not know what will happen to the geology once the fracking begins and what that might do to the cave system to which the Minister has referred.

Lord Bourne of Aberystwyth: My Lords, I was going on to say—perhaps I will come on to it now—that the scientific and environmental evidence is overwhelming that it should be safe at that depth.

In addition to the regime that we are seeking to set up here, as I have explained, there is a process of requiring a licence and planning permission, as well as the numerous EU directives that have to be complied

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with—the groundwater directive, the water framework directive, the industrial emissions directive, the environmental liability directive, the habitats directive and the mining waste directive—along with basic safety standards and the process that we follow. This country has a very good record for safety, and safety first, in relation to drilling. I am sure that no system can be 100% robust, but it is very clear that saying that this drilling is effectively two-thirds of a mile down very much favours the precautionary approach.

I turn to the points raised by the noble Baroness, Lady Parminter, about the environmental impact. The economic impact is what is quantified in the assessment of economic impact; environmental issues are dealt with elsewhere. To come back to the basic point about the need to balance interests, we have an obligation, in terms of not just energy security but energy affordability and indeed our carbon footprint, to progress as a nation and to try to strike a balance between what is sensible and what is fair. We need to look at our own energy security rather than importing from overseas. My noble friend Lady Byford suggested as much by saying that we have to look to our own resources and these things take time, as indeed they do. Even with these regulations, as I have explained, there is a necessity for planning permission and licensing. In addition to the regulations, as I explained in introducing them, there is a discretion for the Environment Agency to turn down individual applications where it thinks there is good reason to do so.

I do not think that we can be accused of a dash for gas at all costs; indeed, I agree with the noble Lord, Lord Young, that we as a nation cannot be accused of a dash for gas at all. It really is time that we started taking this seriously. We have this massive potential and we have the experience of what has happened in the United States. We cannot draw direct parallels, but I think that we have a greater regard for safety in this country than is the case there. We have every right to be proud of our precautionary safety-first approach. Like the noble Lord, Lord Young, I wish that we had had a dash for gas. That is certainly not what has happened historically.

I move on to points raised by the noble Lord, Lord Young. If he is doing well with his solar panels at the moment, then the London Borough of Ealing is obviously the place to be. I am reassured that he has them and that he is contributing to the great growth of renewables. I thank him sincerely for what he says, in a most unpartisan way, about the importance of this for British jobs, for British security supply and for affordability, all of which are very necessary. However, it is really not realistic to suggest, if you study this and react to it in a fair way, that we are cutting corners.

My noble friend Lady Byford raised points about the urgency of the need for shale, which very much ties in with what the noble Lord, Lord Young, was saying. There is an urgent need for shale for our own domestic supply. Of course, we need to balance that; safety must come first, with proper planning and environmental considerations, which are already there.

To come back to protection, we have afforded particular protections to national parks, to the Broads and to world heritage sites by providing that drilling has to be

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at a greater depth. We have provided protection, too, by stipulating that there can be no development on the surface in those areas; we have also provided that protection in relation to SSSIs and Natura sites and so on. It is true that we have not extended SSSI protection below 1,000 metres, but 1,000 metres is well above what is considered safe in the assessment of the various scientific bodies—the Royal Society and so on—that have looked at these issues.

So far, there have been no successful planning permission applications in relation to shale, but these things take time. We have a massive potential and we have issues to address. This is the right way forward and it is a satisfactory approach. I understand what the noble Lord, Lord Grantchester, says about people’s concerns about surface activities. That is why we have said that there can be no surface activities in the areas that demand particular protection. However, we have to recognise that, if we are too restrictive, that will just drive investors away altogether.

My noble friend Lady Byford also raised the question of whether there is interest. There is some interest—there have been developers who are interested in this—but we do not want to make it so difficult or so unattractive that all interest dies away all of a sudden. We are not that sort of nation. We have energy issues to address on security of supply, which we looked at in relation to other statutory instruments earlier today.

I turn to two additional points raised by the noble Lord, Lord Grantchester. First, this does not apply to Scotland. We anticipate that Scotland will bring forward legislation of its own. This is a measure for England and Wales. Secondly, as he rightly said, we have chosen to align the 1,200 metres issue with the source protection zone 1 areas. That seems the sensible approach; the Environment Agency and Natural Resources Wales have recognised that. It seems a consistent approach. I do not think that there is any danger of pollution to groundwater. I do not accept that there is any massive safety issue. You can never be 100% certain, but we are almost there with our safety regimes, which I think we should be proud of.

5.15 pm

Lord Judd: The Minister is being his usual self in being very full in his response, which I appreciate greatly, but he has not really dealt with the constitutional issue of whether you can redefine what is a national park through an order when there is legislation covering national parks and their status. I hope that the Government will look at that before this issue comes before us again. He really must not pit those who have anxieties about what is happening with the government situation on national parks against the general argument about making ourselves self-sustaining in energy. I am absolutely convinced that we must make ourselves self-sustaining in energy, but there are exceptions to the application of what is necessary.

Lord Bourne of Aberystwyth: My Lords, on the second point first, I was certainly not suggesting that the noble Lord, with his vast experience, or indeed anyone else, was raising anxieties that were not valid. I was seeking to reassure noble Lords that we have a

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safety regime of which we can be very proud and proposals in these draft regulations that strike the right balance. In relation to the first point that the noble Lord raised about the constitutional position of national parks and the argument that he is deploying that we are redefining national parks in this statutory instrument, I know that he has vast experience, but I think that that is rather a creative argument. I will of course have a look at the issue, but I do not for one minute accept that that is the case. However, I will write to him and other noble Lords who have participated on that point.

Motion agreed.

Health and Care Professions Council (Registration and Fees) (Amendment) (No. 2) Rules Order of Council 2015

Motion to Take Note

5.17 pm

Moved by Lord Hunt of Kings Heath

That the Grand Committee takes note of the Health and Care Professions Council (Registration and Fees) (Amendment) (No. 2) Rules Order of Council 2015 and of the increase in mandatory registration renewal fees for health and social work professionals (SI 2015/1337).

Lord Hunt of Kings Heath (Lab): My Lords, this order concerns the Health and Care Professions Council and its fee raise, which is in relation to 330,000 health and social care professionals. They include paramedics, occupational therapists, biomedical scientists, chiropodists, dieticians, physiotherapists, radiographers, prosthetists, orthotists, speech therapists and social workers. That list brings home the importance of this group of professionals. Parliament, through various pieces of legislation, has seen fit to ensure that they are subject to mandatory regulation in the interests of public protection. Parliament also has a role, therefore, in overseeing the performance of the regulatory bodies.

On 1 August, the annual registration fee for members of the professions covered by the HCPC went up by 12.5% overnight as a result of the order that we debate today. The order was passed in the face of cross-party concern, including 100 Members who signed up to an Early Day Motion and indeed the tabling of a Motion to annul in committee at Holyrood. The 12.5% increase in fees followed on the heels of a 5% rise the previous year and in the face of assurances given by the HCPC in 2014 that it would not look to raise fees again until 2016. This is not being done in isolation. I know that we are not discussing other regulatory bodies, but I would mention to the Minister the NMC, which raised fees for nurses in 2013 from £76 to £100 and in 2015 from £100 to £120. The points that I want to raise in principle relate to a number of these regulatory bodies.

The contrast that I want to make is between the regulator’s demand for an increase in fees alongside what is essentially the sixth year of pay freeze and pay restraint and the Government’s policy on austerity

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generally. It is a puzzle as to how, when the public sector in general is under tight financial control, the one area that seems to be able to raise its fees willy-nilly is that of the professional regulatory bodies and the Care Quality Commission. The Minister will know that the CQC proposes to raise fees hugely, at some financial risk, particularly in the care sector. That is not for debate today, but there is an issue of principle here: in contrast to the issue of pay restraint and restraint generally on the public sector, a group of regulators seems to be able to put forward proposals, which the Government accept, for large fee increases.

