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House of Commons Hansard
Energy Bill [Lords]
09 May 2016
Volume 609

Consideration of Lords message

After Clause 79

Onshore wind generating stations in England and Wales

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I beg to move, That this House disagrees with Lords amendment 7TB.

Here we are again to discuss this Bill, and in particular the delivery of our manifesto commitment to end new subsidies for onshore wind. The other place has seen fit yet again to try to overturn that manifesto commitment, and to seek to impose further costs on consumer bills, but this Chamber, and this Government, are determined not to put up with that. As I made clear on 20 April, the Government are intent on bringing forward the closure of the renewables obligation to new onshore wind in Great Britain. I therefore urge the House to support the Government’s motion to disagree with the Lords amendment.

The Government signalled their intent well before last May’s general election, so I will not repeat that evidence again. I remind the House, however, that even with cost control measures in place, our estimates show that we are on track to deliver 35% of the UK’s electricity from renewables in 2020-21, exceeding our stated ambition of 30%. That is up from 9% in 2011—quite an achievement—and we simply do not need more subsidised onshore wind. The costs for this established technology continue to fall, so it is right that we should scale back support and let the industry stand on its own two feet. The Government’s policy—a manifesto commitment—has now been agreed twice in this House, yet we now have an amendment from the other place that is similar to that previously rejected by this House, and relates to projects that did not have planning permission on 18 June last year.

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I am sure the Minister has seen the evidence because she will come before the Scottish Affairs Committee in the next couple of weeks, and we are currently undertaking a review and inquiry into the impact that this policy is having on the sector in Scotland. The evidence we have secured is dramatic and suggests that confidence has been sucked out of the sector. There is a lack of investment, no movement, and a sector that was growing, prospering, and delivering targets is now in real fear of being decimated by the Government’s policy. What does the Minister say to businesses in my constituency that are dependent on that sector, and whose legs have been pulled from under them?

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How does the hon. Gentleman feel about the bill payers and those in fuel poverty? How does he feel about a clear commitment to achieving a certain level of renewables deployment and no further? There must be a balance, and we believe that the right balance has been struck.

The projects that this amendment would allow to access the grace period did not have planning permission as at 18 June last year. Allowing such projects to access the grace period would lead to an increase in deployment, adding more costs to consumer bills. The 18 June 2015 was set out as a clear bright line, and we have continued to maintain the importance of that as a clear cut-off date. Tampering with such an integral part of the early closure policy at such a late stage in the passage of the Bill is simply not on, and it is extremely disappointing that Opposition peers in the other place persist with an approach that will add to consumer bills. Conservative Members are on the side of the consumer. It is our duty as consumer champions to keep costs down, and that is what we will do.

Let us remember that this money comes directly from people’s bills. While Labour Members oppose measures to control costs for families and businesses and to keep bills down, we are clear that we can only expect bill payers to support low-carbon electricity if costs are controlled. If we do not take action and we let subsidies spiral, families and businesses will suffer.

The Government’s policy takes a balanced approach and we have a proven track record on renewable electricity. Last year for the first time ever, renewable sources provided more power over the year than coal, with nearly one quarter of the UK’s electricity generated by renewables. The Government remain committed to the move towards a low-carbon economy in a way that minimises costs to consumers.

This Bill is a key part of the Government’s commitment to the oil and gas industry on the UK continental shelf. At this very challenging time for the oil and gas sector, it is extremely disappointing that the persistent disagreement from the Lords on an unrelated issue is now risking timely implementation of these powers which enjoy the support of both Houses and are so crucial to the industry at this difficult time.

Our oil and gas industry supports hundreds of thousands of working people and their families. It is vital that the Oil and Gas Authority gets the functions and duties it needs to maximise the economic recovery of the UK’s remaining oil and gas reserves, while building its capacity and capability to attract investment and jobs, and helping to retain valuable skills in the UK. I received an email just this morning from the head of Oil & Gas UK urging me to ensure the safe passage of the Bill at what is a very challenging time for the industry. The need for an independent, robust and effective regulator for the North sea is greater than ever. We cannot afford the loss of confidence that delaying the establishment of the Oil and Gas Authority would generate among existing operators and the regulatory uncertainty it would generate among investors.

The Government and industry share the same ambitions, even if the actions of Opposition Lords have frustrated the timeliness of the OGA’s implementation. The Government want to protect bill payers and ensure technologies stand on their own two feet, while meeting our renewable energy commitments.

