House of Lords
Wednesday, 5 November 2008.
The House met at three o'clock: the LORD SPEAKER on the Woolsack.
Prayers—Read by the Lord Bishop of Chelmsford.
My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare an interest, in that my wife’s daughter is married to a non-British citizen.
The Question was as follows:
To ask Her Majesty’s Government what steps they are taking to ensure that bona fide spouses and civil partners of British citizens can join and reside with their families in the United Kingdom without hindrance.
My Lords, the Government are committed to a policy of supporting managed legal migration to the UK, from which our economy and society derive great benefits. For those seeking to settle in the UK as spouses, it is important that we have provisions to enable us to differentiate between genuine and failed or sham relationships. The Immigration Rules facilitate the entry of those in genuine relationships, while preventing abuse.
My Lords, I thank the Minister for that reply. I know he takes a great interest in this area. However, can he assure me that the only test that is relevant to a British citizen being able to live with their non-British husband or wife in the UK is that the marriage is real? That should surely be the only test. Should not the state avoid getting involved in anything beyond that?
My Lords, my interest in this subject is enhanced by the Question, and other questions of this sort. The test the noble Lord mentions is important but it is not the only test. A number of rules are required to be followed as regards migration of spouses or others. We have a two-year probationary period to ensure that a distinction is made between genuine and potentially sham relationships. We have a requirement as regards seeking and achieving proficiency in the English language and a requirement that spouses entering from abroad will be supported for two years without being a burden on the state. These are important parts of our migration policy and of our ability to sustain and support the relationships of which the noble Lord speaks.
My Lords, I recently married in the Palace of Westminster a resident of Texas. My spouse was told that she had to travel half way round the world in order to get her visa. Surely in these days of modern technology, particularly with the internet, she ought to have been able, without leaving the United Kingdom, to get her passport stamped to state that she could reside here as my wife.
My Lords, I still seek the first Question Time when I will not have to say, “I shall write to the noble Lord”. On this occasion I congratulate him on his new-found status and on the fact that his bride is from Texas. I trust that she is celebrating the new American presidency today, as are most Americans.
My Lords, there are frequent allegations that marriage is one of the greatest sources of abuse of our immigration system and that at the end of the two-year period there is very limited monitoring of whether marriages still subsist. What proposals do the Government have to meet these anxieties?
My Lords, continuing my previous theme, it is nice to say, “Yes we can”. We are concerned about the danger of forced marriages and that is why we have a monitoring period. A unit was launched by the Foreign and Commonwealth Office and the Home Office in 2005 to look at marriages which may not be genuine and may be forced. The UK Border Agency is in the process of developing a code of practice to deal with alleged forced marriages. There are 300 to 400 cases per year, mostly involving young women, and these are the subject of investigation.
My Lords, in their response to the consultation document on marriage visas, the Government say that they are not sure that the existing powers to revoke ILR after two years for reasons of deception are sufficient in law, and that they may need to put something into the Citizenship, Immigration and Borders Bill that is coming up in the Queen’s Speech. An inquiry was being made into that by the Forced Marriage Unit. Has that come up with any results? Have the Government decided whether it is necessary to extend the law in the way that was foreshadowed?
My Lords, I should perhaps make it clear that the English language provision is a requirement not for entry but for settlement. The document Marriage Visas: The Way Forward was published this summer. It was widely consulted on; some 120 organisations were consulted. There seems to be broad support for the Government’s position, but it is a developing situation, and one cannot anticipate the Queen’s Speech.
My Lords, the sigh of relief on that occasion may have been for the short answer that I gave rather than anything else. Primarily, it is a balance between what we require of migrants, whether spouses or others, what they contribute to our society and how we support them. The Government’s balance is about right.
My Lords, the point of dealing with forced marriage is to ensure that young people—not just women; some 15 per cent of cases involve men—are not forced into marriage by whatever form of coercion, whether threat of physical or emotional harm or the threat of bringing shame on the family. Forced marriage is not permitted in the United Kingdom. That is why we have a serious investigation into each individual case, and that is why we are raising the age at which someone can sponsor or be sponsored to be a spouse from 18 to 21. That comes into effect on the 27th of this month.
My Lords, first, I am sure that the House will wish to join me in sending our profound condolences to the family and friends of the soldier of 2 Battalion the Royal Gurkha Rifles who was killed in Afghanistan yesterday.
On 12 December 2007, the Prime Minister set out the UK’s long-term comprehensive framework for security and for political, social and economic development for Afghanistan. The strategy sets the strategic objectives for Her Majesty’s Government as a whole. We will have succeeded in Afghanistan when the democratic Government of that country have built sufficient capacity to maintain a stable security situation and the rule of law, enabling them to extend governance, reduce the drugs trade and build a successful economy.
My Lords, I join the noble Lord in sending condolences and thank him for that Answer. Do the Government agree with Brigadier Carleton-Smith that there is no exclusively military solution in Afghanistan? Does the noble Lord agree that that implies that, in the end, there will have to be talks with all sides, maybe including the Taliban? Given the fact that there is a new Administration in the United States, which hopefully and mercifully promises to be more subtle, more realistic and, above all, more multilateral than in the past—indeed, the President-elect has already this morning talked about repairing alliances—will the Government start now, with the Americans and others, to prepare ways best to conduct those talks, when the time is appropriate for them to begin?
My Lords, I assure the noble Lord that, although we feel the need to prevail militarily in Helmand and Afghanistan, we have always and consistently been clear that a military victory alone will not secure the stable peace that we wish for; it is necessary to have a political track as well. The Government of Afghanistan must reach out to tribal leaders and other groups who have aligned themselves with the Taliban and bring them back onside. We are already working with General Petraeus, the new commander, and we have seconded individuals to his team to prepare strategic options for the new President.
My Lords, are the Government of Pakistan assisting NATO and United States forces to achieve our strategic goals? Why is it necessary for NATO and the United States to bomb inside Pakistan? Does my noble friend agree that a destabilised Pakistan is more dangerous than a destabilised Afghanistan?
My Lords, I assure my noble friend that NATO is not bombing inside Pakistan. What he has in mind is a United States action, which is primarily a matter for the United States and Pakistan to resolve. However, I certainly confirm to my noble friend that we all believe that the newly elected democratic Government of Pakistan must be allowed to prevail. Were it to fail, that would be a great setback for all our objectives in the region.
My Lords, have we failed to learn the lessons of history in central Asia? We have had an obsession with Afghanistan for more than 200 years. We have seen other nations leave Afghanistan with their tails between their legs. If we fail to equip our troops properly to do the job with which we have charged them, will we see another infamous and humiliating retreat from Kabul, such as that which this country suffered—the historians in this House will correct me if I am wrong—in 1842?
My Lords, while I, like the noble Lord, am a great respecter of history, I say to him that this action in Afghanistan is driven by the astonishing international attack made on 9/11 against the United States. The whole world came together to endorse action to ensure that never again would Afghanistan be a haven for such terrorists. As to vehicles, we have just committed some £30 million to upgrade the Snatch vehicles, although I know that they are controversial to some. Last week, we also announced the procurement of nearly 700 new vehicles and the upgrading of 200 more, because we must have the right equipment for our troops.
My Lords, will the Minister accept that, whatever the Prime Minister may have said a year ago, the baleful fact remains that the dynamic is increasingly moving against us in Afghanistan? If this is to be turned around, while more troops and resources may be necessary, they will not be sufficient unless they are backed by two factors, which we still do not have. The first is an international plan with clear priorities, prosecuted by an international community capable of speaking with a single voice. The second is a regional context that can play among Afghanistan’s neighbours. Without those two things, more troops and more resources will not be sufficient.
My Lords, although there have been some setbacks in the situation in Afghanistan, I think that it is too strong to say that the dynamic is running against us there. The asymmetrical warfare adopted by the Taliban with the targeting of civilians has led to civilian casualties across the country, which is to be deeply regretted. However, I certainly agree with the noble Lord that we need an effective, coherent international strategy, which we and the Americans are working with our allies in the United Nations to achieve. I certainly endorse his suggestion that having regional neighbours as partners is critical to success.
My Lords, we on this side share in sending condolences to the bereaved of one more hero killed in Afghanistan. We also endorse what the noble Lord, Lord Ashdown, wisely said about the desperate need for a more effective, unified command. Obviously, we will have to wait a couple of months before we hear the new American policy, although it seems to include more troops and modest ambitions, in the words of Mr Obama. From our point of view, how do we view the questions of more troops, better equipment and closer co-operation with Pakistan? This may be rather a daring thought, but is there any mileage in trying to get some co-operation even with Iran, which has the same objectives as we have over a wide area in Afghanistan?
My Lords, the noble Lord will agree that we need to wait and see what the new President’s strategy is. There has been a lot of speculation but he now needs an opportunity to develop his thinking. We certainly believe that additional troops can be useful but we have always made it clear that that must be combined with an appropriate political approach. We hope that the American approach will emphasise both things. With a new leader committed to multilateralism, as the noble Lord said earlier, we very much hope that this will be an opportunity for NATO to re-engage and that the new President, Mr Obama, will use some of his new-found multilateral authority and friendships to bring a broader NATO commitment back to this operation.
NHS: Accident and Emergency
My Lords, most patients’ experience of accident and emergency has improved dramatically in recent years. In 2007-08, nationally 97.9 per cent of patients were admitted, transferred or discharged within four hours of their arrival at accident and emergency, against a four-hour standard of 98 per cent. Of the 157 acute trusts that provide accident and emergency services, 45 did not achieve the standard for the whole year, but that is improving this year.
My Lords, I thank the Minister for that reply. Is she aware that on 13 October at 9.15 in the evening I went to St Thomas’ A&E department with cellulitis and that the waiting time was five and a half hours? Is she aware that no one checked the patients, who included two small babies who were breastfeeding, during that time? It was a very uncaring situation. Does she agree that, with drug-resistant TB, this is a very unsatisfactory situation?
My Lords, the accident and emergency department at St Thomas’ is the one most frequented by noble Lords during their working week. I include myself in that, having taken a tumble in the Chamber and sprained my ankle some years ago. The fact is that during 2008-09 98.2 per cent of patients at St Thomas’ were seen, diagnosed and treated within four hours, although that does not mitigate the noble Baroness’s unsatisfactory experience. Nevertheless, the hospital seems to have given her clear information, however unsatisfactory, on which to base her decision and course of action. That would have been based on the particular situation at the time, although I do not know what that was. The aim is for a range of emergency care services to be available. We expect all patients to be seen according to their clinical needs, and they should receive high-quality and timely care.
My Lords, the figures for 1997 were not collated, but in 2003 almost a quarter of patients spent over four hours in accident and emergency departments. Patients have told us over and over again that waiting times are a priority for them. It is worth noting that in the 1990s it was not uncommon for patients to wait on trolleys for up to 12 hours. Today, however, due to the hard work of NHS ambulance drivers, paramedics, nurses, doctors and other staff, and a large investment in services, that occurrence is quite rightly a matter for public comment and action by the trust in question.
My Lords, does the Minister share with me a feeling of enormous admiration, gained through personal experience, for those who work in the emergency departments? They often have to work in extremely unpleasant and dangerous situations, and they do so with terrific grace and efficiency. Perhaps I may also ask whether it is true that one is no longer allowed to send flowers to people in hospital. If she does not have the answer now, perhaps she could write to me.
My Lords, I need to declare an interest: my brother is an ambulance driver. So, I completely concur with the noble Baroness’s comments. I will write to her about sending flowers. I do not think that that is the case. I have just dispatched some to someone in hospital, so I hope that it is not.
My Lords, I share the noble Baroness’s gratitude to all doctors and nurses working in casualty departments. But can the Minister tell us whether there is any evidence that NHS managers are indulging in a little creative reporting, such as discharging casualty patients after four hours and then readmitting them, or counting intermediate, casualty beds, A&E beds and assessment beds as in-patient beds? I should declare an interest. At one time I was a health service manager, but not in A&E.
My Lords, there have certainly been accusations along the lines that the noble Baroness has outlined and we take them extremely seriously indeed. Any substantiated case of misreporting would obviously be considered a very serious issue. All the data received by the Department of Health should have been certified as accurate by the NHS trust and the chief executive. Anyone who thinks that any manipulation has taken place should certainly raise it with their medical director or chief executive.
My Lords, I declare an interest as my daughter is an A&E trainee. Can the Minister tell us what investment is being made in minor injuries units and in units able to cope with patients who present at A&E because they have not, for whatever reason, been able to see their general practitioner? This group inflates numbers and detracts staff from cases involving major trauma and illnesses that may require a lot of time for complex decision-making, with a risk that patients are speeded through under pressure from the clock.
My Lords, the noble Baroness raises a series of very interesting points, as usual. There is no reason why accident and emergency departments and the trusts that run them should not know the demands which will be placed on them from either a transient population or a very young population. They should be prepared to have the resources available. We now have 94 per cent more A&E consultants, 600 per cent more A&E registrars and many, many more nurses. The fact that we have to provide emergency care in a variety of different forms should not mean that any less care is taken.
My Lords, I understand that many incidents in A&E are alcohol-related. Can my noble friend tell the House how closely the part of her department that oversees A&E is working with the part of her department that deals with education about alcohol?
My Lords, my noble friend points out something that is very important and that we are very well aware of. I do not have the details of how they are working together but will write to her about it. I suspect that they are working closely together because the issue has such a major effect on service delivery in A&E departments.
My Lords, the Government’s stance on piracy off Somalia has recently been reviewed, resulting in a more proactive posture. Royal Navy units in the region will now actively seek out pirates and are issued with robust guidance to deal effectively with any pirates encountered. The Royal Navy is actively participating in counterpiracy operations with Standing NATO Maritime Group 2 and Combined Task Force 150. We have also offered to command a planned EU mission from our operational headquarters.
My Lords, I enjoin these Benches in the earlier tribute.
In the past six months, there have been 28 attacks on vessels off Somalia. For too long, the pirates have been terrorising the shipping lanes, and it must have been enormously frustrating for our Navy and other western navies to have to stand back and not to be allowed to take action. This more robust approach is clearly to be welcomed. Does the Minister accept that peace will not come to the shipping lanes and the sea until governance, stability and law are restored in Somalia? Specifically, when pirates are caught, where will they be brought to trial?
My Lords, all Royal Navy vessels and those of other countries have a responsibility to tackle piracy under the United Nations Convention on the Law of the Sea. We are taking a more proactive role along with other partner nations because of the severity of the problem and the concern that it is causing. The Transitional Federal Government in Somalia are very unstable, and the situation is very difficult. We and other allies are offering aid. There is a problem about what will happen to anybody who is apprehended because we do not want to see the Royal Navy having to bring back a lot of individuals to this country. Part of our purpose is deterrence, but we are also seeking a memorandum of understanding with coastal states in the area to see what possibility there is of landing anybody who is apprehended on those shores for local action.
My Lords, the noble Lord is right: we now have an EU operation, which is at the planning stage. We have offered to have the headquarters at Northwood, which is a step in the right direction. We intend to offer a frigate for some part of the mission, subject to other countries coming up with resources so that it is a truly comprehensive and appropriate mission. We are liaising with the other countries and missions involved. The standing NATO Maritime Group has representatives from Turkey, Greece, Italy, Germany and the USA. The coalition group has people from Denmark, the USA and Pakistan. There is co-operation. The EU mission will not be able to be operational for a little time yet, and the NATO mission that is already in the area will be filling that gap until there can be a more proactive role on a European basis.
My Lords, will the noble Baroness accept my declaration of interest, as having made representations to the noble Lord, Lord Malloch-Brown, on this matter some weeks ago in favour of a more proactive response, which the Government have now taken, no doubt purely coincidentally?
Can the noble Baroness reinforce the point made by the noble Lord, Lord Lee, that Somalia is an example of a place that has come far too low down the list of international priorities for far too long? During all that time, it has been nothing but a growing source of instability and mayhem in the Horn of Africa. Is it not time for the Government, as a permanent member of the Security Council, to promote a little more proactively, like the good work that it is doing on piracy, a process that leads to stabilisation of that country?