I read the consultation paper issued by the HCPC, which said that the unexpected fee rise was prompted by the levy that it now has to pay to fund the Professional Standards Authority for Health and Social Care, the regulators’ regulator. I understand that and it was fully discussed in a debate in the other place in March. However, it subsequently emerged that the levy that it said had to be paid because of the Professional Standards Authority actually accounted for only 30% of the fee rise, and the remaining 70% was so that the HCPC could buy new accommodation for hearings, IT and quality assurance systems. In the consultation document, as far as I can see, that was not made clear. There was no breakdown or detailed justification of the fee increase.

That is particularly striking in light of the judicial review proceedings brought by the British Dental Association against the increase proposed by the General Dental Council whereas I understand that the High Court said that a regulator’s consultation on fee increase must set out a clear and detailed breakdown of the financial case for proposed increases. My point to the Minister is that that did not happen in relation to the HCPC consultation. There are three areas that I want to touch on. The first is that the consultation itself was extremely short. It covered the Easter holidays, May Day bank holiday and the purdah period. It closed on 6 May, the day before the general election. It totalled just 26 working days, leading many to suspect that it was designed to be buried away from scrutiny.

My second point is about accountability. Of those who did respond to the consultation, 86% of individual respondents objected to the increase, as did three-quarters of organisations. Their objections made not one iota of difference.

I come now to the role of the PSA, the regulators’ regulator. One of the problems is that while in a sense it can ask for a levy in order to fund itself, it does not seem to have a role to intervene on how regulators set fees or consult on them. In the light of experience with the HCPC, it would be good for the PSA to take a more proactive role. We know from submissions that I have received from staff organisations—I particularly refer the Minister to a survey by UNISON of nearly 5,000 registrants across the professions—that the fee rise was commonly referred to as a stealth tax. If you have no choice but to pay to practise your profession then it feels like a form of taxation. Yet registrants have little representation in the decision-making process that sets that fee.

Will the Minister also comment on the issue of the HCPC? Does it represent value for money? I know that the HCPC has done very good work, and I do not

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deny that it has absorbed a number of professions over the years successfully. However, these large fee increases bring concerns about whether the overall operation of the HCPC—and the other regulated bodies—is as efficient as it could be.

I want to raise with the Minister an issue that has been presented to me: although the fee might not be considered large in absolute terms, it is, none the less, a consideration for part-time staff in their choice of profession. The Minister may be aware that, as I understand it, the HCPC has declined to introduce a pro-rata structure, or differentiated fee structure, for part-time workers. That is a pity, given the need for us to attract staff and the fact that part-time staff have a lot to offer.

I understand that nine trade unions and professional associations representing registrants in HCPC fitness-to-practise processes have written to advise the HCPC that more could be done to control its costs, improve its efficiency and reduce the number of unnecessary hearings. They also made detailed recommendations on how the investigating process could be improved in order to root out unnecessary investigations, reduce the number of lengthy hearings and facilitate consensual resolutions. Seeing the noble Lord, Lord Lansley, here of course brings great joy to us all, but I cannot help commenting on the draft Bill drawn up by the Law Commission, which he would have received some time ago. Well, he may have commissioned it, I do not know whether he received it.

Lord Lansley (Con): If I remember correctly, it was commissioned in 2011 and received by my successors in April 2014.

Lord Hunt of Kings Heath: My Lords, if he had still been in place I have no doubt that he would have acted on it. The point is, however, that a lot of the problems with the current fitness-to-practise procedures among health regulators generally derive from the fact that we have not implemented the Law Commission’s Bill, which would have allowed for a much more streamlined process.

The HCPC has, as I say, earned a great deal of credit for the way in which it has absorbed new professions over the years. I hope, however, that in this short debate the Minister will agree to look at some of the general principles raised. Does he agree that in any future proposal for a fee increase there needs to be a full breakdown and detailed justification for it? Does he also agree that it is not a good thing for Ministers to entertain fee rises that are higher than the percentage fee rises that are going to be given to NHS staff? There is an issue about pay restraint on the one hand and what seems to be the regulator’s ability to raise fees well above that rate on the other. Will he consider discussing with the PSA whether it will take a more proactive role in monitoring and evaluating any proposed increases by the regulator it oversees? Will he also look at whether the HCPC should be required to introduce a pro rata, or differentiated, fee structure for part-time workers?

Lastly, and I am sure the noble Lord will say yes to this, will he say that the Government will make it a priority to bring in primary legislation as soon as

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possible to implement the Law Commission proposals? The alternative is that the Minister will have to go through a succession of Section 60 orders when as a general principle he would find widespread support for the Law Commission proposals—there are one or two issues that we will debate—for a streamlined process that would apply consistency across all the regulated bodies. I am sure that it would reduce the cost of the regulators and, if the Government are not able to bring this in as a full Bill, at the very least it lends itself to pre-legislative scrutiny. However, there is enough consensus around the proposal to allow the Government to introduce a Bill. This short debate is a good opportunity to raise the issue of transparency of the regulators, and I hope that the Government are prepared to give this further consideration when a proposal comes up in the future. I beg to move.

5.30 pm

The Parliamentary Under-Secretary of State, Department of Health (Lord Prior of Brampton) (Con): My Lords, I thank the noble Lord for introducing this short debate on the HCPC. It raises other issues beyond the HCPC that are of great interest to us.

The HCPC is a statutory regulator established to protect the public. To do this, it keeps a register of professionals who meet its standards for professional skills and behaviour. The noble Lord knows all that, but this is a preamble. There are 330,000 professionals across 16 health, psychological and social work professions. It is a very large regulator. It is self-financing, with funding coming entirely from registrant fees. It does not receive any regular funding from the Government.

The HCPC’s registration fees are the lowest, and have consistently been so, of all the UK statutory regulators of health and care professionals overseen by the Professional Standards Authority. Its fees are £90 a year. The next lowest regulator, the NMC, charges £120 per year. By way of comparison, the GMC is £420 a year. However, as a self-funding regulator, like all the professional regulators, its needs to keep its fees under regular review so that it can respond to demands on finances and resources, and to continue its role of delivering effective public protection.

As noble Lords will know, from 27 March 2015 to 6 May 2015 the HCPC consulted on raising its fees by an average of 12%, or £10 a year. That is 26 days. I appreciate that it was over an election period but that decision on consultation had to be with the council of the HCPC and the decision to formally review and consult on an increase to its fees was the result of three factors: first, as the noble Lord mentioned, because the PSA fee regulations came into effect, as a result of the Government deciding that the PSA should be funded by the regulators that it oversees, rather than the public purse; secondly, to improve how fitness to practise hearings are run; and thirdly, to invest in essential IT systems.

In relation to the first point, the Professional Standards Authority for Health and Social Care (Fees) Regulations 2015 came into force on 1 April 2015. This marked the realisation of the previous Administration’s commitment, set out in the Department of Health’s report Liberating the NHS: Report of the arm’s-length bodies review, to

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move the PSA away from government funding, to becoming funded by a fee on the nine regulatory bodies that it oversees. As required by those regulations, the PSA’s fee is calculated on each regulatory body’s registrant numbers. The HCPC is the second largest regulator by registrant numbers and will contribute to around 22% of the PSA’s funding. The PSA fee will be determined each year.

This methodology was considered fair because available evidence suggests that the level of PSA resource given to each regulatory body is very much influenced by the number of registrants as this critically informs the level of Section 29 work that the PSA undertakes for each regulator. Section 29 work is where a fitness-to-practise case is heard in court.

While around one-third of the 2015 fee increase was to meet the PSA’s fees, as I have said, the HCPC is also making improvements in the way it works. The HCPC is also looking to improve its fitness to practise processes. In doing so, the HCPC plans to introduce dedicated facilities for fitness-to-practise hearings. The HCPC’s existing office space was not purpose built for holding public fitness-to-practise hearings, which affects its ability to run a high-quality and modern adjudication service. It believes that introducing dedicated space will be consistent with the modern adjudication facilities provided by other regulators.