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Let us be clear before we go any further: this discussion does not concern manifesto commitments in any way, shape or form. The Energy Bill provides within its terms of reference a number of grace periods to mitigate the effects of the early closure of the renewables obligation on categories of schemes affected by that closure. That is a consequence of the original plan to close the renewables obligation early.

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The hon. Gentleman says it does not concern a manifesto commitment to get costs down for bill payers. Is he willing to put forward the £7 million the amendment would cost the bill payers to whom we made that manifesto pledge?

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I believe we referred to the manifesto commitments the Minister mentioned during the passage of the Bill as something of a flexible friend. The Minister is quoting a manifesto commitment that was not actually in the Conservative party 2015 general election manifesto. The manifesto commitment was for no new subsidies for onshore wind. The Bill puts that in place, but provides for a number of grace periods for the consequence of that process. What we are therefore talking about in this debate is not that commitment but the grace periods that follow it. That, essentially, is what the Lords amendment is about. It therefore does not breach manifesto commitments in any way. To do that, the Minister would have to say that the grace periods themselves breach the manifesto commitment. Plainly, the Minister put those grace periods into the Bill. She must therefore accept that the grace periods are a part of the process and not the process itself.

Under the grace periods, if there is a delay in grid connection or a delay in clearance for Radar, then the schemes come into the fold. That is set out in the grace periods in the Bill. If you have been turned down by a planning committee, have appealed and the appeal comes through after the cut-off date, then you come into the fold. If investment facilities have been frozen because of uncertainty about what was going to happen to the Energy Bill and investment documentation could not be shown in time, that comes into the fold of the grace periods.

As matters stand, however, one cannot come into the fold if one has gone down the route of seeking local approval for the scheme, gaining that approval, getting the consent of the local planning committee and negotiating section 106 or section 75 agreements, as would happen once agreement is reached. If the final certificate, which is obtained after agreement has been reached, happens to fall after 18 June 2015, then one does not come into the fold. That is especially galling for the people going down this route, which they did not have to go down. A central part of the Energy Bill is that onshore generating schemes should proceed in future only if they have the support of the local communities in which they are to be sited, which might be determined by the grant of locally based planning permission. Clause 78 expressly removes the requirement for consent by the Secretary of State. If one has gone down that route and done everything by the rules that the Energy Bill wants to put in place, one is outside the fold if everything is not in place, even after permission has been granted, by 18 June 2015.

Let us imagine the scene when the managers of the Bill sat down to draft what was always clearly supposed to be a sequence of exceptions to the clear bright line as described by the Minister: the cut-off date and circumstances of the cut-off for new onshore windfarms. The instruction to the team drafting the Bill—I commend the Bill team on a superb job in pulling together the multiple facets of the Bill into a coherent whole—would have been to work towards an overall instruction that the renewables obligation would be closed to all new applicants a year before its original closure date, a date to which developers, local authorities and those seeking to invest in wind farms had all been working. The Bill team was required to place that into a satisfactory legislative context. In doing so, there would have to be cut-off dates before the final date of closure of the scheme overall. It was always recognised, however, that there would have to be exceptions, which is why extensive passages of grace periods have been drafted into the Bill, allowing for exceptions where not to do so for various reasons would have looked particularly unjust, would have led to legal complications or even legal challenge from those affected.

I would have thought that projects about to be completely swept away by the imposition of the cut-off date—when they had done exactly what the Bill provides for, having previously thought the original cut-off date was March 2017—would have been first on the list for possible grace periods. Who knows, perhaps something might have been drafted early on to accommodate such a position? What we know, regardless of any speculation, is that someone decided—it looks to me that they may have done so on grounds of dogma, rather than on a fair analysis of what should go into an already agreed grace period—that those schemes would have the door firmly closed in their faces. That is a manifestly perverse outcome for projects whose approach to planning and investment was exactly by the book. On the other hand, others going through an appeal process—having perhaps been turned down by those very local concerns the Bill emphasises—will find they are on the guest list after all and can come in through the door.

The amendment from their lordships’ House does not seek to alter the premise of grace periods. It does not seek to overturn the early closing date for onshore renewables, sad though that is. It does not seek to alter in any way the vast bulk of this well-crafted Bill, with all its important provisions concerning the North Sea oil industry. It simply seeks to put right one of the great anomalies in the grace period sections of the Bill, and, in that way, strengthen the proper application of those periods. As the Minister may have noted, it now does so in a way that it did not do in a previous amended incarnation. It places a specific time limit after the cut-off date of three months, reflecting the view that grace periods should be just that. This is now a very brief grace period window in which to put right the most difficult cases frozen out for doing the right thing.