My Lords, I doubt that anyone would disagree with the words of the noble Lord, Lord Hannay. We are all concerned about the situation in Somalia and the instability in the whole of that region. I know from words with my noble friend that we are very active in the Security Council in trying to get action on issues of this kind and Resolution 1838, which encourages states to be more proactive on piracy in this region, was generally welcomed.
My Lords, I think that it is the turn of the Liberal Democrats.
My Lords, although I welcome the decision to allow the use of force against pirate vessels operating off the coast of Somalia, would it not have been sensible at the same time to extend that role to action against the land-based dens from which the pirates are operating along the coast of Somalia, which were identified in an article in the Los Angeles Times last week? Will the Government take action via the Security Council in consultation with the TFG and the World Food Programme to see that action is extended in that way?
My Lords, I do not think that we have any mandate for land-based action in that area. I know various African countries have looked at the situation and tried to help by way of peacekeeping forces, but it is a very complex issue. We are one player in this. We are trying to do our part in NATO, in the coalition task force and, now, with the new EU operation. So we are doing what we can, but we are under no illusion that we can solve this kind of problem by ourselves.
My Lords, I have it in command from Her Majesty the Queen and His Royal Highness the Prince of Wales to acquaint the House that they, having been informed of the purport of the Energy Bill, have consented to place their prerogative and interest, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
Bill read a third time.
Clause 37 [The renewables obligation]:
1: Clause 37, page 19, line 36, leave out “Secretary of State” and insert “relevant minister”
The noble Lord said: My Lords, before turning to the specifics of the amendment and the other government amendments grouped under my name, I open proceedings by thanking noble Lords in advance for bearing with the Government, given the large number of amendments that we are bringing forward at this stage. Since taking over this responsibility shortly before Report, I have been struck by the consensual nature of the process, which I am sure we will want to continue today. There is much agreement on all sides of the House on many of the issues that we have debated. In scrutinising the Bill, noble Lords have made persuasive and influential arguments. In particular, we have made promises at a number of stages of the Bill to consider those matters carefully and, where appropriate, to bring back suitable amendments at Third Reading to deliver on those promises. The government amendments today are all concessions in response to points made by noble Lords at earlier stages.
The amendments will enable the introduction of a feed-in tariff; respond to concerns about the offence provisions in relation to nuclear; make it clear that only parties that have a primary interest in a station will be liable for meeting its decommissioning liabilities; address problems of strategic investment in and access to the electricity transmission grid; give greater priority to sustainability in the duties of Ofgem; enable distribution network operators to resume in certain circumstances the efficient and accepted practice of charging in advance for assessment and design costs associated with making offers of connections; and keep options open relating to the degree of centralisation of services in the rollout of smart meters to the domestic sector. In addition, we have tabled a number of minor and technical changes to the drafting of the Bill.
For that reason, there are a considerable number of amendments. Because many of them have been prepared at a pace, some have been tabled only recently. I apologise to the House for that, but I hope that noble Lords will understand that the great majority of them are in response to debates in your Lordships’ House at previous stages. They are in the spirit of the purpose of Third Reading.
On the first group of amendments in my name, the operation of the renewables obligation in Scotland is already devolved. Previously, these powers have been transferred to Scotland using an Order in Council made under Section 63 of the Scotland Act. Noble Lords will know that the RO runs on a financial-year basis and it is our aim—strongly supported by investors and developers of renewable generation—that the reformed RO will be introduced from April 2009. Clearly, this is a tight timetable, which will be made more difficult by the need to debate any RO-related amendments made in this House in the other place.
Our solution to this timing issue is to amend the Bill to transfer the functions to Scottish Ministers in the Bill rather than waiting until the Bill is finalised to start the Section 63 order process. The alternative process is in line with the devolution settlement and will still allow the transfer of functions to be debated in both Houses and by way of a legislative consent motion in Holyrood.
In government Amendments Nos. 17, 18 and 20, as set out on Report and following a commitment to the noble Lord, Lord Wallace, we propose a small technical amendment to proposed new Section 32E of the Electricity Act 1989 under Clause 37. It relates to grants awarded to projects that may want to benefit from the new banding proposals under the renewables obligation. As we stated, we believe that the current draft of proposed new Section 32E would not allow projects awarded a grant after the introduction of banding to receive more than one renewables obligation certificate per megawatt hour. That was never our intention and is not consistent with our stated policy. This amendment therefore makes a minor technical drafting change to rectify the problem.
I realise that, in bringing this matter to our attention on Report, the noble Lord, Lord Wallace, was arguing for a rather wider issue in relation to the relationship between a grant and the new banding system. In so doing, he identified a defect, for which I am grateful. We are making this amendment to deal with that.
Amendments Nos. 52 and 53 make a minor technical change to the provisions in the Bill relating to the proposed offshore electricity transmission regime, which the Government and Ofgem are developing. Under this regime, Ofgem will run competitive tenders to determine to whom it will grant offshore transmission licences authorising the conveyance of electricity from offshore generators to the GB onshore grid.
In order for that process to be effective, the Government have sought powers under Clause 2 of the Energy Bill to enable Ofgem to make a scheme for the transfer of property rights and liabilities from offshore generators or developers to offshore transmission licence holders. This provision would give those parties an avenue for expediting the transfer of property in situations where commercial agreement has not been reached. Our amendments change references in paragraph 26 of Schedule 2 to “asset owner” to clarify that the provisions refer to the person who owns the asset prior to the transfer scheme taking place rather than after. This is consistent with the existing wording in paragraph 29 of Schedule 2. I beg to move.
My Lords, I wish to acknowledge the amendments tabled in the Minister’s name in fulfilment of the obligation that he made on Report. Conferring powers on Scottish Ministers is consistent with both the spirit and the letter of the Scotland Act. The purpose of doing it in primary legislation rather than through a Section 63 order is to have things in place for 1 April 2009, which is eminently sensible and much to be welcomed. The other amendments in the group are technical in nature but put beyond doubt the fact that it will be possible for grants, not least research and development grants, and upbanded ROCs to be available for future developments. That was a concern expressed by the industry. The Minister has acknowledged that this does not go quite as far as I wanted at the Report stage, but nevertheless those to whom I have spoken have welcomed the Government’s move to clarify the situation. I want to put on the record my appreciation of the Minister’s response.
My Lords, as the Minister said, the renewables obligation legislation was devolved to Scotland under SI 1999/1750. It has proved to be a policy of great potential. Can he tell us what level Scottish Ministers have currently laid down for the percentage of renewable energy that will be required by electricity generators in Scotland and whether any assessment has been made in the light of that of what surplus renewable energy and its certificates they expect to be available to generating stations in England and Northern Ireland? I raise this because yesterday I received a fact sheet from Ofgem, which states:
“There is a significant problem in Scotland where there is already too little transmission capacity, and the National Grid is already spending substantial sums of money which they have increased from £114 million to £170 million per annum”.
How much control does Ofgem have over the construction and management of these improvements? If a line is being upgraded without changing the route, at what point would planning permission be required from the local authority or Scottish Ministers?
If there was a potential for a surplus of renewable energy in Scotland that had to be shut down because of a lack of transmission capacity—even though that generation could make a significant contribution towards meeting the UK’s renewable energy target—what powers in addition to financial incentives would Ofgem have to expedite the construction of the necessary capacity? I realise that the full answer to these issues might not be available to the Minister at this moment, but would he be good enough to write a response and put it in this Library and that of the Scottish Parliament?
My Lords, I am grateful to the noble Lord, Lord Wallace, for his support. It was with some trepidation that I brought forward amendments relating to Scotland, given his extensive knowledge and experience of both the order-making power and the power that we are using today. I thank him for his support. On the interesting series of questions raised by the noble Duke, I will accept the offer to write to him, because I am not briefed on the extensive detail of these issues. If noble Lords would like me to do so, I would be happy to try to explain some of the intricacies of the devolution settlement, but I shall write on this specific matter.
2: Clause 37, page 19, line 36, at end insert—
“(1A) “The relevant minister” means—
(a) in the case of Scotland, the Scottish Ministers,(b) in any other case, the Secretary of State.(1B) In subsection (1A) “Scotland” includes—
(a) so much of the internal waters and territorial sea of the United Kingdom as are adjacent to Scotland, and(b) a Renewable Energy Zone, or any part of such a Zone, which is designated by order under section 84(5) of the Energy Act 2004 (areas in relation to which Scottish Ministers have functions).”
3: Clause 37, page 20, leave out lines 7 to 9 and insert “to customers in the relevant part of Great Britain,”
4: Clause 37, page 20, leave out lines 14 to 19 and insert “the amount of electricity supplied by it during a specified period to customers in the relevant part of Great Britain.”
5: Clause 37, page 20, line 27, after “in” insert “the relevant part of”
6: Clause 37, page 21, line 2, after “in” insert “the relevant part of”
7: Clause 37, page 21, line 9, at end insert—
“( ) Except as provided by a renewables obligation order, a renewables obligation certificate counts towards discharging the renewables obligation regardless of whether the order under which it is issued is made by the Secretary of State or the Scottish Ministers.”
8: Clause 37, page 21, line 10, leave out from beginning to “may” in line 11 and insert “A renewables obligation order”
9: Clause 37, page 21, line 14, leave out “that” and insert “the relevant”
10: Clause 37, page 23, line 42, at end insert—
“( ) In this section “generating station”—
(a) in the case of an order made by the Scottish Ministers, means a generating station which is situated in Scotland;(b) in the case of an order made by the Secretary of State, means a generating station which is not situated in Scotland.( ) For this purpose “Scotland” is to be construed in accordance with section 32(1B).”
11: Clause 37, page 25, line 23, leave out “Secretary of State” and insert “relevant minister”
12: Clause 37, page 26, line 9, after “made” insert “by the relevant minister”
13: Clause 37, page 26, line 10, after “made” insert “by that minister”
14: Clause 37, page 26, line 13, leave out “Secretary of State” and insert “relevant minister”
15: Clause 37, page 26, line 16, leave out “Secretary of State” and insert “relevant minister”
16: Clause 37, page 26, line 17, leave out “the Secretary of State” and insert “that minister”
17: Clause 37, page 26, line 34, leave out from “awarded” to end of line 39 and insert “if—
(a) the generating station is of a specified description, or(b) the circumstances of the case meet specified requirements.( ) The requirements specified under subsection (4)(b) may relate to the time when the grant was awarded (whether a time before or after the coming into force of this section).”
18: Clause 37, page 26, line 42, leave out “each” and insert “a”
19: Clause 37, page 27, line 5, at end insert—
“( ) If the grant in respect of which an amount falls to be paid under paragraph (a) or (b) of subsection (5) was paid by the Scottish Ministers, the references in those paragraphs to the Secretary of State are to be read as references to those Ministers.”
20: Clause 37, page 27, leave out lines 16 to 27
21: Clause 37, page 32, line 21, leave out “Secretary of State” and insert “relevant minister”
22: Clause 37, page 32, line 28, leave out “Secretary of State” and insert “relevant minister”
23: Clause 37, page 32, line 29, leave out “Secretary of State” and insert “relevant minister”
24: Clause 37, page 32, line 31, after “made” insert “by the Secretary of State”
25: Clause 37, page 32, line 33, at end insert—
“( ) A renewables obligation order is not to be made by the Scottish Ministers unless a draft of the instrument containing it has been laid before and approved by a resolution of the Scottish Parliament.”
26: Clause 37, page 33, line 8, at end insert—
““the relevant minister” has the meaning given by section 32;
“the relevant part of Great Britain” means—
(a) in the case of a renewables obligation order made by the Secretary of State, England and Wales (including so much of the internal waters and territorial sea of the United Kingdom as are adjacent to England or Wales);(b) in the case of a renewables obligation order made by the Scottish Ministers, Scotland (including so much of the internal waters and territorial sea of the United Kingdom as are adjacent to Scotland);”
27: Clause 37, page 33, line 37, at end insert—
“( ) For the purposes of the definition of “the relevant part of Great Britain”, the territorial sea adjacent to England is the territorial sea adjacent to the United Kingdom, other than the territorial sea adjacent to Scotland, Wales or Northern Ireland.
( ) An Order in Council under section 126(2) of the Scotland Act 1998 (c. 46) (apportionment of sea areas) has effect for the purposes of this section and sections 32 to 32L if, or to the extent that, the Order is expressed to apply—
(a) by virtue of this subsection, for those purposes, or(b) if no provision has been made by virtue of paragraph (a), for the general or residual purposes of that Act.( ) An order or Order in Council made under or by virtue of section 158(3) or (4) of the Government of Wales Act 2006 (apportionment of sea areas) has effect for the purposes of this section if, or to the extent that, the order or Order in Council is expressed to apply—
(a) by virtue of this subsection, for those purposes, or(b) if no provision has been made by virtue of paragraph (a), for the general or residual purposes of that Act. ( ) An Order in Council under section 98(8) of the Northern Ireland Act 1998 (c. 46) (apportionment of sea areas) has effect for the purposes of this section if, or to the extent that, the Order is expressed to apply—
(a) by virtue of this subsection, for those purposes, or(b) if no provision has been made by virtue of paragraph (a), for the general or residual purposes of that Act.”
28: Clause 37, page 33, line 41, at end insert—
“( ) to customers in the relevant part of Great Britain;”
On Question, amendments agreed to.
29: After Clause 40, insert the following new Clause—
“Feed-in tariffs: electricity
(1) The Secretary of State may modify—
(a) a condition of a particular licence under section 6(1)(c) or (d) of the Electricity Act 1989 (c. 29) (distribution and supply licences);(b) the standard conditions incorporated in licences under those provisions by virtue of section 8A of that Act;(c) a document maintained in accordance with the conditions of licences under section 6(1) of that Act, or an agreement that gives effect to a document so maintained.(2) The Secretary of State may exercise the power in subsection (1) for the purpose only of—
(a) establishing, or making arrangements for the administration of, a scheme of financial incentives to encourage small-scale low-carbon generation of electricity;(b) requiring or enabling the holder of a distribution licence to make arrangements for the distribution of electricity generated by small-scale low-carbon generation;(c) requiring the holder of a licence to make arrangements related to the matters mentioned in paragraph (a) or (b).(3) Modifications made by virtue of subsection (1) may include—
(a) provision requiring the holder of a supply licence to make a payment to a small-scale low-carbon generator, or to the Authority for onward payment to such a generator, in specified circumstances;(b) provision specifying how a payment under paragraph (a) is to be calculated;(c) provision for the level of payment under paragraph (a) to decrease year by year in accordance with a formula published, or to be published, by the Secretary of State;(d) provision about the circumstances in which no payment, or a reduced payment, may be made to a small-scale low-carbon generator;(e) provision about the circumstances in which a payment may be recovered from a small-scale low-carbon generator;(f) a requirement for the holder of a supply licence or distribution licence to pay a levy to the Authority at specified times;(g) provision specifying how a levy under paragraph (f) is to be calculated (which may require specified matters to be determined by the Authority or the Secretary of State);(h) provision conferring an entitlement on the holder of a supply licence or distribution licence to receive a payment from the Authority.(4) In this section—
“Authority” means the Gas and Electricity Markets Authority;
“distribution licence” means a licence under section 6(1)(c) of the Electricity Act 1989 (c. 29);
“owner”, in relation to any plant which is the subject of a hire purchase agreement, a conditional sale agreement or any agreement of a similar nature, means the person in possession of the plant under that agreement;
“plant” includes any equipment, apparatus or appliance;
“small-scale low-carbon generation” means the use, for the generation of electricity, of any plant—
(a) which, in generating electricity, relies wholly or mainly on a source of energy or a technology mentioned in subsection (5), and(b) the capacity of which to generate electricity does not exceed the specified maximum capacity;“small-scale low-carbon generator” means an owner of plant used or intended to be used for small-scale low-carbon generation, whether or not the person is also operating or intending to operate the plant;
“specified maximum capacity” means the capacity specified by the Secretary of State by order, which must not exceed 3 megawatts;“supply licence” means a licence under section 6(1)(d) of the Electricity Act 1989 (c. 29).
(5) The sources of energy and technologies are—
(a) biomass;(b) biofuels;(c) fuel cells;(d) photovoltaics;(e) water (including waves and tides);(f) wind;(g) solar power;(h) geothermal sources;(i) combined heat and power systems with an electrical capacity of 50 kilowatts or less.(6) The Secretary of State may by order modify the list of sources of energy and technologies for the time being listed in subsection (5).