The HCPC also says that that the number and length of hearings are key cost drivers of the fitness-to-practise process. It has said that it aims to keep the cost of hearings low—for example, by proactively looking to conclude cases with the consent of the registrant involved, where appropriate. This avoids the need to have a contested hearing, with all the costs this involves. However, the HCPC says that it has seen an increase in the complexity of the cases since 2012. This has meant that the average length of a hearing has increased over time. The average number of witnesses required for each hearing has also increased to between three and four for each hearing. The HCPC’s primary objective is public protection, and it says that every allegation it receives must therefore be considered on its merits.

On the third point, the HCPC says that the new IT system it is looking to introduce will make its work more efficient by replacing a number of other legacy systems, by driving and delivering time and resource savings. Additionally, a project looking at redesigning the HCPC’s registration processes and systems should improve the level of service that it is able to provide to applicants and registrants by allowing them to carry out many more tasks online.

Finally, in determining budget forecasts for future years and the level of fees, the HCPC says that it had to make assumptions about costs and activity level—in particular, the volume of fitness-to-practise cases. It says that these forecasts indicated that despite generating a surplus in previous years, without the 2015 fee increase it would make operating deficits in 2015-16 and 2016-17. This would not be sustainable and would threaten its ability to fulfil its role of protecting the public. Additionally, the HCPC registers each profession

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on a two-year cycle, so it will take two full financial years before any increase in the renewal fee has full effect.

The HCPC says that it has not changed its ongoing commitment to the principle of small, regular increases in the fees where possible and necessary. Its latest five-year plan does not forecast any further increase in fees until 2019-2020. That said, in the past the Government have expressed a view on registration fees and the expectation that they should not increase beyond their current levels unless there is a clear and robust business case that any increase is essential to ensure the exercise of statutory duties.

The noble Lord raised a number of issues. First, he asked that in a consultation exercise there should be a detailed breakdown of the reason for a fee increase, which strikes me as a reasonable request, which I will draw to the attention of the PSA. He said that the fees should not increase by greater than the amount of the increase paid to NHS staff. All I can say is that the fee increase must be kept to an absolute minimum. I entirely appreciate that we live in a very difficult world, and fees must be kept to an absolute minimum. I do not think that we can make any commitment that they should be kept to the absolute level of increases of salaries paid to NHS staff.

The noble Lord asked that the PSA should take a more proactive role. Of course, the PSA undertakes an annual assessment of all the organisations that it is responsible for, which is tabled before Parliament. It is of course up to the Health Select Committee, if it wishes to do so, to have any individual regulator before it.

The noble Lord also asked about part-time workers; I hope that it will be all right if I write to him about part-time workers, as I am not sure of my answer on that. As regards the work the Law Commission has done, I think we all accept that it has done an outstanding job and made some extremely important and what could be very useful recommendations. The Government are currently reviewing how to take forward the work of the Law Commission.

Lord Hunt of Kings Heath: My Lords, I am very grateful to the noble Lord, Lord Prior. He is right to acknowledge the issue of pay restraint. However, I have three points. On consultation, I hope that the HCPC and the PSA will take note that it is reasonable to have a proper consultation in relation to fee increases in the future. Secondly, I noted what the Minister had to say about the introduction of IT and new systems and that it would lead to resource savings in the future. I have some experience of IT systems in the health service, and I certainly hope that that comes true. I noted the expectation of no further increase until 2019-20. Given the expected resource savings from new IT systems, it would be very disappointing if the HCPC came forward with any other proposal in the next Parliament.

Thirdly, I understand the Government’s reluctance to bring health legislation through Parliament, but one has received so many representations from the regulatory bodies. Given the extensive work of the Law Commission, I hope that the Government will

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give further consideration to bringing a Bill before Parliament before too long. The debate has been very helpful and I am most grateful.

Motion agreed.

National Health Service Commissioning Board and Clinical Commissioning Groups (Responsibilities and Standing Rules) (Amendment) (No. 2) Regulations 2015

Motion to Take Note

5.41 pm

Moved by Lord Hunt of Kings Heath

That the Grand Committee takes note of the National Health Service Commissioning Board and Clinical Commissioning Groups (Responsibilities and Standing Rules) (Amendment) (No. 2) Regulations 2015 and of the simplification of the assessment of the maximum waiting time for NHS treatment for elective patients, in the light of the review by Sir Bruce Keogh, and the risk that the current more complex standards could provide a perverse incentive to commissioning bodies to deal with those recently added to the waiting list before those who have already been waiting for more than 18 weeks (SI 2015/1430).

Lord Hunt of Kings Heath (Lab): My Lords, this is another fascinating order that the noble Lord has brought before the Committee, for which we are all very grateful. I do not want to extend the time of Grand Committee. I am having this debate not so much because I oppose the regulations, but because I want to understand the thinking. Clearly, these targets are important.

Obviously, I have read the Explanatory Memorandum, which makes it clear that the reason for removing the two referral to treatment waiting time standards related to the completed pathways of patients who started treatment is to focus solely on the standard for the incomplete pathways of patients waiting to start treatment. This is because of the confusion of the previous set of standards that had the potential to give rise to perverse incentives. I understand that. But I wondered whether the Minister could tell me what evidence he, Bruce Keogh or Simon Stevens had for how these perverse incentives were being used. Rather than introducing new standards, this is consolidating existing standards, but does the Minister think that there is a risk of new perverse incentives being introduced as a result of the order?

The order also relates to NHS-funded nursing care, which, given the vulnerability of the care sector as a whole, is of some considerable interest. Is the Minister satisfied that the current eligibility criteria for NHS-funded nursing care are being observed properly by the NHS and not being reinterpreted? The obvious temptation for the NHS is to ensure that little NHS-funded nursing care is funded because it can then transfer to means-tested social care. Given current budgetary pressures, I would have thought that that is an ever-present temptation

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for the NHS. Is the Minister able to provide information about NHS-funded nursing care and the extent to which there is consistency throughout the country in terms of ensuring that the eligibility criteria are observed? I beg to move.

5.45 pm

Lord Lansley (Con): My Lords, this is the first time I have had the opportunity to say something in Grand Committee, so I hope that I will be forgiven if I trespass on any of the procedures. I was tempted to speak, not least by the noble Lord’s reference in his Motion to the potential perverse incentives surrounding the referral to treatment time targets.

We do not need to speculate on where there might be perverse incentives in the system of targets and the impact they can have on how the NHS manages such targets, as we can see them. We saw them under the previous Labour Government. They had two referral to treatment time targets relating to admitted and non-admitted patients for complete pathways. The net result, of course, was a perverse incentive not to treat patients once they had passed beyond the 18-week point. It was precisely for that reason, after the 2010 election, that my colleagues and I in the Department of Health thought it was necessary to have a third target. For example, we were presented with 18,000-plus patients who at the time of the May 2010 election had waited for their treatment beyond 52 weeks.

There was a perverse incentive. It was very straightforward: if they were brought in in any significant numbers, and they and others like them had gone well beyond the 18 weeks into treatment, they would not be counted for the then 90% or 95% target—particularly the admitted patients on the 90% target. They were simply ignored. That was not acceptable. It was not what the targets were intended to do and it was not for the benefit of patients. So we introduced the incomplete pathway which had a salutary effect. It brought the numbers waiting beyond 52 weeks from more than 18,000 down to the low hundreds. It is still only about 800 patients who have waited. We introduced zero tolerance subsequently, once we had brought the numbers down for beyond a 52-week wait. We do not need to speculate about perverse incentives; they were there.

I can understand where Sir Bruce Keogh has seen that the combination of these targets can create a degree of confusion. The success of having introduced the incomplete pathway standard is something that we can build on. That is what Sir Bruce and NHS England are aiming to do—a simple standard that no less than 92% should be treated within 18 weeks. That reinforces the 18-week standard and it is very clear in the minds of patients.

Of course, there is scope for perverse incentives; there always is. In this instance, we know that by failing to distinguish, as the previous targets have done, between admitted and non-admitted patients—non-admitted patients having been less costly and complex to treat—there is a perverse incentive to concentrate on the non-admitted patients relative to the admitted patients. It is fair to say that if we see that emerging, we would have to respond in terms of the structure of the targets. To introduce something that

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dealt with the transparent detriment to patients of waiting beyond 18 weeks and then simply being dropped from the system and ignored was the right thing to do. When the noble Lord talks about perverse incentives, we have dealt with what was the principal perverse incentive. It is perfectly reasonable for NHS England and for the Government now to focus on one standard to make life more straightforward for those who have the responsibility of managing an increasing workload in hospitals.