We all want the Bill to pass now and it can do so today. We want the Bill on the statute book because of what we agree on. Overall, we want it to be on the statute book as a just Bill, even when Opposition Members consider the principle behind it—effectively retrospectively pulling an early plug on the renewables obligation specifically for onshore wind—is profoundly mistaken. It is mistaken because it will potentially replace onshore supply with more expensive offshore wind. As I am sure the Minister is aware, a study by the Royal Academy of Engineers estimated a while ago that if just one onshore turbine was replaced by more expensive offshore turbines, it could eventually cost taxpayers £300,000 per annum.

The amendment saves money, therefore, as well as placing equity back into the grace periods. It is of course down to the Government to get their legislation on to the statute books. We have supported most of the Bill, which can be passed today, throughout its passage. I trust that they will have the sense not to stand dogmatically in the way of its passage and allow us to sign it off and get going with the vast bulk of the provisions on which we all agree.

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I will speak briefly given that we have been here before in this ping- pong process.

This was my first Bill Committee and Reasons Committee—I believe I am already coming up for my second, which is interesting—and we are now down to one key point: there is wide acceptance of the broader need for the Bill, but we are told that if it is so important, we need only accept one more wafer-thin amendment and then it can go through. Conservative Members take the view that a Government could not govern if they did that every time. There are, unfortunately, cut-off points in lots of Bills, and many are unpopular, and although I can understand why people who will lose out are aggrieved, we take the view that the wider principles are incredibly important.

Others have spoken about the Oil and Gas Authority. Every time I have spoken, I have referred to the oil price, which I think is now up to about $49. There is still no sign of stability returning to the sector. Who knows where it will be in weeks if not days, given all that is happening in the world? The measures in relation to the OGA are not a magic wand for the oil sector but will bring an extra level of stability and demonstrate Government support at an incredibly sensitive and important time for what remains one of the UK’s largest industries and one of Scotland’s key industries. We should dispense with this process, move forward and pass the Bill, for the simple reason that it is about the fundamental strength of the UK economy.

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It is with an unfortunate sense of déjà vu that we return to debate an issue we should have put to bed months ago, if not longer. I struggle to recall when the Wood review reported, but it was well in excess of 18 months ago, and as has been said many times, including by me, it was a completely different time in the oil industry’s lifespan. Up to a point, the Government have taken the action expected, but they did so at the time of the Wood review, when things were very different. Further delay should not have happened.

The Bill should have been on the statute books months ago and should not have conflated the OGA with onshore wind. It might have seemed like a neat parliamentary ruse at the time, but it is causing potentially significant damage. The last time we dealt with this—a week or so ago—the Minister told Opposition Members that we should be ashamed of ourselves. The most unedifying aspect of all this is that we are now talking only about projects in Scotland—four Scottish wind farms—and the OGA, which will largely deal with the oil industry in Scotland, and yet this House and that House cannot get their act together to protect two vital Scottish industries. That, for me, is utterly shameful and unacceptable.

Not content with decimating the wind industry in Scotland, the Tory party, supposedly in the name of public opinion, is twisting the knife in the face of public opinion. The four projects affected by the Bill all got planning permission from the local council. That is the definition of public support, which is what this should be about. There is public support for wind farms that would have significant community benefit. We have talked about the £7 million cost. I wonder how much we would have saved had we not delayed in establishing the OGA and provided it with the teeth it should have had months ago. We are squabbling over a relatively small figure, in the grand scheme of things, compared with the colossal amounts of money the Government will waste on the white elephant at Hinkley Point C. That sticks in my craw and that of folks in Scotland.

The Lords have compromised—good on them—because they want to get a deal done. I am no expert in parliamentary procedure, but the Minister talks about wanting to pass the Bill. It could be done very simply by accepting the amendment. We run the risk, before we prorogue for the Queen’s Speech, of the Bill falling. If that happens, it will be a shameful betrayal of the entire cross-party process over the establishment of the OGA, the development of its agenda and the provision of the tools it requires to help our oil industry. That cannot be allowed to happen. The risk is that we sacrifice the OGA on the altar of Tory party dogma on onshore wind. That is utterly unforgiveable.