(7) The power conferred by subsection (1)—
(a) may be exercised generally, only in relation to specified cases or subject to exceptions (including provision for a case to be excepted only so long as specified conditions are satisfied);(b) may be exercised differently in different cases or circumstances;(c) includes a power to make incidental, supplemental, consequential or transitional modifications.(8) Provision included in a licence by virtue of that power—
(a) need not relate to the activities authorised by the licence;(b) may make different provision for different cases.”
The noble Lord said: My Lords, I am grateful for the opportunity to discuss with noble Lords this group of amendments on the important issue of feed-in tariffs. I announced on Report that we would be bringing forward these amendments and it has been helpful to have input from noble Lords on whether they think that we have got the matter right. We have had to prepare the new clauses at short notice. As a result, we have had to adopt a broad approach, as that was the only way in which we could prepare the amendments in the time available and be confident that they will be sufficiently flexible to allow us to deliver the policy that we all want.
We are fully committed to introducing a tailor-made scheme to financially support small-scale low-carbon generation of electricity. Our intention is that generators will receive a guaranteed payment for generating electricity. We know that different technologies of different sizes will require different rates of payment, and we believe that the provisions in subsection (3)(a) and (b) will allow for this to happen. Cost reductions are encouraged by decreasing the rates of reward, year on year, for new installations, and this is covered by subsection (3)(c).
However, we also need flexibility to allow us to deliver incentives differently in some situations if the evidence supports it. For example, we may decide that for some scales of generation we need the option of deeming generation from a given installation and then making payment upfront. Subsections (3)(a) and (b) allows for this. I accept that the powers are broad, but until we have completed the work to determine how the scheme might operate we need to ensure that we have sufficient flexibility in primary legislation to be confident that we have not inadvertently closed down options.
Let me give a brief outline of the powers we are proposing. The clause gives the Secretary of State the power to modify electricity supply and distribution licences as well as standard conditions and some documents and to introduce a scheme of financial incentives to encourage small-scale low-carbon generation of electricity. Modifying licences would allow us to piggy-back on the existing electricity licensing framework and to tap into the enforcement and other provisions that already govern the electricity market. Building on the existing framework will dramatically reduce the risk that we inadvertently miss out important elements of that framework. Modifications may include requiring supply licence holders to make payments to small-scale low-carbon generators, either directly or via Ofgem; specifying how such payment is calculated; and imposing a levy on supply or distribution licence holders in order to fund the scheme.
A number of amendments seeking further clarity on how the scheme will operate have been tabled and I shall respond to them at the appropriate time. However, by way of introduction to the general debate, perhaps I should say that the amendment sets an absolute upper capacity cap of three megawatts beneath which the Secretary of State will have the power to set the maximum capacity limit for small-scale low-carbon feed-in tariffs by order. Under this power we have the flexibility to give different levels of reward for different technologies in setting the tariff payments. There are amendments on the upper-capacity limit which take a rather different view and I shall respond to them at the appropriate moment. Other amendments deal with the procedure for amending licence conditions and other supplemental issues. Again, I shall come to those later.
In broad terms this is an appropriate response to the arguments that have been made both here and in the other place, and the announcements that my right honourable friend the Secretary of State and I have made on it have been warmly welcomed. I accept that many details still have to be worked out, which is why there is flexibility in the amendment. Equally, I assure noble Lords that the Government are committed and determined to go down this path. I beg to move.
30: After Clause 40, line 3, leave out “may” and insert “shall”
The noble Baroness said: My Lords, I thank the Minister for moving Amendment No. 29. Despite the late stage in the proceedings, it is nice to see persuasion and reasoned argument win the day, rather than sheer force of numbers. The government amendment allows for the implementation of a feed-in tariff for electricity, which we asked for and was promised by the Minister at Report, so we welcome it. Of course such an important amendment cannot be expected to be added to the Bill without some level of scrutiny, and with the support of many noble Lords around the House I have tabled several amendments in order to explore the Government’s intentions a little further. One of the great disadvantages of tabling complicated amendments at this stage in the Bill is the difficulty of discussing in detail the provisions they contain. My amendments will, I hope, provide the Minister with the opportunity to expand on his opening remarks.
My first amendments, and those of the noble Baroness, Lady Young of Old Scone, deal with the implementation of the feed-in tariff. They replace the word “may” with “shall” and so would insert a duty on, not a power for, the Secretary of State to implement the tariff. Of all the amendments tabled to Amendment No. 29, this is probably the most important. No doubt many of your Lordships have received strong lobbying from outside groups who are concerned that, despite the encouraging words from the Minister and his colleague the Secretary of State, there are many within his party and the Government who are not as convinced as the support for these amendments has forced them to sound. I hope the Minister will be able to give a categorical guarantee that the tariff will be implemented as soon as possible and give us a clear timetable for the steps necessary to reach the rollout point. I beg to move.
My Lords, I welcome the Government’s move forward in this area over the period that the Bill has been going through Parliament and particularly through this House. One of the key areas here is ensuring not just that the Government really intend to write the enabling clauses into the Bill and accept the principle but that there really is a commitment to take this forward so that it becomes a practical and implemented part of the Government’s energy policy and we can get on and reap the benefits of it in terms of the renewable energy that is generated on a smaller scale, and households and communities can join in with the project and make it work. That is why I was pleased to put my name to a number of these amendments. I would be interested to hear from the Government some idea of the timescale in which they intend to bring a feed-in tariff into operation.
It was brought to my attention by one of the groups involved in the low-carbon building programme that funds for that will now end in June 2009. I have a question mark there. That programme has been successful and important in terms of microrenewable energy generation, as part of its work. Are we introducing one incentive as we take out another?
My Lords, I was delighted to add my name to this flurry of amendments. I will speak only the once and hope that what I have to say will apply to everything I have added my name to. I woke up this morning, in common with many of your Lordships, to hear a young man tell almost 300 million people, “Yes we can”. It reminded me that if I go back over the 50 years I have been in the commercial world, there has been one common factor: the incumbent will always throw apparently insuperable obstacles in the way of those who wish to change the way that anything is done—in this case, we are talking about the microgeneration of power.
I was intrigued to hear the Minister say that he does not wish to close down options. I applaud that. We should not close down options by becoming fixated on an upper capacity of 3 megawatts. To make economic sense, one may in some circumstances have to go to 10 megawatts—certainly, I would say, to 5 megawatts. It seems possible that, at 3 megawatts, many perfectly good schemes will be ruled out as being purely uneconomic, and that communities wishing to take advantage of this opportunity to create their own microgeneration schemes, but on a scale of 5 to 10 megawatts, cannot do so because the incumbents do not wish it to be possible. That would be a poor start to an otherwise brilliant and encouraging initiative by the Government. I urge the Government not to become fixated by an upper capacity of 3 megawatts, because, over time, I suspect that very good schemes will be developed that require a significant increase on that cap.
My Lords, I welcome the new clauses. The Bill has been immeasurably improved in the Lords. The amendments are welcome particularly in Woking, a town in Berkshire which has been at the forefront of the introduction of alternative renewable and sustainable energy technology developments. I shall say a few words on the relevance of Woking to the proposed government scheme.
From an environmental perspective, Woking Borough Council is undoubtedly the most energy-efficient and energy-conservation-conscious local authority in the United Kingdom. I advise noble friends to visit Woking to see for themselves this exemplar in the field of green energy technology. The town and its surrounding community should potentially be a major beneficiary of this initiative by the Government through their investment in photovoltaics, which is considerable, and the proposed investment in wind power as and when sites are identified.
I was able during the Recess to visit many of the town’s projects under the auspices of John Thorpe of Thameswey Energy, a British company which has brought together in a joint venture the local authority and ESCO, a Danish company which specialises in green technology. The company is spearheading the national agenda of community-based energy initiatives in every area of energy efficiency, including combined heat and power. The company also provides green-sourced energy to other local authorities, public bodies and the private sector. Its virtual private wire electricity distribution arrangements for local power consumption point the way forward in a way that should interest many local authorities nationally which want to develop their energy efficiency programmes and which, one hopes, will take advantage of the Government’s proposed scheme when it comes on stream.
While I congratulate the Government, I also congratulate Woking on its ability to harness cross-party political support for what can only be described as an outstanding achievement. I only hope that the Minister will feel able to join me in paying tribute to those in the town for their work. It is clear from my most recent discussions with those involved in Woking that they believe that feed-in tariffs will give renewed stability in a market that they are constantly developing. Such stability is required if we are to meet our 2020 targets. I say to the Government, well done.
My Lords, I add my praise to that offered to the Government for coming forward with this amendment on feed-in tariffs, because it is a major breakthrough in circumstances where, for many years, we have seen introduced a series of instruments designed to drive up renewables which simply have not done that at the lower scales. It took us an inordinate amount of time to come to that conclusion. We changed the system a few years ago, and we have begun to see the bigger-scale renewable schemes really start to motor along, which is to be welcomed, but we are still failing on the smaller-scale renewables. The feed-in tariff is therefore to be welcomed and hugely overdue.
The series of amendments that have been tabled in this and subsequent groups are well worth the Government considering, as they might improve the amendment that they have tabled. Amendments Nos. 31, 32, 33 and 35, to which I have put my name, ginger the process up a bit. We are running out of road, as we have the 2020 target to meet for renewables, and we could well fail our obligations under the directive. All the work that has been done by the climate change commission and in previous reports has demonstrated that the early carbon reductions will be the most important ones. It is not hitting the 80 per cent 2050 target but achieving very rapid carbon reduction targets in the early stages that is necessary to prevent us running the risk of some of these irretrievable and irreversible whole-system climate changes.
So well done to the Government, and two cheers. We would give the proposals three cheers if we could get some of our amendments adopted into the Government’s proposals.
My Lords, I congratulate my noble friends on introducing these amendments. I have been perhaps somewhat less than enthusiastic in every respect about the feed-in tariffs, because there are downsides to them. It is therefore quite reasonable for the Government to embrace the conditional mood and make this a duty rather than a power. It may be that in several years’ time we will have subsequent energy legislation and we will be able to refine it. We will have to return to these issues very quickly for other reasons. If the Long Title of the Bill is sufficiently sensitively drafted, it should be able to embrace amendments of the kind that might be necessary if we want to make an increase from 3 megawatts to 5 megawatts, if there is a desire and demand for that.
What is important is that when we recognise the significance of small-scale developments, it is not just in the generation of power or the saving of the planet; it is also in the case of small wind farms being established on small hill farms, for example, as a means of sustaining the farming business in these small entities. I know that in my old parliamentary constituency there were several farms that wanted that little bit of assistance that would have enabled them to have small-scale wind farms, in places such as the Ochils and discrete valleys, where they would not necessarily be offensive to the eye or damaging to bird sanctuaries, and so on. That would make the difference between a farm perhaps failing and a farm being able to continue.
We sometimes forget that there are quite sensible wider economic arguments in favour of renewable power and assisting renewable power. For that purpose, I am very grateful to the Government for how they have responded. It is often said that there is more rejoicing in heaven when a sinner repenteth—and, in this instance, it is perhaps the late repentance that makes it all the more welcome. Nevertheless, we have this provision, which is a start. I understand that one of the basic rules of scrutiny is that when a member of the opposition goes through the Bill and sees a “may” he should insert a “shall” and get a debate. Those are D101 opposition tactics in Committee. Nevertheless, it would be sensible for us not to have to divide on this. Those who legitimately seek scrutiny will get from the Minister the kind of response and positive statement that he gave at the beginning, which was encouraging in itself. I look forward to hearing what he has to say.
My Lords, I support noble Lords who have spoken in favour of feed-in tariffs. About five years ago, in my previous residence, my husband and I had solar panels for hot water and photovoltaic panels for generating electricity. I cannot say how excited I was, watching my electricity meter going backwards in the summer when I had the fridge, the freezer and the kettle on. I have to admit that my enthusiasm was positively childlike. In the winter, of course, I used electricity from the generating company because the hours of daylight were shorter. The sums of money that we got from the company were extraordinarily small, and it always struck me that it was doing much better out of this deal than I was. There should be proper recognition of people who are prepared to install microgeneration on their property and who feed amounts of electricity into the national grid. Those amounts may be generally quite small, but when we start to get them en masse they will produce a significant amount of electricity, and there should be proper recognition of that.
My Lords, I declare my land-owning interest, which is listed in the Register of Members’ Interests.
At last, we have the Government’s feed-in tariff amendment, which was promised by the new Minister, anxious to take the earliest opportunity to display his green credentials while committing this country to reducing its carbon-emission levels by 80 per cent by 2050, shortly after he took office in the middle of last month. His decision must have produced great strain in the department. I thought that I detected signs of that when he spoke on the subject on Report—he more or less acknowledged that today in different words—as the consultation on the Government’s renewable energy strategy document had closed less than three weeks earlier.
That paper contained a whole annexe devoted to the feed-in tariff and what form any such scheme might take. It posed multiple questions—evidence of the department’s yet-to-be-settled views on the subject—and said:
“In order to reach a balanced decision on whether we should introduce feed-in tariffs for small scale renewable generation, it is important to consider how such a system would work in practice. We welcome your views”.
Again, at the end, it said:
“We have outlined here one example of how a feed-tariff might operate for small-scale electricity generation; and set out a number of issues on which we seek views. The information provided through responses to this consultation and ongoing discussions with industry and other stakeholders will inform our decisions on how best to support electricity generation at this scale, including whether a move to a feed-in tariff system would be advantageous”.
Yet, barely a fortnight after receiving the answers that they had so eagerly sought, the Government had impetuously committed themselves to the scheme and to an extremely tight legislative timetable for introducing it. It is not beside the point to raise this issue: first, because it will now be difficult for the Government to persuade those who co-operated with their inquiry and provided the replies that the Government sought that the Government paid any attention at all to what they said and that the whole consultation was not a waste of time; and, secondly, because this must go far to explain the sketchy nature of the scheme in the Bill and the amount of discretion that it leaves to the Secretary of State. The department is still groping its way.
I have some questions for the Minister. First, I asked on Report about cost. I did not expect an answer then, but I hope for one now. What might any scheme cost? Do the Government expect any such scheme to grow into the same order of magnitude as the cost of the renewables obligation scheme, which is currently running at some £1.1 billion a year and calculated to rise on present policies to £32 billion a year if we are to reach our 2020 target? Is it the Government’s idea that consumers will pay it all, just as they do for the renewables obligation, and will that include the costs of the bureaucracy to run the scheme and of providing the extra low-voltage grid wherever required? Have the Government worked out their views on those issues? What will that add to consumers’ bills?
Secondly, can the Government say anything on how any scheme might interact with the planning system? Is it their idea that microgeneration plants should be exempt from planning permission? Is the scheme to be open to occupants of terraced houses in urban areas, or only those living in detached houses?
I hope that the Government can explain, on the later amendments, why they have set the maximum specified capacity for a plant as high as 3 megawatts. For a wind turbine, that can mean it is 400 feet high: that is thoroughly unsuitable for domestic electricity generation and far above the limit of what would normally be considered “microgeneration”.
Finally, I question whether wind should be included as an allowable energy source. An interesting and highly detailed study has just been published by the Builders Research Establishment Trust on microturbines in urban environments, including a study of Manchester as typical of a large inland conurbation. It found that, even under the most favourable assumptions, it was unlikely that microturbines would pay back their carbon emissions over the expected lifetime of the systems. It also found that no microturbine was likely to produce more than 150 kilowatts of electricity per year, compared to the 4,000 to 6,000 consumed by the average two-to-three bedroom house—in other words, not very much. I have presented the Library with a copy of this report in case noble Lords would like to consult it.
It is already plain that large-scale wind turbines will struggle to repay the carbon emissions produced by their manufacture, installation, maintenance, required backup and eventual decommissioning. If microturbines cannot repay their carbon emissions either, I cannot see a place for wind in this scheme, or in any policy whose avowed purpose is to mitigate climate change.
My Lords, I speak briefly in my capacity as chairman of the Delegated Powers Committee. The amendments before your Lordships’ House today contain a number of important delegated powers that did not appear at earlier stages of the Bill. Amendment No. 47, in particular, contains some important powers, as do a number of amendments in other groups.