The Parliamentary Under-Secretary of State, Department of Health (Lord Prior of Brampton) (Con): My Lords, once again I thank the noble Lord, Lord Hunt of Kings Heath, for bringing this to the Committee. My noble friend Lord Lansley has pretty much done my job for me, but I think I had better go through with this to put it on the record. I thank my noble friend for that articulate and eloquent exposition of why we now have one incomplete standard and not the three that we had before.

We all accept that waiting times are critical. I should pay tribute to the Government of which the noble Lord was once a member. Bringing down waiting times was a huge success and there is no doubt that targets were one of the instruments used to do so. However, the noble Lord accepts that they are a blunt instrument and can lead to distorting clinical priorities. They can lead to gaming and extra cost, so they are not the whole answer. In particular, they can lead to perverse consequences. That is why the Secretary of State for Health and Simon Stevens accepted the recommendations made by Bruce Keogh earlier in the year. I will place a copy of his letter to the Secretary of State and Simon Stevens in the Library. The noble Lord may already have seen the letter but I will place it there.

Sir Bruce’s clinical advice on the standards used to measure the 18 weeks NHS constitution right was to remove the two standards that looked at how long people who have started treatment waited and to focus on the incomplete pathway standard—that is, the people who are still waiting. Perhaps I can explain that by using the analogy of a bus. The two earlier standards measured the people on the bus and the incomplete standard is designed to measure those who are left behind at the bus stop. As all three standards were written into the standing rules regulations, this statutory instrument, which took effect from 1 October, was required to make that change.

The change affects the metrics by which we measure the NHS’s performance on waiting times. It does not change the patient’s right. It is important that that is on the record. Patients can still expect to start treatment within a maximum of 18 weeks if they want to and it is clinically appropriate. If this is not possible, patients have the right to ask to be referred to an alternative provider that can see them more quickly, and the NHS must take all reasonable steps to meet patients’ requests. Sir Bruce Keogh recommended this change because having a set of three standards could be confusing and give rise to perverse incentives.

My noble friend described those perverse incentives. The perverse incentive was such that you could treat only one patient who had waited for more than 18

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weeks as opposed to nine who had waited for less. There is no doubt that hospitals were managing their waiting lists on that basis. As a consequence, there were people waiting beyond 18 weeks for far too long. That was the wrong that the incomplete standard tried to address. As Sir Bruce said in June, while hospitals may be the ones penalised directly when they breached waiting time standards, the true penalty was laid on the patient who was waiting for much longer than he should have done. I wholly agree that that was not right.

In 2012—I think my noble friend was Secretary of State at the time—the Government introduced the incomplete pathway standard that a minimum of 92% of patients yet to start their treatment should have been waiting less than 18 weeks, to give NHS organisations a reason to prioritise patients who had been waiting a long time. The removal of the two completed pathway standards further minimises the potential for management of the waiting list to cut across clinical decision-making. Clinical priority should always be the main determinant of when patients should be treated. This clinical priority should not have been distorted because it should have been possible to meet all the clinical priorities and meet the waiting time standard, but in practice that was not always the case. Clinicians should make decisions about patients’ treatment and patients should not experience undue delay at any stage of their referral, diagnosis or treatment.

These changes will mean that there is a simplified, clearer focus on only one standard, covering all patients on the waiting list, and ensuring that those who have been waiting a long time are not left languishing. The noble Lord raised the issue, which was addressed by my noble friend, of whether having just the one standard will result in new and different perverse incentives. My noble friend made the important point that it could lead to priorities being skewed in favour of non-admitted, simpler, cases rather than admitted, more complex, cases. That is something we need to keep a very close eye on. NHS England will continue to measure trusts’ performance against all the standards except that there will be only the one measure in the contract.

I stress that changing the standards is not moving the goalposts in response to poor performance. This change has been made on the basis of clinical advice and in the best interests of patients, and has received widespread support, for example from the Nuffield Trust and the Patients Association. More than a million NHS patients start treatment with a consultant each month and the overwhelming majority are seen and treated within 18 weeks. However, the NHS is busier than ever, which is why we are investing the extra £8 billion that NHS leaders have asked for to support the five-year forward view. I hope that the noble Lord will accept that this was done in good faith and in the interests of patients and that it was a decision informed by clinicians, not by politicians. I have not addressed the concerns he raised about the eligibility criteria for nursing, because they are not strictly relevant to these regulations, but perhaps I could write to him on that matter.

Lord Hunt of Kings Heath: My Lords, I am very grateful for that. I must say that the intervention from the noble Lord, Lord Lansley, was very helpful. It

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reminded me that in 2001 I was resplendent in the title of Minister for targets in the Department of Health. I remember asking officials to count up how many targets we had set. When we reached 450, we decided we ought to start again, first by trying to refine the targets and then by setting up foundation trusts, in order to take them out of a directly managed form of control from the centre. Whether that has been entirely successful, in light of today’s circumstances, is up for some debate, though I still maintain that the concept of foundation trusts, with separate governance and local accountability, is the right way forward. I hope that NHS Improvement will see the benefit of trying to protect foundation trusts, and the good bits of their governance—the role of governors, the accountability of the board to local people—from overmanagement from the centre. I know that the noble Lord also chaired a foundation trust; he will know what I mean.

There is no doubt whatever that targets. The waiting time in 1997 was more than 18 months. It was brought down to 18 weeks, which was driven by a target people that had to meet. That is always justifiable. However, we know that in both the public and private sectors, people who have to meet targets are very clever and sometimes the temptation for perverse behaviour is all too apparent. I hope that we can continue to rely on NHS England to monitor behaviour closely and that if it needs to adjust targets to meet any perversity, it is important that that is done quickly and responds to problems that arise.

I do not oppose this order at all; I think it is a sensible approach. However, it would be helpful if we saw that NHS England was fleet of foot in responding very quickly when new problems arise with targets, as inevitably they will. This is a good example of that.

Motion agreed.

World Biodiversity

Question for Short Debate

5.59 pm

Asked by Lord Blencathra

To ask Her Majesty’s Government what steps they are taking to tackle the loss of world biodiversity caused by human activity.

Lord Blencathra (Con): My Lords, the matters that I wish to discuss today are largely taken from the excellent report by the IUCN Red List. By sheer coincidence, the latest list was published last Friday. It states that because of the melting ice at the North Pole, polar bear populations were expected to decline by 30%, confirming their vulnerable status. That was the headline announcement from the IUCN last week.

So, what is the IUCN and its Red List? The International Union for Conservation of Nature and Natural Resources is the world’s oldest and largest global environmental organisation, with almost 1,300 government and NGO members and more than 15,000 volunteer experts in 185 countries. Their work is supported by almost 1,000 staff in 45 offices and hundreds of partners in the public, NGO and private sectors around the world. Of crucial importance is the fact that it is

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absolutely neutral; no one has ever challenged its findings or criticised its integrity. It is the most respected and thorough conservation organisation in the world and is free from political or personal bias.

The Red Lists are the most comprehensive sources on the global conservation status of animals, fungi and plant species. They are the starting point for conservation action. By 2000 the IUCN had assessed slightly more than 15,000 species. By 2015 it had assessed 79,859 species, and it has set itself the ambitious target of 160,000 species by 2020. The assessments are carried by a global network of scientists who have access to the best scientific data and knowledge available on the species being assessed. Each assessment then goes through a review process involving scientists who were not directly involved in the first assessment.