What is the solution? It is surely a simple one. It is to recognise that, although the manifesto contained a commitment not to have any more onshore wind and to end new subsidies, it did not have an arbitrary date, cast in stone, that no more should happen after that. These schemes all have public support and all got planning permission within six months—I believe—of the election, which is a pretty reasonable timescale to allow for sensible interaction between Government and business. But no. These schemes are to be sacrificed, regardless of the consequences.

I do not know what will happen after this. No doubt we will lose the vote. I do not know if the Lords will continue to fight—they would have every right to—but we need to bring our minds back to the bigger picture. Tens of thousands of jobs are at stake if we do not get the oil and gas support correct.

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I am loth to interrupt my hon. Friend, who is making a powerful case in defence of the Lords amendment, but I am sure he has seen the evidence submitted to the Scottish Affairs Committee and how the energy has been taken out of the sector because of the Government’s arbitrary decision. He is right that they made a manifesto commitment, but it is totally unacceptable to do this in a year and leave these four plants in a state of limbo. There is a simple way the Government could solve the issue this evening and get the Bill through: accept the amendment, get on with it, deliver the Bill and make sure we do our best for both sectors.

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I thank my hon. Friend for his intervention. I agree 100% and commend the work of the Committee he leads in shedding light on this issue.

Most countries would be proud of the wind industry that has developed in the last decade or so. It should not be seen as a burden, as it apparently is; it contributes massively to jobs, to reducing our carbon emissions and to tackling the great threat of climate change. But—again—no, because it upsets a few folks!

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Tory ideology.

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It is. It is an ideological attack, and despite the potential consequences for wider industry sectors, they are happy to see it happen. We have this squabble over an issue in Scotland between the unelected House of Lords and a Government who, with their sole Tory representative, might as well be unelected in Scotland. We are talking about grace periods. Thus far, the Government have acted completely and utterly without grace. It is not too late to change that.

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This is a vital Bill, and there have been plenty of opportunities in this House and the other place to give it proper scrutiny. Having spoken on Second Reading and sat on the Bill Committee, I feel that I am nearly as familiar as the Minister with some of the debates.

I have a particular local interest in the wider issue. A proposed new electricity interconnector facility linking France and the UK comes ashore at Chilling in my constituency. The development, called IFA2, will provide the capability to export or import more than 1,000 MW of power and provide benefits to consumers through increased flexibility of supply and downwards pressure on prices. It is because I want the Bill enacted that I share the Minister’s frustrations at the continued blocking by the Opposition in the other place. It also defies long-held conventions such as the Salisbury convention, which is that a manifesto commitment of a party elected with a majority of support from the people should be enshrined in law—without opposition from the other place. And we should not forget that the other place gains its majority from Members who come from the Liberal Democrats or other parties that are not elected and do not reflect the political make-up of this elected Chamber. This undermines parliamentary democracy and the will of the general public.

This amendment addresses one of the narrowest aspects of the Bill—and the issue of the cut-off date and potential grace period has become the sticking-point. Debate on the merits of the arguments have been exhausted by now, so I shall not dwell on them too long. We can all appreciate the concern of those directly affected, who understandably want changes in the rules to benefit themselves. They have the right to lobby the Government and put their case. In the end, however, a decision has to be made, and a line needs to be drawn somewhere. Every deadline is arbitrary in some sense because it draws such a line. Some will be on one side and some on the other side. The fact of setting a deadline itself, however, cannot be considered unfair—otherwise we would be unable to set them at all.

The hon. Member for Southampton, Test (Dr Whitehead) put forward a proposal for a grace period, but where will it end? Some people will benefit; others will not. The Government have made a very clear commitment to this policy in their manifesto, and I support it.

Question put, That this House disagrees with Lords amendment 7TB.

Division 264

9 May 2016

The House divided:

Ayes: 286
Noes: 260

Question accordingly agreed to.

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Lords amendment 7TB disagreed to.

Motion made, and Question put forthwith (Standing Order No. 83H), That a Committee be appointed to draw up Reasons to be assigned to the Lords for disagreeing to their amendment 7TB.

That James Cartlidge, Andrea Leadsom, Holly Lynch, Callum McCaig, Paul Maynard, Julian Smith and Dr Alan Whitehead be members of the Committee.

That Andrea Leadsom be the Chair of the Committee.

That three be the quorum of the Committee.

That the Committee do withdraw immediately.—(Julian Smith.)

Question agreed to.

Committee to withdraw immediately; reasons to be reported and communicated to the Lords.