There is, unfortunately, no report from the Delegated Powers Committee on the amendments because of the short time between their publication and Third Reading. To obtain a report from the committee, it would therefore have been necessary to call an emergency meeting to consider them. After consultation with the legal adviser and the Clerk to the committee, I concluded that it was unlikely that the committee would have objected to any of these powers had it met, and it was therefore not essential to call such a meeting.
However, it is undesirable that that should have happened. Had the committee had the time to do so, it would certainly have considered these amendments. Therefore, while I understand the special circumstances applying to them, I make it clear that the committee regards this as neither desirable in principle, nor an appropriate precedent.
My Lords, it has been an extremely interesting debate. We have heard rather different views, but they have been none the less helpful.
I welcome the opportunity that the amendments of the noble Baroness, Lady Wilcox, have given us to exercise proper scrutiny of the government amendments. I accept, as I said earlier, that a large number of amendments have been laid at a late stage. I welcome the intervention of the noble Lord, Lord Goodhart, and the work of the Delegated Powers Committee. I endorse his comment that this is not an ideal situation. Unusual circumstances have arisen but the Government’s actions have undoubtedly been a response to debates in your Lordships' House and the other place. In that sense it was appropriate for the Government to announce at Report a development of their policies and to bring forward appropriate amendments. However, I agree with him that that should not be taken as a precedent, and I certainly will not do so.
The noble Lord, Lord Reay, is the only noble Lord who criticised the measure. He made some fair points, to some of which I can respond and to some of which I cannot. He said that the integrity of the consultation process on the renewables strategy is put into question because the Government have made an early decision on a matter which was in the consultation document. We believe that the consultation has been conducted perfectly properly. It set out a number of questions in relation to feed-in tariffs. Although this was part of the consultation process, the Government have taken note of the views of Parliament. I believe that the amendment I bring forward today reflects the view of Parliament and parliamentarians. That must override any consultation process. He asked whether respondents to the consultation had wasted their time. They have not. The consultation covers many areas and the responses on feed-in tariffs, which are still being carefully considered, will help us work out the details of the scheme to be implemented. He will understand that a lot of the questions he raises are matters that will have to be decided in the light of the discussions that will need to take place on the amendment, should your Lordships deem it wise to approve it. Therefore, the comments that we have received on the consultation are by no means wasted. They will be carefully considered, but in the context of a decision to introduce feed-in tariffs, which, as I said, clearly enjoy widespread support in your Lordships' House and in the other place.
The noble Baroness, Lady Young, wishes to ginger me up. I have known her for many years since her time in the health service and she has done nothing but press me to do things and ginger me up. I am grateful for her support in this area. I say to my noble friend Lord Campbell-Savours that I have had many invitations to visit premises, usually farms, as Members of your Lordships’ House seem to own rather a lot of farms. However, I shall add Woking to my list of potential places to visit over the next few months.
It is 11 years to the day since my noble friend Lord Puttnam was introduced in your Lordships' House and he has proven to be an extremely effective parliamentarian in terms of the number of changes that have been made to legislation as a result of his great efforts. However, I shall discuss the three megawatts issue when we reach the next group of amendments. My noble friend Lord O’Neill made the fair point that caution is necessary. I understand that. That is why we have to engage in serious work on the details of feed-in tariffs. He will know that by convention I cannot anticipate further legislation. However, I would not be surprised if further legislation were introduced at some stage.
I say to my noble friend Lady Corston that I was interested in what she had to say. She clearly spelt out the benefit of feed-in tariffs, and she made a point that is relevant to our decision about smart meters. Armed with the knowledge of what was happening in her own home to her bill, as a consumer she was anxious to ensure that she used that information to its best effect. Coupled with the decision on smart meters, that gives comfort to the suggestion that the more we as individual consumers know about what is happening to our energy and our energy costs and the more we know about the imperative of the use of renewables, the more effective we will be as consumers. I am sure that is where we want to be.
We come to the question of “may” and “shall”. I look at a number of distinguished Members on the Benches opposite who I am sure have dealt with these questions before as senior Ministers. They will know of the reluctance of Governments ever to substitute “may” for “shall”. While I understand why noble Lords want to do it in this case, because they wish to see tangible evidence of the Government’s good faith in this area, there are some significant reasons why I would not recommend your Lordships to go down that path. I assure noble Lords that we are committed to feed-in tariffs, but we have to ensure that we get the policy right. One has to reflect that the amendment—the noble Lord, Lord Reay, suggested this—is deliberately drafted to give us enabling powers to introduce the scheme.
That is analogous to the renewables obligation, which is similarly governed by a set of enabling powers rather than a duty. There are also some practical consequences of using “shall” instead of “may”. In the proposed new clause, that would limit the discretion, and it could lead to difficulties in implementing the power. For example, if we were to accept the amendment, we would be obliged to modify all documents maintained in accordance with the conditions of a licence, as set out in proposed new subsection (1)(c), rather than those documents that are relevant. Equally, requiring the Secretary of State to modify licences within one year of Royal Assent could present problems.
On the timetable, on the assumption that this might have been a probing amendment, I shall offer some information about when we think that we can implement the scheme. We intend to consult next summer on the proposed feed-in tariff mechanism to ensure that interactions with the existing licensing framework are fully considered, building on the work that was started in the renewable energy strategy concept. I say to the noble Lord, Lord Reay, that that is why I do not believe that the responses of those organisations and individuals who have responded to the consultation, even in relation to the feed-in tariffs, will be wasted. We clearly need to consult on proposed tariff levels for the scheme at that point. To ascertain the right levels, we will need to gain further evidence on cost predictions for the various technologies and develop uptake models, so that we can ensure that we introduce a scheme that can effectively encourage deployment at this scale.
We hope that following consultation, through further work with the authority, the supply industry and the electricity industry we will finalise implementation aspects of the system, such as arrangements for paying processes and registration. We will then be able to propose the necessary modifications to licences that the powers allow. We also need to allow for the parliamentary scrutiny specified in the proposed new clause.
Taking that into account, our hope is that a feed-in tariff scheme will be operational in 2010. Clearly, I have to say that that is a hope, and I cannot give that as an absolute commitment, because a lot of work needs to be undertaken. However, I hope that I have given noble Lords a clear understanding that we are determined to press on with this. We are committed. We will do it as quickly as possible, but a lot of matters need to be resolved.
My Lords, the noble Lord will know that we have already made changes to the planning system to help microgeneration, such as by extending permitted development rights to microgeneration technologies and putting local renewables and low-carbon strategies at the forefront of local planning authority thinking for new developments. Permitted development for most microgeneration technologies, including solar PV, solar thermal, biomass, ground source, heat pumps and combined heat and power, came into effect on 6 April 2008. That means that householders will not be required to go through the planning system to install those technologies, as long as installations meet certain requirements.
Obviously, we are keen to see the development of the microwind generation industry, building on expertise in this market. It is right that we ensure that permitted development is introduced in an appropriate way; to do so inadvertently might damage the industry. That is why further work is required to complete standards for microwind turbines and to link permitted developments to certification under the microgeneration certification scheme. One issue that needs further consideration regarding wind turbines is the point that the noble Lord raised about detached and semi-detached properties.
Costs will have to be looked at in considerable detail. There is a cost in general to meeting the EU renewables target, as is well understood, and some of that cost is passed on to consumers through higher energy bills. Obviously, we want to ensure that, at the end of the day, we have a cost-effective approach. However, I cannot answer the noble Lord’s point in any more detail because, although he does not agree with what we have done, the government amendment is an enabling amendment. We need to do a great deal more work. Frankly, that is why I very much resist the “shall”, as opposed to the “may”, and the tight timetable set out in Amendment No. 32. I hope that noble Lords might be persuaded by that argument.
34: After Clause 40, line 14, leave out “financial incentives to encourage” and insert “payment for”
The noble Lord said: My Lords, we tabled Amendments Nos. 34, 36 and 38 to 43 in this group to explore the detail of a feed-in tariff. Some concern has been expressed that the government amendment gives too little detail about the final structure of the scheme. I should appreciate it if the Minister took this opportunity to go into detail about what he envisages the final tariff will look like. He has already highlighted the necessity for proper consultation and the need for some flexibility to incorporate the necessary details from further study and of course this afternoon I do not expect him to be able to give us the final details of exactly how much the tariff will be and so on. However, these amendments highlight certain areas of concern where we feel that the Government should be able to assure your Lordships that they have a proper feed-in tariff in mind.
First, can the Minister kindly explain exactly how the Government intend to interpret the financial incentives that the provisions allow for? I very much hope that he can confirm that, as in Amendments Nos. 34 and 36, he intends to introduce a scheme of regular payments set at a certain level over a certain period of time. I suggest that anything else will fail to provide the predictable level of income that any meaningful investment requires, as the Stern review made clear when it defined a feed-in tariff as a fixed-price support mechanism.
Amendment No. 38 would ensure that the Secretary of State could set a certain level of payment, as well as establishing the calculation method. Can the Minister confirm that the Government intend to guarantee that the tariff payment will not fluctuate unpredictably, as it may well do if calculated solely on the basis of market conditions?
Amendment No. 39 would ensure that the Government could not modify the level of payment arbitrarily. Any decrease in payment should be transparent, predictable and, above all, fully understood by any generator before it makes its initial investment. I hope that the Minister can confirm that the Government will not use the power in this paragraph arbitrarily to reduce the tariff to generators that, in good faith, expect to receive the higher tariff.
Amendments Nos. 40 and 41 probe a little further the Government’s intentions on different levels of support for different technologies and different scales of plant. Amendment No. 42 seeks to clarify how this tariff will operate with the renewables obligation system. Can the Minister explain a little further how the overlap will be managed and how the Government intend that the choice will be made in the case of an investor in a plant who might be eligible for both? There will also be a necessary transition from some projects from the lower end of the renewables obligation scheme on to this tariff. Perhaps the Minister can give us more information about how he envisages the transition being handled.
Finally, Amendment No. 43 was tabled to explore how the Government expect the connection costs to be handled. Do they intend to monitor the costs that suppliers impose on generators and do they have any plans to ensure that those costs are proportionate and fair? I beg to move.
My Lords, I have added my name to these amendments. I want to talk, in particular, about Amendment No. 34, which strikes me as a way of turning Bill language and uncertainty into plain language and clarity; hence, I consider this amendment to be particularly important. It would delete the words “financial incentives to encourage” and replace them with “payment for”. What could be better than that? It would effectively provide a definition of what we all understand to be a feed-in tariff. That would be healthy for the Bill, healthy for the Government’s objective and healthy for the renewables industry and the individuals and communities that will take advantage of this scheme, as and when it happens.
My Lords, I, too, support this group of amendments, particularly the ones that try to pin these measures down as a tariff scheme rather than something else. We have heard the saying that if it looks like a duck, walks like a duck and quacks like a duck, it probably is a duck. In this case, I am not sure whether “financial incentives to encourage” are “payments for”. If they are, I suggest that the Government should support the attempt to make this clearer in the Bill.
Amendment No. 34 would be controversial only if the Government were considering something other than a straightforward feed-in tariff. Perhaps we can press the Minister to confirm that we are talking about a straightforward feed-in tariff, as commonly understood. Now that I have pondered on Amendment No. 38, I think that it probably supersedes Amendment No. 37, also in my name. It is better because it has belt and braces: it specifies not only how a payment would be calculated but also the level. Amendments Nos. 40 and 41 are important in giving clarity to the feed-in tariff arrangements and will be particularly important when we discuss later amendments regarding the cap.
My Lords, this has been a very interesting, if short, debate. I say to the noble Lord, Lord Teverson, that he should be wary of plain language in legislation, because it can end up causing some difficulty. I may sound like an old-fashioned record player, but we have to accept that we are where we are. Because of the late decision in the light of our debates, clearly there is not as much detail as noble Lords would like. We have to allow ourselves flexibility. I have already said why. That is part of the response that I shall make to this group of amendments.
Equally, I well understand why the noble Baroness, Lady Young, wants to pin down the Government. She wants assurance that the feed-in tariff scheme, which we shall eventually bring forward, is what she described as a true feed-in tariff. I understand that. I assure her that we want to learn from other schemes and take the best features of those schemes into our own. Our intention is that in the next few months we will work closely with stakeholders, looking at these schemes to see how to develop our own. It is interesting that the German feed-in tariff scheme, to which many noble Lords have referred in previous debates, has only recently been modified to provide support for the generation of electricity that is used where it is generated—for example, in households—and not just electricity that is fed into the grid. We want the option of rewarding not just electricity that is fed into a local grid but also all electricity that is generated from eligible sources.
The provision in our amendment is sufficiently flexible to allow different levels of tariff payments to be made to different sources of technology as well as different scales of plant. We have included a power that will allow us to introduce what is called “degression”—a familiar concept with most feed-in tariff schemes. We expect that the level of payments for a given group of technologies may decrease year by year. That would apply only to plants that are newly installed. I do not think that that is at odds with the kind of certainties required by the noble Baroness, Lady Young.
Amendment No. 42 suggests that we include a provision to exclude a plant already receiving support under the renewables obligation. That is clearly an important consideration, but we intend to address the issue through an alternative route. The powers that the Secretary of State has under the Bill to make a renewables obligation order already contain provisions for excluding certain generating stations and we have the powers there to ensure that generators benefiting under the FIT scheme would not also receive support through the renewables obligation. I well understand the importance of that.
Amendment No. 43 concerns the distribution system. That important issue was raised on Report. It is demonstrative of the sort of complexities that introducing a feed-in tariff raises. Subsections (1) and (2)(b) of our new clause will address those issues by giving us the powers to modify distribution licences where we believe it necessary to do so.
The noble Lord, Lord De Mauley, asked an important question about the choice between the FIT scheme and the renewables obligation. Our current intention, which is subject to consultation, is that, to ensure minimum disruption and that investors refrain from delaying potential projects, microgenerators of less than 50 kilowatts currently supported under the RO will move to the new FIT mechanism. All eligible installations above that size that are installed between now and the introduction of the FIT scheme will have a one-time opportunity to move to that scheme. Individuals and organisations that install technologies between now and the introduction of FITs and which are eligible for the scheme will have the choice of the system that is most appropriate for them. That is our preliminary thinking and we will be advised by further consultation. It shows that some preliminary thought has been given to the matters that the noble Lord raised.
I hope that I have convinced noble Lords that we are committed to a feed-in tariff system. I have already said that, if all goes well, we are looking to 2010 for starters. We are looking for the best characteristics of feed-in tariff systems operated by other countries. We do not think that the precision called for in these amendments is required. I hope that I have reassured noble Lords that the Government are listening carefully to the points raised and that we are committed to having a proper scheme as soon as possible.
My Lords, I am grateful to noble Lords who participated in this short debate. I am also grateful to the Minister, who started by saying that,
“we are where we are”.
I gently say that my understanding of the process of parliamentary debate, however late in the day the Government might produce their amendments, is that it should move us from where we are to where we ought to be. Having said that, I do not intend to press these amendments today, although there is a need for further clarity and detail. We look to the Government and the Minister, in particular, to continue to work on these matters as the Act is implemented.
44: After Clause 40, line 62, leave out “3 megawatts” and insert “1 megawatt”
The noble Lord said: My Lords, I am sure the Minister and other noble Lords will recognise that in the past hour and a half, I have been exercising totally uncharacteristic reticence as I realise that an important debate is to follow this Third Reading of the Bill. It has been postponed once already and it is not fair on the noble Lords who will be taking part in the debate that we should waste time.
We now come to the question of the size of the cap. It was briefly referred to in previous debates. I start from the proposition that almost everybody recognises that there has to be a cap, an upper limit, on the amount of microgeneration that will be available to take advantage of this new clause and the regulations when they eventually emerge. My noble friend Lord De Mauley has just referred to the possibility of confusion and conflict with the renewable obligations system in certain circumstances. I listened with great care to what the Minister said right at the end of his speech before my noble friend replied. To my mind, it is enormously important that there should not be a conflict between the feed-in tariffs at the lower end of the scale and the ROCs, as I shall call them, for the rest.