The Red List is published in eight categories. The first category is species where the data are insufficient or not evaluated. The second category is “least concern”, the third “near threatened”, then “vulnerable”, “endangered”, “critically endangered”, “extinct in the wild” and finally “totally extinct”. The latest list, published last week, shows that of those 79,000-odd species 834 have been lost for ever and are totally extinct, while 69 are extinct in the wild. However, there are also 4,898 “critically endangered” species, 7,323 “endangered”, 11,029 “vulnerable” and 5,204 “near threatened”. I suppose if you had asked the public—or me, before I read that—to name critically endangered species, I doubt if we could have named 10. We might have come up with rhinos, tigers, maybe elephants, gorillas, polar bears and leopards, and then we would all have got a bit stuck. So how on earth have we got to the stage where almost 5,000 species are in danger of extinction and another 7,000 endangered? In the UK we have lost to extinction the starry breck lichen, and the roundnose grenadier is critically endangered, fished to near extinction by the French and Spanish. That latter comment is mine, not the IUCN’s, I hasten to add. The IUCN has also just announced that the Atlantic puffin, of which we all thought there were millions, has moved up into the “vulnerable” category.

Most people would say that it would be a shame if we did not see polar bears, pandas or lions any more, but would ask why we should care about all the other things that do not matter too much, like starry breck lichen. Those things do matter, though, and in our general ignorance of our wanton destruction we do not know how much they matter. Most Governments in the world are trying to cut carbon emissions but we are ignoring the one massive natural resource that captures carbon: forests. The protection of ecosystems such as peat bogs and forests is critical to regulating carbon. The Amazon rainforest has been described as the lungs of our planet because it provides the essential world service of continuously recycling carbon dioxide back into oxygen. More than 20% of the world's oxygen is produced in the Amazon rainforest, which also releases 20 billion tonnes of moisture every day, most of it watering crops tens of thousands of miles away.

The burning of the rainforest accounts for almost 20% of all carbon emissions in the world and that is far more than all the cars, lorries, buses, trains and

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ships put together. If we do not halt the total destruction of our rainforests we could close down all the transport in the world and we would still, eventually, die. We are destroying rainforests the size of England every year, and at the present rate they will be totally destroyed in 40 years’ time.

As rainforest species disappear, so too do many possible cures for life-threatening diseases. The National Cancer Institute in the United States has identified 3,000 plants that are active against cancer cells, 70% of which are found in the rainforests, and 25% of the active ingredients in today’s cancer-fighting drugs come from organisms found only in the rainforests. However, of those 25% of western pharmaceuticals derived from rainforest ingredients, fewer than 1% of tropical trees and plants have been tested by scientists. So we have tested 1% and are burning the other 99%, yet we are getting a quarter of our drugs from that 1%. How can we be so stupid as to destroy a habitat and species permanently when we have not looked at 99% of the species in it and what benefits they may bring to our survival?

Let us briefly consider the three following facts: a single pond in Brazil can sustain a greater variety of fish than is found in all the rivers of Europe put together; a 25-acre area of rainforest in Borneo may contain more than 700 species of trees, and that figure is equal to the total tree diversity of north America; and the number of species of fish in the Amazon exceeds the number found in the entire Atlantic Ocean.

With enormous effort and will on the part of all Governments in the world we could eventually reverse climate change, but we can never ever bring back to life a species that has been wiped out. Biodiversity is not just about saving the red squirrels—dear to my heart—or the polar bears, orang-utans, lemurs and tigers, whose loss would diminish us all; of perhaps far greater importance to the planet are the plants, bugs, mosses and lichens that we never see and which are not cuddly or iconic.

Look at that tiny insect which we have taken for granted for millennia, the bee, which holds the key to huge quantities of our food production. That is just one insect that we know about and which we have studied. We kind of know the bee’s place in the jigsaw of the survival of humankind but why, therefore, do we carry on destroying without checking hundreds of other species whose role we have not studied and do not understand, but which might be equally crucial to our survival?

The complex and crucial interactions between species can sometimes be unrecognised until one species is lost from an ecosystem and the imbalance results in sometimes disastrous consequences. One example is that when top predators are removed from an ecosystem, prey populations can sometimes grow to unstable levels and deplete food resources, which leads to a cascade of ecological effects.

Not many people like vultures—big ugly, nasty birds which eat carrion and rotten flesh. So who cares if their numbers decline? In India a few years ago, in order to protect cattle from flies a pesticide was rubbed onto their hides. It was good for the cattle but when

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the cattle died, say, out in the bush, and the vultures ate them, the pesticide killed the vultures. India lost 99% of its vultures and what were the consequences? There were no natural scavengers to clean the bones, and rotting, diseased animals were eaten by dogs, which greatly increased in numbers and passed on diseases to humans. There are now programmes to save vultures, and by saving vultures, we save humans.

Not many people like sharks either. We see daily news reports of killer sharks all over the place. I have never seen one but I suspect that 99% of the public would not care if all sharks were killed. Sharks are being killed—in their millions. The median estimate for kills of sharks is at least 100 million, with some estimates at over 200 million. Sharks are heading for extinction unless the Chinese stop eating the fins—the main reason for them being killed. If the top predator of the ocean is taken out, we would certainly get an explosion in seal and dolphin numbers and a catastrophic decrease in fish numbers. We would have an ecological disaster which would impact on the lives of hundreds of millions of people, and it would be irreversible. However, when one species gets to the endangered or critically endangered category we can save it and reverse the process, with enormous effort.

I was privileged to work with the Cayman Islands Government for some time. The native blue iguana had shrunk to just 12 by 2005 and was functionally extinct. Thanks to the work of the Durrell Wildlife Conservation Trust, based in Jersey, and the National Trust for the Cayman Islands, the project led by the excellent Fred Burton has now reproduced about 1,100 blue iguanas in total and almost 700 have been released back into the wild. In 2013 the IUCN dropped them from the “Critically Endangered” list to the “Endangered” list. Of course, the Cayman Islands are a British Overseas Territory, where most of the UK’s biodiversity is found.

I congratulate Defra, which is the most respected government department amongst the overseas territories for the work they do with the OTs and in CITES. I am delighted at the creation of the Pitcairn Island Marine Reserve, which at 322,000 square miles is the largest continuous one in the world. I hope that we can work with other countries in the South Pacific to one day make the whole South Pacific a marine reserve.

The loss of animals and plants, their habitats and their genes, on which so much of human life depends, is one of the world’s most pressing crises. It is estimated that the current species extinction rate is between 1,000 and 10,000 times higher than it would naturally be if man were not interfering. The main drivers for this loss are converting natural areas to farming and urban development; introducing invasive alien species; polluting and overexploiting resources, including water and soil; and harvesting wild plants and animals in unsustainable levels. Cutting down rainforests in order to produce soya beans, palm oil and beef burgers is sheer madness.

We were not responsible for the extinction of the dinosaurs, but we have been responsible for all the species losses in the last few hundred years. Every decision we take that affects biodiversity also affects

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our lives and the lives of other people. Biodiversity is crucial to human well-being, sustainable development and poverty reduction.

I conclude with the words of the double Pulitzer prize-winning biologist, Edward O. Wilson. In 1980, he said that, in the 1980s:

“The worst thing that can happen—will happen—is not energy depletion, economic collapse, limited nuclear war, or conquest by a totalitarian government. As terrible as these catastrophes would be for us, they can be repaired within a few generations. The one process ongoing in the 1980s that will take millions of years to correct is the loss of genetic and species diversity by the destruction of natural habitats. This is the folly our descendants are least likely to forgive us”.

The late Dr John Sawhill of the Nature Conservancy said:

“In the end, our society will be defined not only by what we create, but by what we refuse to destroy”.

I am sorry to have taken so long.

6.11 pm

Lord Jones of Cheltenham (LD): My Lords, I congratulate the noble Lord, Lord Blencathra, on a fascinating speech and on securing this important debate.

Visitors leaving the Two Oceans Aquarium at Cape Town’s waterfront see a sign announcing:

“Planet Earth’s most dangerous predator”.

Under that sign is a full-length mirror. You stand in front of it and a neon sign behind you lights up with the word “You”.

We are well into the sixth period of extinction in our planet’s history, the first to be entirely manmade. The first five extinction periods were caused by catastrophic methane release, flood basalt eruptions, climate change and impact events like the asteroid famed for the death of the dinosaurs. The main threats to biodiversity today are overexploitation and unsustainable use of species; human wildlife conflict; habitat loss and degradation; emerging infectious diseases; environmental pollution; and human-induced climate change. Some 1.5 million species are known about, but scientists believe that there are potentially 5 million to 10 million or more to be found. However, because of this diverse list of threats, many of these unknown terrestrial and marine species may become extinct without us even knowing they existed.

Since 1970, our planet has lost half its wildlife. 10,000 representative populations of mammals, birds, reptiles, amphibians and fish measured by the Living Planet Index have declined by 52%. Half of the Amazon rainforest tree species are under threat of extinction because of extensive destruction for timber. In Indonesia, forests are being burned to make way for palm oil planting, causing terrible air pollution which is killing animals, insects and humans.

I will say a few words about just three of the many species under pressure because of human activity: bees, bats and elephants. I turn first to bees. Since the end of the Second World War there has been a massive loss of wild habitat for bees and other pollinators. Some 3 million hectares of flower-rich grassland have been lost since 1945, leaving only 100,000 hectares

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remaining. Only 2% of wildflower meadows and grasslands that existed in the 1930s survive, with over 7 million acres lost.

Honey bees are only part of pollination; wild pollinators are crucial, too. Hoverflies and other fly varieties, butterflies and moths, bumblebees and other wild bees all play their part in pollination, as do bats, but these species, too, are in decline. In the UK, between 5% and 10% of pollination is done by honey bees, with 90% to 95% done by other pollinators.

In the last 35 years, 75 species have declined by more than 70% and more than 250 UK pollinators are in danger of extinction. If these losses continue unabated, we could lose 80% of plant species and 13% of agricultural production at a time when future food security is becoming a real issue. Human intervention has caused this disastrous decline, not just through loss of habitat but though the use of pesticides, particularly neonicotinoids, which confuse the orientation of bees. A halt to their use throughout Europe was announced two years ago. After signing up to this, the UK regrettably gave a derogation to use the chemicals in certain areas of the country, which is likely to worsen the situation.

The population decline of bees is a national emergency. One answer is to grow bee-friendly plants. The Bumblebee Conservation Trust helpfully names the top 10 plants to help bees—mahonia, pussy willow, viburnum, lavender, scabious, borage, comfrey, pink allium, bellflower and yellow aquilegia. We need to outlaw the use of neonicotinoids and carry out an education programme to inform the public on how we can all help the bees.

Secondly, I am appalled to learn that the fruit bat—sometimes called the flying fox—is being culled in Mauritius. Under pressure from farmers, the Mauritius Government say that 18,000 of these little creatures—almost half the population—will be culled because farmers claim that the bats are damaging more than 50% of their crops. The IUCN, which we have already head about, says that this figure is nonsense and that fruit bats account for no more than 14% of the loss. The vast majority of fruit losses come from poor farming practices.

The Mauritian Wildlife Foundation, which has been running a fruit bat project for over a decade, and opposes the cull, strongly encourages a scheme to subsidise nets and train farmers in pruning trees. A government cull of tens of thousands of these bats has no scientific basis and is putting the survival of the species at risk. Furthermore, a decision to cull will damage the good reputation in conservation that Mauritius has acquired internationally with support from organisations such as Durrell. I hope that our Government will make a strong protest to the Government of Mauritius and that the cull will be stopped.

Thirdly, elephants. As we all know, a global poaching crisis threatens decades of conservation successes of many species, including rhinos, lions, tigers, leopards, cheetahs and elephants. The illegal wildlife trade is enormous, worth up to an estimated $19 billion a year. Around 30,000 African elephants are killed by poachers each year. In 2013, more elephants died than were born—a clear sign of a species in trouble. So what can be done? There are two elements of the problem—the market for ivory and poaching. First, we need to try to eradicate the market. The big markets for ivory are

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China, Vietnam, Thailand and Indonesia. Education is the key. Apparently, in China 75% of people believe that ivory is a mineral. Documentaries such as those made by Sir David Attenborough and others should be distributed worldwide, particularly to schools, so that the next generation will appreciate better that wildlife is precious when it is alive.

Secondly, we need to end poaching. Inevitably, elephants are killed for their ivory. There needs to be a tangible reward for information on where poachers are. When park rangers and game wardens receive intelligence on poachers they need to act and they need training and equipping to meet this task. This costs money and a long-term commitment. The message must sink in that poachers are effectively “on licence” all day, every day of every year from now on. This worked for a while in Kenya. The current Minister for Wildlife and Tourism in Botswana has said that his country does not negotiate with poachers. They are told to lay down their weapons and, if they resist, they do not resist for long.

In some countries, poachers with machine guns use helicopters in their murky exploits. They shoot elephants and rhinos, land the helicopter, take the ivory and take off again. This is not random poaching; it is highly organised and financed crime. There is now hard evidence that these helicopter missions are linked to terrorism; they fund terrorist activity or drug activity elsewhere in the world by killing elephants for ivory and selling it to China or Vietnam. I favour the bazooka option for these helicopters, although this is not party policy. We would need only a few of these aircraft to be destroyed to ram home the message that poachers are not going to win.

It is not all bad news. Botswana has an increasing population of elephants—I draw attention to my declared interest in that country—and that is because their rulers, from Seretse Khama onwards, have loved their wildlife. I understand that if noble Lords wish to have elephants on their estates, they can have as many as they like from Botswana; you just arrange the transport.

I end with this story. A few years ago I was on a boat on the River Chobe near Kisani in northern Botswana. In the distance in the river was a very large elephant, a matriarch. All around there were hundreds, maybe thousands, of elephants. When she died a few days later, wildlife wardens dragged her body on to the riverbank with a tractor and chains. Then, for hour after hour, elephants filed past her in an orderly fashion, touching her body with their trunks—a family paying its last respects. It is up to humans to ensure that elephants, like many other species, are around for future generations to enjoy.

6.21 pm

The Earl of Selborne (Con): My Lords, I thank my noble friend Lord Blencathra for giving us the opportunity to debate this very important subject. I declare an interest as patron of the National Biodiversity Network trust.

Both of the speeches that we have heard so far have given us some stark information on biodiversity losses. We must accept that with the human population

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expanding, and with the standard of economies by and large increasing, there are bound to be competing demands for land use and maritime resources, hence the conflict between conservation and other interests. We have to tackle the question of how industries such as agriculture, which is a large land user, fisheries, mineral extraction and forestry can coexist with the requirements of conservation. Realistically, if you can achieve 15% of land cover around the world protected in some form, you are doing well. You are certainly not going to get vastly more; that is probably near the upper limit. We have to recognise that habitat destruction is not the only cause of the loss of biodiversity; there is also climate change, and we have heard about the introduction of alien species. These are the issues that have to be addressed.

What instruments are available to us that could be rolled out on a global scale? The UK has some quite interesting tools that it has developed, and it needs to think carefully about how it can pursue them further. In 2011 we published the UK National Ecosystem Assessment, which was started under the Labour Government of Gordon Brown and has been pursued with some interest by the coalition Government and the present Government. It gave us an idea of how to take an overview of the state of our natural environment, including biodiversity, and how to value our ecosystem services.

The second instrument, which again is a first in global terms, has been the Natural Capital Committee, which gives advice to government and others on how to value our natural capital, including biodiversity. The Government’s response in September this year to the third State of Natural Capital report, said that they agreed with the underpinning premise of recommendation 3, which was:

“Organisations should create a register of natural capital for which they are responsible and use this to maintain its quality and quantity”.

The government response continued:

“We support the NCC’s work on developing an approach to corporate natural capital accounting. We will continue to work with the Natural Capital Coalition and the Natural Capital Declaration as they develop an internationally agreed approach to valuing and accounting for nature in business and finance … Once a domestically and internationally agreed approach to natural capital accounting has been established, we will look at appropriate mechanisms to support further adoption of this approach”.

That seems thoroughly realistic and it represents quite a sea change in how we construct our balance sheets, and how we put values on businesses and their impact on the environment. We have to make progress on this. There is a danger that this will get bogged down in interminable committees. It is a significant contribution that we should make so that every organisation, ultimately, has to account for its impacts, for better or worse, on natural capital, including biodiversity.