Insufficient weight has been given hitherto to the enormous importance of a proper cap in not undermining investor confidence in the ROC system for what will always be the great majority of the quantity of power generated from renewable sources. That has been emphasised to me very forcefully by those who are investing, have invested and want to continue to invest in middling and larger-sized renewable generation.
The issue is: where should the cap of the FITs be set? A wide spread of options faces the Government. At the lower end, some have been arguing that it should not be more than 50 kilowatts; that figure was mentioned in debate on Report and is still the Government’s figure, as referred to in the new clause, for certain combined heat and power plants. The noble Baroness, Lady Young of Old Scone, who will no doubt speak after me in a moment, has argued for a cap of 10 megawatts, which I should have thought is at the upper limit that anyone would want to consider. Today—not more than four hours ago—I received a substantial representation from a group of lobbyists who wanted a cap of 10 megawatts. I say in parenthesis that if people really want us to take notice of their views, please do not send those representations while one is in the middle of writing one’s speech and all the amendments are already on the Marshalled List. We are not well served by some of those groups.
I suspect that the Government's 3 megawatt cap is a sort of triangulation; it is somewhere between the extremes of those conflicting views. I have tabled the amendment to make the cap 1 megawatt. I have already been roundly abused within the confines of the House by a noble Lord who thought that I was trying to sabotage the whole scheme, but I assure the House that that is not the case. I am seeking by the amendment to give the Minister the opportunity to explain to the House what lies behind the Government’s thinking for the 3 megawatt cap.
I have received representations, as I am sure have many noble Lords, from a number of quarters. I start by asking: what is the aim of encouraging,
“small-scale low-carbon generation”,
by offering consumers the chance of a return on their investment from being able to sell surplus power to the grid? I was very interested in what the noble Baroness, Lady Corston, said about her experience. That totally links with what I understand the provision is supposed to be about.
Larger investors already have the incentive to invest in renewables by the subsidy provided by the ROC system, and very attractive that subsidy has turned out to be. It is not a subsidy paid by the Government, as appeared in an article in the Times a couple weeks ago—one would have thought that the Times might have known better. As the Minister made clear a few moments ago, it is paid by consumers. It goes directly onto all our electricity bills, as will the cost of feed-in tariffs. We will all have to pay the cost of that; it will be reflected somehow in our bills.
ROCs are not a satisfactory incentive for consumers at the domestic or very small community level. It is clear that a combination of complex bureaucracy and the complexity of the system simply turns people off and they do not think that it is for them. To be fair, ROCs were not invented for them. They were invented to encourage what is happening or should be happening across the country to get renewable energy up and running. FITs are intended to fill this gap; that is, what could happen at the lower end of the scale where the ROC incentive is not effective. FITs are seen as an alternative for those who cannot or will not benefit from ROCs. I echo my noble friend’s point, to which the Minister replied. It should not be available as an alternative for investors who can and should claim ROCs.
A 3 megawatt cap on FITs would take them well into the sector where ROCs are already proving effective. I will not bother the House by reading it all, but Ofgem’s ROC accreditation list shows that one-quarter of projects—by project numbers—are already between 500 kilowatts and 3 megawatts. Of course, they are not all happening, but that is not because the ROCs are ineffective. It is for the reasons that were admirably rehearsed in our debate on Report, first, as regards planning and, secondly, as the noble Lord, Lord Oxburgh, said, as regards access to the grid. No doubt we shall be able to return to that in a few moments. Those obstacles prevent large numbers of projects for wind power, in particular, but also other forms of renewables, coming into effect. FITs will have no impact on that.
My noble friend Lord Reay was right to ask about planning. Of course, exactly the same things will happen, except, as the Minister made clear, at the very lowest level where many of these things will not require planning permission. I shall give three examples of ROCs which are attracting investment on a considerable scale and are below the 3 megawatt limit: a 2.75 megawatt wind turbine in Suffolk, which cost £4.4 million to build, and has annual revenues of £550,000; a 3 megawatt hydro turbine, with the water reservoir covering 16 square kilometres, was built at a cost of £3.5 million and generates revenues of £800,000; and a 2.5 megawatt capacity plant, which is based on 30,000 tonnes of waste per annum, generates 15,000 megawatt hours per annum and was built at a cost of £11.5 million, with revenues of nearly £2 million. By no stretch of language could these be described as small-scale renewable energy projects. They are certainly 1,000 miles from the type of domestic project referred to by the noble Baroness, Lady Corston, and miles from the sort of hospital or school projects talked about in this context. They are medium-sized commercial ventures, all of which are capable of benefiting from the ROCs, and many do. By making FITs available to investors of this size, the result will be to siphon off funds intended for the genuine, small community and domestic sector. We have always understood that that is what these FITs are primarily aimed at.
Among the representations that I have had is one which I can only describe as a genuine cri de coeur, from a small firm called Good Energy which has raised with me what it sees as the threat of this proposal. In its letter it states:
“Good Energy is the UK’s first and only 100% renewable electricity supplier who supply electricity to homes and businesses across the UK … In Good Energy’s view, the point of a feed-in tariff is to support micro-generation and encourage individuals to make a difference”.
That sentiment lies behind many of the speeches we have heard today. The letter continues:
“They are concerned that a 3MW limit is too high and supports commercial wind farm operators rather than focusing on supporting individuals—for example a full size onshore turbine averages 2.5MW. They also believe it undermines the Renewables Obligation … Essentially, Good Energy believe that feed-in tariffs should be designed to encourage individuals to do their bit to fight climate change, not create a support mechanism for commercial enterprises”.
That is the function of the ROCs. I am in 100 per cent agreement with this company, a small firm which has been in the market for some time. It has put its finger very firmly on the point.
At the other end of the scale is the trade association that represents most of the major wind investors, the British Wind Energy Association. I have received a very good brief from the association which—at the risk of boring the House, but this is an important issue—I shall quote. It states:
“A stable, long-term policy environment is vital in order to stimulate the investment necessary for 2020”—
I see the Minister nodding his assent and I am grateful for that—
“the key component of which is confidence that the support mechanism will remain stable over the 20-25 year life cycle of a project’s operation. Any move which appears to signal a weakening of the Government’s long-term commitment to the RO could have a seriously negative impact on the willingness of companies to invest in the UK renewable energy market, especially when compared with more predictable opportunities overseas”.
One has to remember that for many of the firms that are investing in large wind farms both onshore and offshore, the world is their oyster. They can do this elsewhere, and if they find that their arrangements are threatened as a result of the integrity of the ROC system being undermined, they will push off.
There is a third issue which the noble Lord will remember I raised on Report in the course of an intervention in a speech made by the noble Lord, Lord Teverson. I asked about the effect of the addition to local low-voltage distribution networks of a significant number of generators claiming FITs sized between 1 and 3 megawatts. Since then I have taken advice from the Energy Networks Association which represents the operators of the grid and of local distribution networks. It is a long report from which I shall quote only a couple of short passages. It states:
“The connection of multiple microgeneration units can have an adverse effect on network operation. The main issues that need to be considered include
1. impact on voltage levels, both over and under-voltage
2. short circuit levels”—
variations in the power supply that can lead to equipment being switched off—
“3. system loading
4. voltage unbalance”.
That is all spelt out in the report. In another paragraph the report states:
“Realising the full potential of lower voltage networks in particular will require further clarification of the requirements under ESQCR”—
the electricity safety, quality and continuity regulations—
“that would potentially permit a wider (LV) voltage operating range within specified parameters and hence permit a wider penetration of microgeneration into LV networks”.
These are technical questions, and I am certainly not a technical man, but I read that as endorsing the anxiety I expressed on Report that if one has a surge of medium-sized feed-in tariff generators seeking access to the local networks, that will have a disruptive influence. I asked the Minister to look into that and he undertook to do so. I hope, therefore, that I will now get an answer.
The higher the cap, the bigger the project and the greater the risk. As this is a two-directional flow going both from the generators to the consumers and back from the consumers to the generators, it poses significant problems for the distribution network. As I said at the outset, the purpose of the amendment is to give the Minister an opportunity to explain his figure of 3 megawatts. What I have said seems to be, at first sight, powerful arguments for a figure somewhat lower than 3 megawatts. I have suggested 1 megawatt and I am assured that that figure would have the support of the British Wind Energy Association. I beg to move.
My Lords, the Government must be happy because one amendment seeks to change the ceiling from 3 megawatts to 1 megawatt, and another seeks to change the 3 megawatts to 10 megawatts. That is always an admirable position for a Government to find themselves in because they can split the difference and demonstrate that they have come up with the right figure. I shall explain why I think it is not the right figure.
The noble Lord, Lord Jenkin, shares many of my objectives: a need for clarity for those involved in the ROC scheme and a need to promote investor confidence. On Report, the Minister stressed the need for investor confidence in the ROC system for larger-scale renewables—he used the words “larger-scale renewables” advisedly—and the noble Lord, Lord Whitty, rightly said that that works both ways and that there needs to be confidence for the small and medium-sized generators in another scheme which would suit their needs because it would be simpler and clearer. I would be sad if the Government, in adopting a 3 megawatt ceiling, boxed themselves in and left themselves with insufficient headroom in a market and a set of technologies that are moving quite rapidly.
Under their outline proposals the Government can set different tariff levels for individual technologies following consultation, and so the 10-megawatt ceiling should be seen as an envelope within which the whole scheme can happen. For many technologies, as they change their capacity over time, there could be a different set of conditions attached to taking part in the feed-in tariff. That would not destroy flexibility for the Government but it would give them headroom.
There has been a failure of the ROC system to incentivise investment in small to medium-size generation schemes. About 95 per cent of the wind capacity currently in the planning system is in developments larger than 10 megawatts. The renewables obligation is not incentivising adequately schemes under 10 megawatts.
If we look at other countries that have had advantageous feed-in tariff arrangements as well as other mechanisms, we see that Germany is in the enviable position of having 10 times more wind power than the UK despite the fact that we are a jolly sight windier. It is quite telling that somewhere between one-third and one-half of that power is under 10 megawatts. It is possible to have the best of both worlds, with significant investment in large-scale schemes as well as in small and medium-sized schemes. There is room for both, and we have to find a way of getting feed-in tariffs and ROCs to work together to deliver both. The ROC system is certainly not doing that for schemes between 3 megawatts and 10 megawatts at the moment.
At the moment we are not talking about single-house solutions such as sticking a windmill in your garden or on the side of your house. I always thought that putting one on the side of your house would probably mean that your house flew away rather than that you generated electricity. We are looking at the needs of communities and the needs of groups of farmers getting together. Some of the technologies are fairly small-scale at the moment but are rapidly increasing in the scale they are capable of in terms of on-site generation, low-cost housing, hospital on-site generation—a variety of areas where a single provider will not be well versed and well attuned in the ROCs issue and the way in which managing that system needs to take place. Those providers would be much more incentivised by the certainty of a feed-in tariff.
I have watched farmers struggle with anaerobic digestion systems. Some of the biggest farming companies in the country have trouble with it for a variety of reasons, as the noble Lord, Lord Jenkin, said, but the ROC scheme is not insignificant in that matter. You can imagine what small-scale farmers, who would still have the capacity for generating substantial amounts of electricity from anaerobic digestion, must feel in trying to pull off a development.
I take issue with the noble Lord’s description of these mid-range projects as “commercial ventures”. One would like to hope that they are commercial if that means they are not going to be loss-makers and a total flop, otherwise no one will invest in them at all. However, they are far from being commercial ventures by commercial energy companies; in most cases, they are concomitant to another activity being carried on at a community level by a very small-scale business.
I hope that the Government will not say that, as they cannot get agreement between the two amendments, that must mean that they are probably right. I hope they will take account of the fact that a number of responsible groups have got together in support of the 10-megawatt proposition, including several of the home building associations and the Energy Saving Trust.
I hope, too, that the Government will ponder on paragraph 155 of the good report by the noble Lord, Lord Freeman—who, alas, has just abandoned his slot. That paragraph, which examines the case for feed-in tariffs and recommends that system, says:
“Although the evidence we received in favour of feed-in tariffs anticipated that micro-generators would benefit most from such a system, we do not believe that the benefit of feed-in tariffs would be limited only to small-scale generation. Single site operators, community developments, affordable housing schemes and farmers will often want generation capacity above the micro-generation level. They are, however, unlikely to want to trade in the ROCs market with large energy companies. Such generators are likely to favour the certainty of a medium term feed-in tariff structure over the uncertainty of the RO. Therefore, we see potential for the RO and a feed-in tariff to work in parallel with generators choosing the most appropriate support scheme for their own needs”.
I hope we can encourage the Government to ponder that recommendation from the committee and not box themselves in.
If the noble Lord, Lord Campbell-Savours, can wax lyrical about Woking, I hope I can wax lyrical about Willington, my local village, which, if we can get a feed-in tariff, I hope will ultimately generate its entire needs from local hydropower.
My Lords, I am grateful to my noble friend Lord Jenkin and the noble Baroness, Lady Young of Old Scone, for tabling the amendments and giving us the opportunity to debate the 3 megawatt cap. Without doubt, the cap, both its existence and the level at which it is set, is one of the most controversial areas of the amendment, with strong feelings expressed, as we have heard, on both sides of the House. I hope that the Minister will be able to provide us with a proper explanation of how this level was chosen.
My Lords, we welcome the fact that the Government have put a higher cap in the Bill than we perhaps expected. On Report, the noble Lord, Lord Redesdale, saw the minimum cap as needing to be somewhere around 2.2 megawatts. It is clear that the level is written into the Bill as a maximum, which means that it could be set in practice at any level below that. It would provide some useful certainty to the industry, which the Minister is keen to be able to do, if the Government were able to show their hand a little more as to whether it is just a technical cap or whether it highlights the level that the Government are likely to impose. We would not be against a higher level of 10 megawatts, but we are pleased to see a realistic cap. The important thing is what is implemented.
My Lords, this has been an interesting discussion, following on from our discussion on Report. The noble Lord, Lord Jenkin, suggested that a 3 megawatt limit could be described as triangulation. The noble Baroness, Lady Young, suggested that the Government would always be in a happy position responding to a debate where two very different amendments are proposed and the Government seem to be coming down the middle. Indeed, I am in that happy position.
However, there is a genuine reason for our thinking that 3 megawatts is about right. On the one hand, I echo the noble Lord, Lord Jenkin, in saying that investor certainty is essential. The last thing that we want to do is discourage decisions about investment. On the other hand, we want to encourage the small microgenerating schemes to which we see the FIT applying. We are trying to get the balance right, which is not easy. There are many considerations. Going for the 3 megawatt capacity cap, but allowing ourselves discretion to go into the detail of the different areas where we might set caps below that, is the right way forward, giving us some flexibility or “headroom”, as the noble Baroness said, for further discussion, consultation and work, but also ensuring that the great majority of large-scale investors have certainty. That essentially is why we have gone for the 3 megawatt cap. I have been convinced that it is essential to have a cap in the Bill, because of the critical issue of investor confidence. I do not need to go into the argument as to why we think—
My Lords, I apologise for having just had to run out to a meeting. If it became evident that 3 megawatts was not an economic figure for community generation, what mechanism would be used to raise it to 5, or even 10, megawatts? It is one thing to create investment confidence for the big companies, but there is surely an obligation to create investor confidence for the small generator.
My Lords, my noble friend is trying to tempt me down a path that I do not want to go down. I know what he wants me to say—that of course we will be flexible and respond to circumstances as they arise. It is perfectly possible that another energy Bill will come at some stage and that noble Lords may propose to come back to this issue. While I am concerned simply to leave this where it is and say that we are flexible, I am also concerned not to give the impression to companies wishing to invest seriously in this area that somehow the 3 megawatt limit is okay for the moment but that in a year or two it might have risen. That is why I am reluctant to go as far as my noble friend wishes me to go. We think that the 3 megawatt cap is right for the long term—and I really must place that on the record.
I should make it clear, too, that we think that the renewables obligation is absolutely critical to delivering the vast majority of renewable electricity that we need to meet the challenging targets set by the EU for 2020. That is why maintaining investor confidence is so important, while we keep enough flexibility to ensure that we direct support to small-scale projects at the right capacity.
I say in response to the remarks of the noble Baroness, Lady Young, that the types of projects that we are trying to incentivise through the feed-in tariff scheme range from the individual householder to the larger community-scale projects. As for deciding on an upper limit, our analysis shows that an upper limit of 3 megawatts will enable a feed-in tariff scheme to support a variety of projects. For example, at one end of the spectrum, a typical household might use about 4 megawatt hours of electricity per year. That electricity requirement could be provided by a 4 kilowatt wind turbine or a 4 to 5 kilowatt PV installation. A school’s electricity requirement might typically be met by a wind turbine below 50 kilowatts and a hospital by a larger system closer to 250 kilowatts. In addition, at the other end of the spectrum, a 3 megawatt wind turbine has the capacity to generate enough electricity to power in the region of 1,500-plus homes per year—potentially enough electricity to power a village. The cost of such a project would be around £4 million to £4.5 million, which is clearly not an insignificant sum.
As a further example of the significant scale of 3 megawatts as an upper limit, a 3 megawatt biomass plant could support around 3,000 to 4,000 homes. That is why we think that the 3 megawatt cap is about right, as it provides investor confidence and avoids any wait-and-see behaviour for at least 95 per cent of deployment currently covered by onshore wind turbines under the renewables obligation.
The noble Baroness, Lady Young, talked about headroom. I think that she suggested that we should accept the amendment proposing 10 megawatts and then have the opportunity for consultation, as a result of which we could say that we would set the limit much lower, as we have in the flexibility given by the government amendments. But there is still the problem that, if we suddenly accepted 10 megawatts as the limit, it could jeopardise investment decisions for quite a large number of projects that we wish to see go ahead immediately. The essential point is that we should go for a limit that is reasonable and defensible but which does not inhibit a lot of investment decisions.
The noble Lord, Lord Teverson, is also tempting me down paths that I should not go down. He said, “You’ve got the 3 megawatt limit but, come on, give some more details about where you might place the limit, if you went below it”. I do not think that we have done enough work so far to be able to give the noble Lord an indication of that. Clearly we need to do an awful lot of work in the next few months. As I have said, we will be happy to find ways of involving Members of your Lordships’ House who have a particular interest in those discussions.
The noble Lord, Lord Jenkin, is absolutely right about avoiding confusion or overlap between the FIT scheme and the ROC scheme. We are anxious to invite comments about how we should do this. I have already set out our initial thinking. He made an interesting point last week about the network operation of voltage. We will have to look into that. I hope that I did not give him the impression that I would have a definitive answer by today, because I do not have one, but I am advised that my officials will look into working with Ofgem and the energy companies. Clearly we do not want to cause the kind of problems that he has suggested, so I hope that he will accept that I am taking this seriously, even though I cannot respond immediately.
I recognise that there is no simple answer. We have tried to get the balance right and to set the cap at a level that will provide enough flexibility and encourage the small-scale generation that we want through a feed-in tariff. At the same time, it is essential that we give certainty to the companies that are taking the kind of investment decisions that we need them to take if we are to meet this challenging target. On that basis, I hope that noble Lords will accept that the 3 megawatt cap, with the flexibilities given within it, is probably the right way forward.
My Lords, I am grateful to those who spoke in the debate and for the Minister’s reply, which was not wholly unhelpful. We have to debate this while being uncertain how this flexibility, which the Minister has mentioned several times, will actually work. The noble Lord, Lord Teverson, asked for a bit more detail and was promptly chased off the patch altogether, albeit in polite parliamentary language. That is what makes this difficult. The Minister’s paper, which he kindly circulated a day or two ago, says that,
“if the evidence points to a lower limit, we will have the necessary powers to set a lower limit for onshore wind”—
but where and for whom, and how will people know what it is?
There is bound to be a period of consultation and therefore a period of considerable uncertainty. My fear is that, at a juncture where great efforts are being made through the planning system to overcome planning obstacles such as the grid-link systems—I have had the same paper from Ofgem that was quoted from earlier in the debate, and one does of course hope that some of the larger schemes in the pipeline will come forward—this level will create a grey area of overlap between the operation of the RO and the feed-in tariff, thereby encouraging gaming, as it is called, where people try to juggle between the two. They may wait until a feed-in tariff becomes operative so that they get the benefit of it and in the mean time delay their investment. We shall simply have to wait and see.
I hope that we have sufficiently aired the problems that the Government face. I am grateful for the Minister’s earlier offer to keep in touch with those who have spoken on this matter so that we may take part in the consultation, which I am sure will be helpful, but I am genuinely anxious, as I have said. The purpose of the amendment was to flush out a bit more of the Government’s thinking, which the Minister was good enough to provide. Therefore, I beg leave to withdraw the amendment.
Amendment No.44, as an amendment to Amendment No. 29, by leave, withdrawn.
[Amendment No. 45, as an amendment to Amendment No. 29, not moved.]
46: After Clause 40, line 87, at end insert—
“( ) The Secretary of State shall review and report annually on the effectiveness of the scheme, and consider such amendments as he considers appropriate.”
The noble Lord said: My Lords, the amendment is simple and would ensure that existing legislation imposes sufficient requirements on the Secretary of State to review and report regularly on the working of these provisions. The Minister has argued for the flexibility that the government amendments provide, but such flexibility leaves open the possibility of the introduction of an entirely inadequate scheme. Proper reporting requirements would allow flaws in the implemented scheme to be identified and solutions proposed. I beg to move.
My Lords, the noble Lord, Lord De Mauley, has raised a fair point. I am happy to say that Section 47 of the Electricity Act 1989 puts a duty on the authority to keep under review, and collect, information about activities to which that section applies. The section will be extended by a provision in Schedule 4 to include small-scale low-carbon electricity generation. It will also give the Secretary of State a power of general direction to the authority to which it must have regard in reviewing those activities. In addition—this goes back to our debate on Report—we are likely to detail progress on the effectiveness of the FIT scheme as part of our annual report under the Sustainable Energy Act 2003. I hope that that provides the noble Lord with the necessary reassurance.
47: After Clause 40, insert the following new Clause—
“Power to amend licence conditions etc: procedure
(1) Before making a modification, the Secretary of State must consult—
(a) the holder of any licence being modified,(b) the Gas and Electricity Markets Authority, and(c) such other persons as the Secretary of State considers appropriate.(2) Subsection (1) may be satisfied by consultation before, as well as by consultation after, the passing of this Act.
(3) Before making modifications, the Secretary of State must lay a draft of the modifications before Parliament.
(4) If, within the 40-day period, either House of Parliament resolves not to approve the draft, the Secretary of State may not take any further steps in relation to the proposed modifications.
(5) If no such resolution is made within that period, the Secretary of State may make the modifications in the form of the draft.
(6) Subsection (4) does not prevent a new draft of proposed modifications being laid before Parliament.
(7) The Secretary of State must publish details of any modifications as soon as reasonably practicable after they are made.
(8) In this section, “40-day period”, in relation to a draft of proposed modifications, means the period of 40 days beginning with the day on which the draft is laid before Parliament (or, if it is not laid before each House of Parliament on the same day, the later of the 2 days on which it is laid).
(9) For the purposes of calculating the 40-day period, no account is to be taken of any period during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than 4 days.
(10) In this section “modification” means a modification under section (Feed-in tariffs: electricity)(1).”
48: After Clause 40, insert the following new Clause—
“Feed-in tariffs: supplemental
(1) A modification under section (Feed-in tariffs: electricity) of part of a standard condition of a licence does not prevent any other part of the condition from continuing to be regarded as a standard condition for the purposes of Part 1 of the Electricity Act 1989 (c. 29).
(2) Where the Secretary of State makes modifications under section (Feed-in tariffs: electricity)(1)(b) of the standard conditions of a licence of any type, the Gas and Electricity Markets Authority (“the Authority”) must—
(a) make the same modification of those standard conditions for the purposes of their incorporation in licences of that type granted after that time, and(b) publish the modification.(3) The Secretary of State may by order—
(a) make provision conferring functions on the Authority or the Secretary of State (or both) in connection with the administration of any scheme established by virtue of section (Feed-in tariffs: electricity);(b) make such modifications of provision made by or under an Act or an Act of the Scottish Parliament (whenever passed or made) as the Secretary of State considers appropriate in consequence of provision made under paragraph (a) or section (Feed-in tariffs: electricity).”
On Question, amendments agreed to.
Clause 51 [Nuclear decommissioning: regulations and guidance]:
49: Clause 51, page 46, leave out lines 12 and 13 and insert—
“(5A) The Secretary of State must publish guidance about factors which it may be appropriate to consider in deciding whether or not—”
The noble Lord said: My Lords, I will also speak to government Amendments Nos. 50 to 53, which seek to provide additional certainty and clarity to potential operators of new nuclear power stations and oil and gas installations respectively, without undermining the robustness of the regimes. I recall that we began the debate when my noble friend Lord Rowlands raised the issue in Committee, when I undertook that the Government would think further about it. We had to do more than that, however, because the noble Lord, Lord Jenkin, tabled subsequent amendments. Our amendments in this group have been laid in response to that debate on Report.
First, on the nuclear amendments, the House will recall concerns being voiced on Report on behalf of industry about the need for greater certainty on the factors that the Secretary of State may take into account when deciding to approve or modify a programme subject to conditions. Amendment No. 49 is our response. It creates a duty on the Secretary of State to publish guidance on factors that it may be appropriate to consider when approving a programme or subsequent modification to a programme in Clause 51(5). Amendment No. 50 then creates a duty on the Secretary of State to have regard to this guidance, thus providing the potential operator with a greater level of certainty as to the factors that the Secretary of State will take into account when approving or modifying a funded decommissioning programme, while not unduly limiting his flexibility in this regard.
We also debated on Report whether the offence under Clause 57 of knowingly or recklessly supplying false or misleading information to Ministers should apply in all cases. Government Amendment No. 51 creates a materiality threshold so that only information that is false or misleading in a material respect falls within scope of the clause. This makes Clause 57 consistent with equivalent offences in other areas of legislation, such as Sections 117 and 201 of the Enterprise Act 2002.
As regards the oil and gas decommissioning amendments, it will be recalled that on Report the noble Lord, Lord Jenkin, proposed an amendment to Clause 69, which was aimed at more closely linking the liability for decommissioning an offshore installation to companies that have received benefits from the installation. On Report, the Government voiced concerns that, although the amendment had much merit, it did not make it clear that it was the principal use of the installation only that should create that link and that benefits arising from secondary services would not make the recipient liable. On hearing that the Government were anxious about the terms of the amendment, the noble Lord, Lord Jenkin, graciously withdrew it. However, we accept that he raised an important point, which we need to address.
Amendments Nos. 51 and 52, which are technical in nature, will make it clear that liability will apply only to licensees who are entitled to benefit, or have benefited, from the principal purpose for which the installation is maintained, or is intended to be established. They will create a precise link between the benefit and activities on the relevant field. The liability will not extend to licensees on a different field, even if they receive a secondary service from the installation. The amendments will extend similar clarification to gas unloading and storage and carbon sequestration activities.
The Government believe that these amendments add to the clarity and practicability of the respective frameworks, while maintaining their robustness. I am grateful to the noble Lord, Lord Jenkin of Roding, for tabling his constructive amendments on Report. I hope that he and the House will accept that the amendments proposed here meet the objectives that he outlined at that stage. Accordingly, I beg to move.
My Lords, I am tempted just to say thank you, but I will say one more word. There is no doubt that the Minister’s officials who worked on the oil and gas amendments devoted a great deal of time and ingenuity in trying to come up with a solution that met the requirements both of the industry and of the department. That they have succeeded is a great tribute to both sides. I should like to pass on—if the noble Lord will be kind enough to do so—the thanks of the industry for the efforts that were made.
My Lords, I support the sentiments of the noble Lord, Lord Jenkin. This issue was first raised in the other place. The subsection that this amendment amends was brought into the Bill as a result of representations that began in the other place and were pursued by me and others in Committee and by the noble Lord, Lord Jenkin, on Report. It is a good example of the Government listening and responding. They have always wanted to achieve what the industry was asking for. Therefore, it is a pleasure to support that achievement.
My Lords, I am grateful to both noble Lords. As I indicated, their assiduous work earlier in the Bill’s progress enabled us to arrive at a much improved and satisfactory situation. I am particularly grateful to the noble Lord, Lord Jenkin, for his appreciation of the work done by officials on this significant task. These are complex and challenging issues and an enormous amount of work has been done, some of it under considerable pressure. We all recognise that we have not had too much time to adjust to the results of debates on the Bill in this House.
My officials are so vigilant that they have indicated that I made a slip, which I wish to correct. I said that the oil and gas decommissioning amendments were Amendments Nos. 51 and 52. In fact, they are Amendments Nos. 52 and 53. I apologise for the slip and take this opportunity to correct it. I am grateful to the officials, as ever, for pointing that out.
On Question, amendment agreed to.
50: Clause 51, page 46, line 18, at end insert—
“( ) When making a decision of a kind mentioned in subsection (5A), the Secretary of State must have regard to the guidance for the time being in force under this section.”
On Question, amendment agreed to.
Clause 57 [Offence of supplying false information]:
51: Clause 57, page 49, line 11, leave out “false or misleading information” and insert “information which is false or misleading in a material respect”
On Question, amendment agreed to.
Clause 69 [Persons who may be required to submit abandonment programmes]:
52: Clause 69, page 59, line 13, leave out “from the installation” and insert “from any activity within section 30(6)—
(i) which has been or is carried on (or is intended to be carried on) from, by means of or on the installation, and(ii) is an activity to which subsection (AA1) applies”
53: Clause 69, page 59, line 15, at end insert—
“(AA1) This subsection applies to an activity if—
(a) where the activity is the exploitation or exploration of mineral resources, it relates to an oil field for which the installation is or is to be established or maintained;(b) where the activity is the conveyance of minerals, the minerals are got, or to be got, from such an oil field;(c) where the activity is the unloading, storage or recovery of gas, it relates to a controlled place (within the meaning of Chapter 2 or 3 of Part 1 of the Energy Act 2008) for which the installation is or is to be established or maintained;(d) where the activity is the conveyance of gas being stored or recovered, the storage or recovery of the gas relates to such a controlled place;(e) where the activity is within section 30(6)(c)—(i) the installation is in an oil field in respect of which P has an interest, or(ii) the installation is in a controlled place in respect of which P has a licence under Part 1 of the Energy Act 2008.(AB1) For the purposes of subsection (AA1)—
(a) “oil field” means an area which the appropriate authority (within the meaning of paragraph 1(2) of Schedule 1 to the Oil Taxation Act 1975) has determined to be an oil field for the purposes of Part 1 of that Act,(b) P has an interest in an oil field if P is entitled to derive, or has at any time been entitled to derive, any financial or other benefit from activities within section 30(6) (other than paragraph (c)) carried on in the field.”
On Question, amendments agreed to.
54: Before Clause 80, insert the following new Clause—
“Duties of the Gas and Electricity Markets Authority
(1) In section 4AA of the Gas Act 1986 (c. 44) (duties of the Gas and Electricity Markets Authority)—
(a) in subsection (1) after “interests of” insert “existing and future”,(b) after subsection (2)(b) insert “; and(c) the need to contribute to the achievement of sustainable development.”,(c) omit subsection (5)(ba), and(d) in subsection (6) for “this section “consumers” includes” substitute “subsections (3) and (4) references to consumers include”.(2) In section 3A of the Electricity Act 1989 (c. 29) (duties of the Gas and Electricity Markets Authority)—
(a) in subsection (1) after “interests of” insert “existing and future”,(b) after subsection (2)(b) insert “; and(c) the need to contribute to the achievement of sustainable development.”,(c) omit subsection (5)(ba), and(d) in subsection (6) for “this section “consumers” includes” substitute “subsections (3) and (4) references to consumers include”.
The noble Lord said: My Lords, we had a very interesting debate on Report, which addressed issues around strategic investment in the electricity transmission grid in the medium and longer term, access to the existing grid in the shorter term and the need to give sustainability greater priority in Ofgem’s statutory duties. The debate about the role of Ofgem was extremely interesting. I am sure that in parallel with this group of amendments, it will have been very helpful to Ofgem to understand some of the issues that Members of your Lordships’ House feel are important for Ofgem to consider within the context of its statutory duties. It was a well balanced and influential debate.