The UK assessment exercise was massive. Many scientists were involved. It took place between 2009 and 2011 and had the great advantage that this country has a wonderful heritage of recording—any number of people go out recording birds and butterflies as volunteers. But scientists, government agencies, NGOs and others also do it. That gave us a head start. This

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information, particularly the long-term databanks, is absolutely critical. I draw attention to the National Biodiversity Network, which is bringing together all these records held by any number of agencies. We now have more than 110 million biological records and they are accessible to anyone online. That is the key. There is no point recording where you find one particular plant or see a bird if that is not available online in order to inform policy-makers. That was a great springboard from which to build up the information required for monitoring, valuing and accounting for natural capital, as well as identifying the required investment and management programmes—the risks, the costs and benefits. Those are what was really meant by developing programmes in order to protect biodiversity.

An investment programme has to be based on the strongest evidence of economic benefit. That could include woodland planting, peatland restoration, wetland creation, the restoration of commercial fish stocks, urban green spaces or improving the environmental performance in farming. These are, of course, happening in some instances. There is a feeling that these must be funded by government grants, but that will not happen, particularly when we hear the news tomorrow. We need to be a little more inventive about sources of funding that might include a wealth fund derived from rents from non-renewable resources and compensation payments from developers.

Other parts of the world clearly do not have access to the same amount of records as we have. But we should not minimise the amount of information that we can get from remote sensing. I do not know whether other noble Lords heard, as I did, Professor Kathy Willis of Kew describe recently on Radio 4, Oxford’s local ecological foot-printing tool for mapping remote sensing, which gives specific information on biodiversity, which, of course, has to be supplemented, ultimately, by fieldwork. But she made the point that using this tool they were able to provide information that had escaped people on the ground.

I am rather cynical about the United Nations targets—the Aichi targets—the five strategic goals and 20 targets. If you read them, you cannot dispute them. For example, by 2020, the extinction of known threatened species will have been prevented and the conservation status, particularly of the most in decline, will have been improved and sustained. Likewise are the sustainability goals agreed at the General Assembly of the United Nations just this September. Quite frankly, when, as happened in 2010, we come to assess the targets that were set at Rio, such as the Convention on Biological Diveristy, surprise, surprise, we have not met them. I fear there is a real danger with a lot of these rather woolly targets set at Aichi that the same thing will happen.

Let us assess what we have that we are proud of in this country and what we need to improve. We should be very proud of the Darwin Initiative, which has been going since Rio. It has done excellent work. Now, it is much more funded by DfID than by Defra. That means that there must be a human well-being content, thereby excluding some of the environmental projects that were supported in the past. Nevertheless, we are proud of it. We have managed some excellent UK-based

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conservation schemes. Referring back to the IUCN red list, we succeeded in taking the bittern and the nightjar off that list, which is a small plus. I agree that it does not outweigh some of the other cases referred to by my noble friend.

We have been active participants in the international programmes, such as Ramsar for wetlands, CITES for endangered species, and the Convention on Biological Diversity. Therefore we have pulled our weight there. However, quite frankly, I am not sure whether we have brought the devolved Administrations in very successfully. When somebody from Defra goes to these meetings, there does not appear to be very good dissemination of outcomes, which certainly needs looking at.

Lastly, I make the point that historically we are bound to recognise that we have a key role. If you go to Kew, the Royal Botanic Garden Edinburgh or the Natural History Museum, there you have the type specimens—the collections to which just about every other country, where these collections come from, will need access to make their biodiversity plans. Again, we should be enormously proud of the resources that are available there. I note that the science strategy from Kew, in spite of the funding difficulties it is facing, is very positive.

Scotland is to be congratulated on the online publication last year of the Atlas of Living Scotland, an online biodiversity database built to inform the world of just what biodiversity, soils, climates and habitats can be found in Scotland. I much look forward to the day when England can do the same.

6.31 pm

Baroness Young of Old Scone (Lab): My Lords, I thank the noble Lord, Lord Blencathra, for seeking this debate. I declare my interests in the register of Members’ interests as being president, vice-president and chairman of a very long list of biodiversity and conservation organisations.

We have already heard that global biodiversity is declining at its fastest ever rate. I am rather more gung-ho than the noble Earl, Lord Selborne, about the Aichi Biodiversity Targets under the Convention on Biodiversity. Unless we set targets we will live in some sort of fool’s paradise, not being able to tell whether we are getting better or worse. We have less than five years left to meet these targets, and to be honest the noble Earl is absolutely right: progress and action from Governments round the world, including the UK Government, is simply too slow and too little.

The noble Lord, Lord Blencathra, stipulated in the question for debate the loss of biodiversity “caused by human activity”. That gave me some pause for thought, because that pretty well means all loss of biodiversity. The biodiversity specialists I consulted could not think of a single species decline that was not caused by human activity. We have already heard some of the list: human development, introduced invasive species, climate change, unsustainable agriculture, fishing or forestry, as well as natural resource extraction, persecution and illegal trade—all those are manmade. Yet half the world’s population directly depends on biodiversity for its livelihood, and we all depend on ecosystem services that biodiversity and the natural environment provide.

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I therefore ask the Minister how the Government plan to step up UK action to meet the Aichi targets and to help protect and foster global biodiversity. I will raise three issues in particular. First, the UK overseas territories contain—would you believe?—90% of the UK’s biodiversity, yet efforts by the UK Government to tackle biodiversity loss in the overseas territories is fairly low; there is a very strong presumption that the overseas territory Governments will cope, but they have very small capacity and even less money to do much. The current Darwin Plus funding stream is valuable but does not go anywhere near meeting the scale of the challenge.

I have the privilege of being president of the South Georgia Heritage Trust and just spent five weeks in Antarctica completing the third phase of eradicating the man-introduced rats and mice from South Georgia. They came with the whalers 100-odd years ago and had been eating the eggs and young of seabirds, penguins, albatrosses and the endemic South Georgia pintail, a rather dinky duck that looks more at home in a bath than on a rather cold island. The South Georgia Heritage Trust raised nearly £7 million to carry out the first three phases of the eradication programme. Although I am very grateful for the funding that the Government provided, the vast majority—nearly 90%—came from private donors. I must confess that I gnashed my teeth rather when the Australian members of our highly expert team told me that a similar exercise to rid Macquarie Island off Tasmania of its similarly introduced rats, mice and, in this case, rabbits, in order to protect its native biodiversity, had been paid for totally by the Tasmanian and Australian Governments.

The second point that I want to raise has been raised previously—the Darwin Initiative, which is a fine example of UK leadership on tackling global biodiversity conservation. It has a very positive profile in many parts of the world and has had a significant impact well beyond its relatively small size. However, it has kind of undertaken a bit of mission creep, in my view. It is now rather more focused on DfID and development-related criteria than on biodiversity conservation per se. Can we have Darwin back, please, and can we have it focused on long-term sustainable development and biodiversity conservation rather than short-term and reactive policies?

My third point is that biodiversity conservation is a bit like a charity—it needs to begin at home. We could take the view that if every nation in the world looked after its own biodiversity, we would not have a problem. So I ask the Minister about the Government’s commitment to doing their bit for global biodiversity by looking after the biodiversity in the UK that we uniquely are responsible for. We have heard of a number of assessments of biodiversity in the UK, and the 2013 State of Nature report found that 60% of UK species that have been studied had declined in recent decades and 31% had strongly declined. More than one in 10 species could disappear from the UK altogether.

I commend to the Minister the conservation NGOs report Response for Nature, which outlines what needs to be done. We are all looking forward to the Government’s 25- year environmental plan, which I understand will include biodiversity conservation issues. I hope that

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we might lure the Minister into giving us some insight into what it might contain and how the Government are getting on with their preparations.

Although vision for the future is important, I urge the Minister that the plan needs to be more than just a vision; it needs to have some teeth. It needs to commit clearly to actions for government and to outline actions for businesses, landowners, local government, civil society and the public. It needs to have concrete numerically expressed goals that can be measured and monitored and have five-year milestones with accountability and reporting to Parliament. In respect of monitoring biodiversity, can I urge the Minister to ensure that the monitoring functions currently carried out by the Joint Nature Conservation Committee do not suffer in the spending review, as is rumoured? If we cannot count and monitor our biodiversity, how will we know if we are winning?