The first element of our proposals is to change the duties of the Secretary of State and Ofgem in two ways. The first places the words “existing and future consumers” directly into the wording of the primary duty of Ofgem and the Secretary of State, as per Amendment No. 29A proposed by the noble Lord, Lord Oxburgh, on Report. We were persuaded by the noble Lord that placing that formulation of words directly into the primary duty would be a clear signal from Parliament that Ofgem and the Secretary of State must take the needs of tomorrow’s consumers into account when making decisions today.
The second change to Ofgem’s duties is in response to noble Lords who wanted the Government to find a way to bring consideration of sustainability onto an equal level to security of supply, without limiting its independence. Amendment No. 54 will also place sustainability at the same level in the hierarchy of duties as security of supply; at the top of Ofgem’s list of secondary duties. That will move sustainability higher up Ofgem’s hierarchy of duties. We think that gets the balance right. It gives sustainability more prominence in Ofgem’s decision-making process, without disrupting its primary duty and without creating uncertainty for investment in new energy infrastructure.
While speaking to his amendment on Report, the noble Lord, Lord Oxburgh, emphasised that his key concerns, and the underlying reason for his amendment, were the current issues that generators face in connecting to the electricity transmission grid and the lack of strategic investment in the grid. The noble Lord, Lord Jenkin, my noble friend Lord Puttnam and many other noble Lords spoke about that in the debate. In speaking to his amendment, the noble Lord, Lord Oxburgh, urged the Government to consider bringing forward a power for the Secretary of State to intervene to resolve grid access issues if the current industry process to renegotiate the industry codes and licences were to fail. Having given the issue careful consideration, I am bringing forward Amendments Nos. 55, 56, 57, 69, 73 and 91 to deal with it.
The noble Lord, Lord Oxburgh, was absolutely right about the importance of ensuring that negotiations are concluded in a timely fashion and that therefore the Secretary of State should have the power to intervene if that proves not to be the case. Our preferred solution is for Ofgem, the national grid and the wider industry to reach a satisfactory conclusion on their own. We will continue to work closely with the parties involved to encourage them to do so. The process is complex, and it has to balance out the interests of all market players. We will keep progress under review. We expect to get a report from Ofgem at the end of this year, and we will develop our renewable energy strategy, which we will publish in spring 2009. In doing that, we will consider the progress that has been made in the industry and in the discussions before deciding whether to exercise the powers. It would be helpful for everyone in those negotiations to know that we have that power up our sleeve and that we are prepared to use it if negotiations are not successful.
The power we propose is limited. It will allow us to amend licences and codes to deliver the high-level principles set out in the Transmission Access Review, including, but not limited to, firm connection dates. It may be used only for the purpose of facilitating access to, or efficient use of, the transmission system. The power is time-limited to two years from the date of commencement, and the Secretary of State is obliged to consult the holders of any licences that will be affected, Ofgem and anyone else that he considers appropriate. The two-year limit is helpful in the sense that it is a limited power and is a constraint on Government and the parties to the discussions to get on with it and make sure that agreement is reached.
Amendment No. 59 has been tabled in response to the amendment of the noble Lord, Lord Jenkin, debated at Report, which was intended to allow distribution network operators to recover the costs associated with their statutory obligations to provide offers of connection to third parties. As the issue that the amendment addresses was discussed on that occasion, I do not need to go into it in great detail.
Under the current legislation, DNOs are able to charge for work carried out on the provision of that connection offer only if and when a connection is made. The problem is that where several connection offers are made and only one connection provided, DNOs cannot recoup all of their costs. It had been commonplace until recently for DNOs to charge upfront for these costs in recognition of that. However, these practices have, unfortunately, had to be stopped by Ofgem because it has discovered that they are not permitted by statute.
The amendment will introduce a new clause to give the Secretary of State a regulation-making power providing for upfront charging for network connection offers. This is an efficient way of balancing the need to promote competition in those markets and providing an incentive against speculative connection requests.
Amendments Nos. 65 and 75 are technical amendments to ensure consistency between the powers in the Bill for the Secretary of State to modify licences granted under the Electricity Act 1989, the Gas Act 1986 and similar powers in the existing statutory framework for the energy sector; for example, in the Climate Change and Sustainable Energy Act 2006. I beg to move.
My Lords, I have to say thank you again to the Government. Amendment No. 69 meets exactly the case that I made on Report and I am grateful for that.
On Amendment No. 54, I consulted Ofgem and told it that I would say that it is happy with the amendment. Ofgem has always recognised that it is for Ministers to set policy and for Ofgem as the regulator to operate the policy. I previously had discussions with Ofgem on the amendments that we discussed on Report and it is content with what is being done. I would add that, quite rightly, the Minister had to add rather more words than was in the rather simple amendment of the noble Lord, Lord Oxburgh. I refer to the substantial superstructure that he had built upon some very slender foundations. However, sustainability is now expressly in the amendment and that is good.
I am slightly more critical of the amendment on the two-year power which the Government are taking. I have received a representation from one of the companies involved in the negotiations, which states:
“We understand that the Government is using it as a sword above our heads in order to ensure a conclusion is reached, but it is a concern nonetheless”.
The noble Lord has given some explanation as to how he sees the Government proceeding on this, but he must be aware that the industry is not totally happy with the deadline. I am sure that it will do its best to try to negotiate proper arrangements. It is the enormously important issue of getting proper access to the grid, as the Ofgem report clearly made out. Will the noble Lord just be aware that there is a feeling that the sword of Damocles is not far away and that the Government need to be reasonably sensitive to that?
My Lords, I do not want to prolong the proceedings but I think that referring to the sword of Damocles is a bit of an exaggeration. We want to see a successful outcome and I have already stressed that we want the parties to come to an agreement. We think that we need this as a reserve power but it is also important that the power is not held for ever—we need to see a successful conclusion. I am encouraged by what the noble Lord says in that I think he is reflecting that, despite the challenges, the parties are determined to do everything they can to see a successful resolution. We would much prefer that, and I very much hope that we do not have to make the order. I prefer to describe this as a reserve power and one that is time-limited.
My Lords, I thank the Minister for tabling these amendments. Through the long and convoluted arguments, I am glad that the Government have agreed that something that ensures sustainability is properly taken account of in a workable and appropriate way.
On Question, amendment agreed to.
55: Before Clause 80, insert the following new Clause—
“Power to amend licence conditions etc: transmission systems
(1) The Secretary of State may modify—
(a) a condition of a particular licence under section 6(1)(a) to (d) of the Electricity Act 1989 (c. 29) (generation, transmission, distribution and supply licences);(b) the standard conditions incorporated in licences under those provisions by virtue of section 8A of that Act;(c) a document maintained in accordance with the conditions of licences under section 6(1)(a) to (d) of that Act, or an agreement that gives effect to a document so maintained.(2) The Secretary of State may exercise the power conferred by subsection (1) for the purpose only of facilitating—
(a) access to a transmission system in Great Britain or offshore waters;(b) efficient use of a transmission system in Great Britain or offshore waters.(3) The power conferred by subsection (1)—
(a) may be exercised to make different provision in relation to different classes of customer;(b) may be exercised generally, only in relation to specified cases or subject to exceptions (including provision for a case to be excepted only so long as specified conditions are satisfied);(c) may be exercised differently in different cases or circumstances;(d) includes a power to make incidental, supplementary, consequential or transitional modifications.(4) The power conferred by subsection (1) may not be exercised after the end of the period of 2 years beginning with the day on which that subsection comes into force.
(5) Provision included in a licence by virtue of that power—
(a) need not relate to the activities authorised by the licence;(b) may do any of the things authorised by section 7(2) to (4) of the Electricity Act 1989 (c. 29) (which apply to the Gas and Electricity Markets Authority’s power with respect to licence conditions under section 7(1)(a)).(6) In this section—
“offshore waters” means—
(a) waters in or adjacent to Great Britain which are between the low water mark and the seaward limits of the territorial sea, and(b) waters within an area designated under section 1(7) of the Continental Shelf Act 1964 (c. 29);“transmission system” has the meaning given by section 4(4) of the Electricity Act 1989 (c. 29).”
56: Before Clause 80, insert the following new Clause—
“Section (Power to amend licence conditions etc: transmission systems): procedure
(1) Before making a modification, the Secretary of State must consult—
(a) the holder of any licence being modified,(b) the Gas and Electricity Markets Authority, and(c) such other persons as the Secretary of State considers appropriate. (2) Subsection (1) may be satisfied by consultation before, as well as by consultation after, the passing of this Act.
(3) The Secretary of State must publish details of any modifications as soon as reasonably practicable after they are made.
(4) In this section “modification” means a modification under section (Power to amend licence conditions etc: transmission systems).”
57: Before Clause 80, insert the following new Clause—
“Section (Power to amend licence conditions etc: transmission systems): supplemental
(1) A modification under section (Power to amend licence conditions etc: transmission systems) of part of a standard condition of a licence does not prevent any other part of the condition from continuing to be regarded as a standard condition for the purposes of Part 1 of the Electricity Act 1989 (c. 29).
(2) Where the Secretary of State makes modifications under section (Power to amend licence conditions etc: transmission systems)(1)(b) of the standard conditions of a licence of any type, the Gas and Electricity Markets Authority must—
(a) make the same modification of those standard conditions for the purposes of their incorporation in licences of that type granted after that time, and(b) publish the modification.(3) The Secretary of State may by order make such modifications of provisions made by or under an Act or an Act of the Scottish Parliament (whenever passed or made) as the Secretary of State considers appropriate in consequence of provision made under section (Power to amend licence conditions etc: transmission systems).”
On Question, amendments agreed to.
58: After Clause 83, insert the following new Clause—
“Licensing of activities relating to smart meters
Schedule (Smart meters: licensable activities) contains amendments to the Gas Act 1986 (c. 44) and the Electricity Act 1989 (c. 29).”
The noble Lord said: My Lords, I shall speak also to the other government amendments in this group.
At Report, my noble friend Lord Dubs proposed an amendment to the Bill related to the type of market model that will underpin the rollout of smart meters to all households. As we recognised during our debate on that amendment, our current competitive metering market offers certain advantages when proceeding with a smart meter rollout.
However, the scale and complexity of delivering 47 million smart meters—to all homes in Great Britain—may mean that we will need to consider centralising some or all metering services in order to ensure an efficient and well managed rollout. I think that our earlier debates recognised the magnitude of this task.
The type of market model used to roll out smart metering to the domestic sector will be a key determinant of the project’s costs and benefits. As such, the Government have already undertaken a considerable amount of analysis of the various market model options. That work will conclude by the end of the year.
As I made clear on Report, at this stage our objective is to ensure that we have a legislative basis to deliver a range of future options—something that noble Lords also identified during our previous debates as being of great importance. I believe that that was also the motivation behind the amendment of my noble friend Lord Dubs.
Having considered the existing smart meter provisions in the Bill, and having looked, as we indicated we would do, very closely at my noble friend’s amendment, we have tabled a number of amendments which we believe better enable us to deliver a range of market model options in future.
Providing for centralisation of services in a competitive market is a challenging and complex issue, as the House will readily appreciate, and it touches on important matters such as competition law. The amendment seeks to take account of these types of complexities while delivering the overall aim of the amendment tabled by my noble friend on Report. The new clause and schedule amend the Secretary of State’s powers under the Gas Act 1986 and the Electricity Act 1989 to create new licensable activities. This amendment ensures that, by affirmative order, the Secretary of State can create new licensable activities in connection with providing, installing or operating smart meters or the related communications infrastructure. The clauses include a power to restrict the geographic scope of the licence to enable centralisation of activities on a regional or national basis.
The power also provides that the Secretary of State may make regulations so that he or Ofgem will be able to award these licences following a competitive tender process, the detail of which is outlined in Schedule 4. I recognise that the noble Lord, Lord Jenkin, has tabled an amendment to the Government’s proposals and I shall listen to his case with the greatest interest.
We believe that this type of power is the best way to ensure that we can deliver a range of market model options while ensuring that, whatever model is finally chosen, we retain an appropriate element of competition. These amendments will help to ensure that we can select the most appropriate market structure to deliver a successful rollout of smart meters to the domestic sector. All sides of the House appreciate the significance of this massive task. We are seeking through these amendments to reflect the concepts advanced on Report by my noble friend Lord Dubs, supported by other noble Lords. At the same time, we are providing a structure which the Government can make workable in the future in a challenging environment. I beg to move.
My Lords, I speak to my two amendments in this group. I can promise noble Lords who are awaiting the next debate that I shall be much shorter than I was last time. This is a very short point.
The question arises about negative or affirmative procedures for the parliamentary approval of the many orders and regulations to be made under these government amendments. Almost all the clauses in the Bill that provide for parliamentary scrutiny of subordinate legislation use the negative procedure. There are four exceptions in the Bill: Clause 13, about the enforcement of licensing and the regime for the importation and storage of gas; Clause 27, exactly the same for CO2; Clause 42, about the funded decommissioning schemes for nuclear operators; and Clause 59, which gives the Secretary of State power to modify Clause 42. All those powers require an affirmative resolution by both Houses.
Almost all the government amendments will be subject to the negative procedure, except for the powers taken in the new schedule proposed by the Government. As noble Lords may have noticed, the Secretary of State’s power under the schedule to create by order new licensable activities in relation to smart metering will be subject to the affirmative procedure. That seems to me to be entirely right because this is a wholly new and very large operation. As the noble Lord said, a vast operation will be required. They are subject to affirmative procedures because the power has been taken under the gas and electricity Acts; and because these are amendments to those Acts, the affirmative procedure already required in relation to such powers will apply to this one. That appears to be almost automatic. However, the clauses that deal with regulations providing for competitive tendering processes for the award of licences for smart metering require the negative procedure. I do not understand why that should be so.
There is no question but that this tendering and some of the models that the Government are going to consider will have very considerable intellectual property value. They will give enormous power and a financial benefit to the companies that are successful in tendering for smart meters. They will be dealing with this under the umbrella of what will be the largest home-visiting programme since the conversion of all households to North Sea gas. I am old enough to remember when that happened, and it was an astonishing operation. This will be on the same sort of scale. As the award of the contract will have substantial IP value, it seems important enough to require an affirmative resolution of both Houses. We all know that that is a more effective form of scrutiny than the negative resolution. Perhaps the Minister can explain why the amendment gives the affirmative procedure for some clauses but the negative procedure for others. I look forward to his answer.
My Lords, I am glad to have an opportunity to welcome once again the Government’s change of heart on the rollout of smart meters. However, I have some sympathy for my noble friend’s amendments requiring that the regulations defining the details of the competition be subject to affirmative resolution. We have had debates earlier in the Bill’s passage on another government competition, and despite the precedent of handling larger projects than this behind the scenes, a general concern that the Government might be somewhat lukewarm in their support for this technology, as shown by the time it has taken us to get to this stage, does argue the need for increased transparency and scrutiny.
My Lords, I am grateful to both noble Lords who contributed to the debate. The last contribution was brief and to the point. I hear what the noble Lord says about transparency, but he can scarcely berate the Government by saying that this is yet another indication of the Government changing their mind. Governments should be flexible and responsive to parliamentary debate, and it is what we are usually enjoined to do. The Government have clearly done so on several occasions during the Bill’s passage, including this one, but the noble Lord seems to suggest that they are somehow not fulfilling their duty. I contest that.
As ever, the noble Lord, Lord Jenkin, has a case which he has deployed very ably. We have taken due cognisance of it. As I think he recognised in his remarks on his amendment, the Government have already taken significant steps to ensure that Parliament has an opportunity to examine the details of a smart metering rollout as we move forward. We have, for example, taken the unusual step of making the licence modification powers which will be the central element in mandating smart meters for all households subject to parliamentary scrutiny. Such powers would not normally carry additional scrutiny procedures; but it is a reflection of the broad theme of the noble Lord’s case that this is a massive task and that it impacts on every household in the United Kingdom.