Last but not least, the Government need to defend and implement the laws that conserve nature, particularly the European birds and habitats directives which are currently under review. It would be a grievous blow for biodiversity across the European Union if these directives were weakened. Can I ask the Minister tell the Committee where the Government stand on the defence of these directives? We were somewhat concerned that when nine EU environmental Ministers, including the German and French Ministers, called recently for the directives to be safeguarded, the name of the UK environment Minister was not attached to that call.

The noble Lord, Lord Blencathra, talked about the IUCN Red List. My very good friend Jane Smart, who is the director of the IUCN global species programme, said that the IUCN Red List is the voice of biodiversity telling us where we need to focus our attention most urgently. If we look at that list, biodiversity is not telling us where to focus our attention most urgently; it is screaming for help.

6.38 pm

Baroness Jones of Whitchurch (Lab): My Lords, I am extremely grateful to the noble Lord for initiating this debate today, and indeed to all noble Lords who have spoken. Between us, around the Committee, we have highlighted some alarming truths, as well as making a compelling case for action.

We know that extinction is a fact of life. Species have been evolving and dying out since our creation but in the past there has been a rhythm to it. There has been a rhythm to evolution in which nature adjusts and rebalances as those changes take place. What we have identified this afternoon, which is different and alarming, is the extent to which that process has speeded up over the last 100 years, almost entirely as a result of human activity. As the noble Earl, Lord Selborne, pointed out, the scale of population growth, and our drain on natural resources, is becoming increasingly unsustainable. In 1950 the global population was 2.4 billion; it is now more than 7 billion and continuing to rise. We are, therefore, outgrowing the planet and misusing the limited resources available to us.

The resulting degradation of biodiversity is breathtaking in its impact. Again, we have heard evidence of that. The noble Lord referred to the latest report

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from the International Union for Conservation of Nature’s Red List. Undoubtedly, the thousands of new species that it has identified as being threatened with extinction really hammer home the case for action.

Knowing that I have limited time to speak this afternoon, I will pick up three issues that echo many of the themes that others have touched on. The first is climate change. Despite a few hardy climate change deniers, I think that there is a growing consensus that the earth is warming up as a result of increased CO2 emissions. If current trends continue, it is predicted that the earth could be 1 degree warmer by 2025 and 3 degrees warmer by 2050. Already the IUCN report highlights the loss of Arctic sea ice, which has been declining at a linear rate of 14% per decade since 1979.

This not only affects the survival of native species, such as polar bears, but becomes a major global environmental threat. Rising sea levels and extreme weather conditions, such as drought, flooding and hurricanes, will lead to huge population shifts as well as damaging biodiversity. This is why the outcome of the Paris talks is crucial. Countries such as China and India are already beginning to face up to their responsibilities to cut CO2, but we must show leadership as well. That is why it was so disappointing that the Minister’s colleague, the Secretary of State for Energy and Climate Change, chose to put the emphasis on the growth of gas, rather than renewable energy, in her announcement last week. Can the Minister, therefore, clarify what our negotiating position will be and whether the UK is committed to meeting its existing 2020 targets, as well as going further to reduce CO2?

Secondly, I want to talk about deforestation, another issue which has been touched on already. We know that it is happening globally and that attempts to control it have so far been frustratingly slow. As the noble Lord pointed out, it matters not only because of the rich biodiversity in areas such as the Amazon rainforest, but also because forests play a critical role in regulating climate. Forests are cleared for many reasons, not least the pressures of expanding populations, but they are also cleared to meet the West’s obsessive consumption of unsustainable foods: cattle ranching to meet demand for beef products in the Amazon; the planting of huge coffee plantations in Central America; the growing of coffee, cocoa and palm oil for export in Papua New Guinea; and the production of bananas and tobacco in Colombia. I know that we could all name many more. Does the Minister agree, therefore, that further action is needed, on a global level, to secure the future of the forests, and what are the Government doing to negotiate international environment and trade agreements that will deliver this in a meaningful way? What are the Government doing, too, to encourage investment, such as that promoted by Fairtrade, in more sustainable livelihoods for local people, which will make those forests more sustainable? Does he agree that at the UK level we could do a great deal more to improve the environmental labelling of products, as well as enforcing the ban on illegally-traded goods, to make good consumers of us all?

Thirdly, I would like to say something about the decline in marine species. The World Wildlife Fund report, Living Blue Planet, published in September,

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shows a decline of 49% in the global marine population between 1970 and 2012. As WWF points out, this is a disaster for both ecosystems and the people in the developing world who depend heavily on the oceans’ resources. Overfishing is a major source of the problem, with levels of some food fish, such as tuna, mackerel and bonito falling by 74%. Again, this is being exacerbated by the impact of climate change, with rising sea levels and increasing acidity levels further weakening the marine ecosystem.

Like the forests, the oceans are an essential part of our life support system, generating half the world’s oxygen and absorbing almost a third of its carbon dioxide. We cannot afford to take this contribution for granted. Clearly one solution is the creation of a global network of marine protected areas—we have heard some examples of how those are developing this afternoon and they would certainly help to allow habitats to recover. Of course, we already have our own network of protected areas around UK shores, which was introduced by the last Labour Government. Will the Minister update us on the rollout of these sites and confirm whether the 23 sites in the second tranche in 2016 are still on course? Will he clarify what negotiations are taking place at an international level to ensure that this model of marine protection is being adopted more widely?

I would also like to say something about the UK’s biodiversity strategy. Like my noble friend Lady Young, I am concerned about the progress being made at home. The department’s Biodiversity 2020 strategy set out some useful priorities and planned actions, but, four years on, I wonder how the Government think they are doing on meeting those targets. The Minister will be aware that the Environmental Audit Committee last year published an environmental scorecard on its progress, using a traffic light system. None of the areas assessed received a green rating, and on air pollution, biodiversity, flooding and coastal protection the Government received a red rating, showing that things had deteriorated. I wonder whether the Minister would like to comment on that.

I have one final query. Like my noble friend Lady Young, I do not expect the Minister to give us a sneak preview of the Chancellor’s Statement tomorrow, but there are concerns about developments. I would be grateful if he could reassure us that, in proposing significant cuts, his Secretary of State has not also damaged the UK’s capacity to meet its own targets, as well as its EU and UN commitments. Put simply, if we are not seen to be rising to the biodiversity challenge, we really cannot expect the poorer developing nations to do so. I look forward to the Minister’s response.

6.47 pm

Lord Gardiner of Kimble (Con): My Lords, I have been very much looking forward to this debate and I congratulate my noble friend Lord Blencathra on securing it. The Government recognise how important biodiversity is, and the breadth of today’s debate has demonstrated the scale of the challenges that we face.

For many in this country, the word “biodiversity” conjures up awe-inspiring images from natural history programmes of majestic species like the tiger or the

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elephant. We are aware of the global impact of the large-scale degradation of an ecosystem like the Amazon rainforest, but when we talk about biodiversity we actually refer to the variety of all life on earth. It includes all animals and plants, including bugs, as my noble friend Lord Blencathra pointed out at the outset.

Climate change, deforestation, the pollution of land and seas, the overexploitation of natural resources and the introduction of invasive species into pristine environments are all major threats to global biodiversity and they are all down to us, the human race. The noble Lord, Lord Jones of Cheltenham, my noble friend Lord Selborne and the noble Baroness, Lady Young of Old Scone, all highlighted that in their exceptional speeches. Indeed, the noble Baroness, Lady Jones of Whitchurch, referred specifically to the impact of climate change on global biodiversity. A global climate agreement is the only way that we can deliver the scale of action required. That is why the Government are committed to working with other countries to secure an ambitious global climate deal in Paris in the coming weeks.

A threat to biodiversity is a threat to us all. Our survival depends upon biodiversity. The natural environment provides us with clean water, clean air, fuel, shelter, food and trade, but we can jeopardise all this if we do not act responsibly to protect it.