The Government have also taken steps to ensure an appropriate level of parliamentary scrutiny in the new clauses that they tabled at Third Reading. The government amendments enable the Secretary of State by order to create new licensable activities in connection with smart meters or the related communications infrastructure. As the noble Lord, Lord Jenkin, recognised, that order will be subject to affirmative resolution and will therefore need to be debated and to receive the approval of both Houses. It will contain the detail of what activities are being made licensable and the conditions of those licences. In effect, the Government will set out in detail within that order the market model selected to underpin a smart meter rollout. For that reason we believe it right to provide for affirmative parliamentary scrutiny of that crucial aspect of the legislation.
The regulations for the process of awarding the license, which the noble Lord covered in his amendment, are procedural in nature and subsidiary to the issues of substance contained in the affirmative order. The regulations will set out in detail the competitive tendering process—specifying, for example, the time periods in which licence applications must be made—and will be largely technical in nature. It would be very unusual for them to be subject to the affirmative procedure, as the noble Lord suggests. The clause is very similar to Section 6C of the Electricity Act, which concerns regulations for awarding offshore transmission licences by competitive tender. Those regulations are subject to the negative resolution procedure.
The amendments we have tabled ensure that we can deliver a wide range of market-model options in order to deliver a successful rollout of smart meters to the domestic sector. The level of parliamentary scrutiny within these smart metering clauses already goes somewhat beyond what might normally be expected for these kinds of powers, and the scrutiny procedures are rightly focused on the most important elements of the powers, which are subject to the affirmative procedure. I listened carefully to what the noble Lord, Lord Jenkin, contended on his amendments, which we have not yet reached. I hope he believes that we have had sufficient debate to enable him not to move them when the time arrives. The Government have thought carefully about this issue. When we eventually rollout smart meters, we have an affirmative order for the crucial part of this important concept for the whole nation.
On Question, amendment agreed to.
59: After Clause 89, insert the following new Clause—
“Costs connected with making an offer of connection
(1) Section 16A of the Electricity Act 1989 (c. 29) (procedure for requiring a connection) is amended as follows.
(2) After subsection (4) insert—
“(4A) The Secretary of State may, after consulting the Authority, make provision by regulations for the purpose of entitling an electricity distributor to require a person requiring a connection in pursuance of section 16(1) to pay connection offer expenses to such extent as is reasonable in all the circumstances.
(4B) In this section “connection offer expenses” means expenses which—
(a) are of a kind specified by the regulations, and(b) have been reasonably incurred by the electricity distributor.(4C) Regulations under subsection (4A) may specify—
(a) circumstances in which an electricity distributor may not require the payment of connection offer expenses by virtue of the regulations;(b) the manner in which expenses reasonably incurred by an electricity distributor are to be calculated for the purposes of subsection (4B)(b).”(3) In subsection (5) for “and any information” to “connection” substitute “, any information requested under subsection (3) and any amount payable by virtue of subsection (4A) to the distributor by the person requiring the connection, the distributor shall give to that person”.”
On Question, amendment agreed to.
60: After Clause 90, insert the following new Clause—
“Renewable heat incentives
(1) The Secretary of State may make regulations—
(a) establishing a scheme to facilitate and encourage renewable generation of heat, and(b) about the administration and financing of the scheme.(2) Regulations under this section may, in particular—
(a) make provision for the Secretary of State or the Authority to make payments, or to require designated fossil fuel suppliers to make payments, in specified circumstances, to—(i) the owner of plant used or intended to be used for the renewable generation of heat, whether or not the owner is also operating or intending to operate the plant;(ii) a producer of biogas or biomethane;(iii) a producer of biofuel for generating heat;(b) make provision about the calculation of such payments;(c) make provision about the circumstances in which such payments may be recovered;(d) require designated fossil fuel suppliers to provide specified information to the Secretary of State or the Authority;(e) require the payment of a levy by designated fossil fuel suppliers to the Secretary of State or the Authority;(f) make provision about the calculation of the levy;(g) make provision for payments to fossil fuel suppliers in specified circumstances; (h) make provision about the enforcement of obligations imposed by or by virtue of the regulations (which may include a power for the Secretary of State or the Authority to impose financial penalties);(i) confer functions on the Secretary of State or the Authority, or both.(3) In this section—
“Authority” means the Gas and Electricity Markets Authority;
“biofuel” means liquid or gaseous fuel which is produced wholly from biomass;
“biogas” means gas produced by the anaerobic conversion of organic matter;
“biomass” means material, other than fossil fuel, which is, or is derived directly or indirectly from, plant matter, animal matter, fungi or algae;
“biomethane” means biogas which is suitable for conveyance through pipes to premises in accordance with a licence under section 7 of the Gas Act 1986 (c. 44) (gas transporter licences);
“designated fossil fuel suppliers” means—
(a) if the regulations so provide, a specified class of fossil fuel suppliers, and(b) in any other case, all fossil fuel suppliers;“fossil fuel” means—
(a) coal;(b) lignite;(c) natural gas (within the meaning of the Energy Act 1976 (c. 76));(d) crude liquid petroleum;(e) petroleum products (within the meaning of that Act);(f) any substance produced directly or indirectly from a substance mentioned in paragraphs (a) to (e);“fossil fuel supplier” means a person who supplies fossil fuel to consumers for the purpose of generating heat;
“owner”, in relation to any plant which is the subject of a hire purchase agreement, a conditional sale agreement or any agreement of a similar nature, means the person in possession of the plant under that agreement;
“plant” includes any equipment, apparatus or appliance;
“renewable generation of heat” means the generation of heat by means of a source of energy or technology mentioned in subsection (4).
(4) The sources of energy and technologies are—
(a) biomass;(b) biofuels;(c) fuel cells;(d) water (including waves and tides);(e) solar power;(f) geothermal sources;(g) heat from air, water or the ground;(h) combined heat and power systems (but only if the system’s source of energy is a renewable source within the meaning given by section 32M of the Electricity Act 1989 (c. 29)).(5) Regulations may—
(a) modify the list of sources of energy and technologies in subsection (4);(b) modify the definition of “biogas” or “biomass” in subsection (3).(6) Regulations may make provision, for the purposes of subsection (2)(a)(iii) and the definition of “fossil fuel supplier”, specifying that particular activities do or do not constitute generating heat.
(7) Before making regulations under this section which extend to Scotland, the Secretary of State must—
(a) if the regulations contain any provision which would be within the legislative competence of the Scottish Parliament if it were contained in an Act of that Parliament, obtain the consent of the Scottish Ministers;(b) in any other case, consult the Scottish Ministers.”
The noble Lord said: My Lords, this is the final group. On Report, we promised to bring an amendment to incentivise renewable heat. This is it. We know that the current renewable heat sector is very small, and we accept that financial support is necessary. The powers in this clause allow the Secretary of State to establish a financial support mechanism for renewable heat: the renewable heat incentive. Noble Lords will know that this was a possible option in the Government’s consultation on the renewable energy strategy. The noble Lord, Lord Reay, is not here to take me to task for anticipating the outcome of the consultation by tabling this amendment, but, as with the FIT scheme, this is a strong response to the debate in both Houses.
Under this initiative, owners of plant for the generation of renewable heat will be entitled to receive financial support. This could entail a set rate for each unit of renewable heat energy that they produce. Renewable heat opportunities will exist at all levels from large-scale industrial sites down to households; all scales will be eligible for support. In some cases—for example, producers of biogas and biomethane—the RHI power is structured to reward the production of those renewable fuels rather than the generation of renewable heat itself. To achieve the deployment of the large amounts of renewable heat required by 2020, it is expected that a contribution from a range of different renewable heat technologies will be needed.
As the different technologies will require varying rates of support to attract investment, it is expected that the level of support provided by the RHI will be specific to a group of technologies. We intend to introduce a banded system similar to that brought forward in the context of the renewables obligation. Payments under the heat incentive will be funded by a levy on designated suppliers of fossil fuel for heat; and powers to require the payment of such a levy are included in the amendment.
The levy will be placed on certain fossil fuel suppliers designated in secondary legislation which are supplying fossil fuel for the purpose of generating heat. The scheme will be administered by Ofgem. Necessarily, there is a great deal of flexibility in my amendment. Even more than in the FIT scheme, an awful lot of work is required in this area. Inevitably, we need flexibility, but I think that this meets the requirements of noble Lords and the other place and I commend it to the House. I beg to move.
[Amendments Nos. 61 and 62, as amendments to Amendment No. 60, not moved.]
63: After Clause 90, line 52, at end insert—
““exempted fossil fuel supplies” means, if the regulations so provide, fossil fuels supplied—
(a) to a specified class of consumer, and(b) for a specified purpose;”
The noble Baroness said: My Lords, I thank the Minister for introducing the amendment. As welcome as it is that the Government have realised the importance that heat will play in reaching our renewables target, and as much as I am glad that they have taken the opportunity that the Bill presents to ensure that they can quickly introduce the necessary scheme, I hope that such vague provisions will not become usual practice. It is therefore critical that the Minister gives this House as much detail as possible, even on this last set of amendments, on how the renewable heat incentive scheme will operate, and will commit to participating fully in both meaningful consultation with and detailed reporting to this House on the Government's intentions as they develop.
My amendments are designed to clear up one concern that has already been raised by an outside stakeholder as a result of the drafting of the provision. Can the Minister confirm that the provisions will not necessarily impose the levy on fossil-fuel powered CHP plants? Of course, renewable heat production is the primary target of the provision, and rightly so, but it would be extremely counterproductive if the rush in which the amendment has been produced causes the unintended consequence of damaging the development of a technology that has the potential to be so helpful in reducing our carbon emissions, enhancing our energy security and lowering our energy costs.
I am also interested in probing the provisions on where heat pumps fall. Do they allow for the payment to be made to producers of heat through that technology; if not, why not? Finally, I again ask for as much detail as possible on the implementation timetable of the scheme. Speed is of course of the essence, and I look forward to hearing the Minister's response. I beg to move.
My Lords, I welcome the government amendment. As we are all aware from the Climate Change Bill and this Bill, heating accounts for about half of energy consumption in this country and 47 per cent of carbon emissions, and half of that energy and carbon emission is from the domestic sector. I should like to explore that area a little more with the Minister, because, as the White Paper stated last year, only 1 per cent of that sector is currently renewable. To meet the targets that we are being set in Europe, major challenges have to be met through that sector as much as through energy generation.
I shall return to some of the issues that the noble Baroness raised, but I congratulate the Minister on listing as a source geothermal energy. That is very positive and perhaps covers heat pumps, which are often powered in that way. Given the very distributed nature of the domestic heat sector, we can all understand how it could work on a large scale with the equivalent of renewables obligation certificates; but with small scale, which is much more prominent in this type of energy use, what we do about, for instance, my two wood-burning stoves? What do we do about the 80,000 solar water-heating installations nationally? A lot of the 49 per cent is generated by very small domestic or small business installations. I find it difficult to understand how that will work—not that I in any way want to put the Government off taking on that challenge.
I, too, raise the issue of combined heat and power, because that has played a big part in the Government’s energy strategy. CHP can save up to 25 per cent of CO2 emissions—there is quite a broad range depending on the individual installation—but most of it is fossil-fuel based and is less efficient than if it was producing heat alone, so there is naturally a potential discrimination against that important sector, which I know we all want to be successful. I would be very interested to hear from the Minister how the department will ensure that the two strategies will not conflict.
My Lords, I thank noble Lords for their interesting comments. I cannot apologise for the vague provisions, but I understand why noble Lords would like some more information on how we will go forward. In a sense, that is the hardest information to share with noble Lords tonight.
To start with, I reassure noble Lords that we see the renewable heat incentive as an important measure and, therefore, want to introduce it as soon as possible. On FIT, I have already said that we hope to start by 2010, although I cannot guarantee that. I cannot say the same about the renewable heat incentive, but I can say that we intend to set out a more robust timetable in the new year. The noble Lord, Lord Teverson, has already raised one or two complex issues. As the noble Lord, Lord Oxburgh, said on Report, it is important that we get it right. It is unwise for me to go any further in terms of providing a timetable.
The noble Lord, Lord Teverson, is quite right about small applications. I reiterate that under the heat incentive scheme that we will produce we want a set rate for each unit of renewable heat energy produced. We expect those opportunities to exist at all scales, from large industrial sites down to the smallest household level, with all scales eligible to receive support. He goes on to ask whether I can tell him some more about some of the practical issues. No, but I acknowledge that he is right: clearly there are practical issues that we will have to work through over the next few months.
The noble Baroness, Lady Wilcox, has done a great service in tabling her amendment and asking her question. I of course understand that some sectors will argue for different treatment under the heat incentive. I know that there are some concerns that my amendment may disadvantage fossil-fuel CHP operators. I would say to the noble Baroness that the levy proposed would apply to suppliers of fossil fuel to consumers for the purpose of generating heat and not directly to consumers—that is, the owners of the CHP plant. I know that the powers in the government amendment are broad, but that has one advantage. As we develop the regulations and the consultation, we can take into account the argument put forward by the noble Baroness and the organisation that has talked to her.
Provision to designate fossil-fuel suppliers will allow the Secretary of State to exempt certain classes of fossil-fuel supplier if, after sufficient analysis and evidence, we believe that there is a disproportionate negative impact on any particular sector. A renewable heat incentive is designed to incentivise renewable heat. It is right to focus on that mode of heat. I assure the noble Baroness that we think that heat pumps are covered and that a renewable heat incentive will cover that technology. The noble Lord, Lord Teverson, mentioned domestic-scale renewable, which we intend to be covered. I hope that I have reassured the noble Baroness on that point and that noble Lords will support this group of amendments.
My Lords, we are at the end of Third Reading. I take some comfort from the Minister’s reply, certainly on renewable heat and heat pumps. Obviously, we are nervous. Given that the Government have had a Damascene conversion so late in our consideration of the Bill and at Third Reading have brought forward amendments when we have so little time or information to go on, my colleagues in another place more than likely think that we have been rather wimpy and should have kept dividing the House.
My Lords, as I have said in relation to the FIT scheme, I will make it clear to noble Lords how they can make a contribution during the consultation process. I should like to say at the Dispatch Box that I will do the same for the renewable heat incentive.
My Lords, I thank the noble Lord for that. There are times when one has to take on trust what the Government say they are going to do. The noble Lord, Lord Teverson, and I were quite nervous at some stages that these things would not come forward, but the Minister seems to have been true to his word, as well as he could be, albeit in broad terms. We can accept only what is before us. I agree with the noble Lord, Lord Teverson, that it is nice to see the word “geothermal”, but we have admitted that we have a special interest from Cornwall in that. I suspect that we will face another energy Bill before too long. I beg leave to withdraw my amendment.
Amendment No. 63, as an amendment to Amendment No. 60, by leave, withdrawn.
[Amendment No. 64, as an amendment to Amendment No. 60, not moved.]
On Question, Amendment No. 60 agreed to.
65: After Clause 91, insert the following new Clause—
“Application of general duties to functions relating to licences
(1) Sections 4AA to 4B of the Gas Act 1986 (c. 44) (principal objectives and general duties) apply to the carrying out, as respects the matters mentioned in subsection (2), of functions conferred on the Secretary of State or the Authority by or under—
(a) sections 81 to 83;(b) section 86.(2) The matters are—
(a) activities required to be authorised by gas licences,(b) such licences and the conditions of such licences,(c) documents maintained in accordance with the conditions of such licences, or agreements that give effect to documents so maintained, and (d) companies holding such licences.(3) In section 4AA(2)(b) of the Gas Act 1986 (c. 44) (duty to have regard to ability of licence holders to finance obligations) for “or the Utilities Act 2000” substitute “, the Utilities Act 2000 or Part 5 of the Energy Act 2008”.
(4) Sections 3A to 3D of the Electricity Act 1989 (c. 29) (principal objectives and general duties) apply to the carrying out, as respects the matters mentioned in subsection (5), of functions conferred on the Secretary of State or the Authority by or under—
(a) sections (Feed-in tariffs: electricity) to (Feed-in tariffs: supplemental);(b) sections (Power to amend licence conditions etc: transmission systems) to (Section (Power to amend licence conditions etc: transmission systems): supplemental);(c) sections 81 to 83;(d) section 89.(5) The matters are—
(a) activities required to be authorised by electricity licences,(b) such licences and the conditions of such licences,(c) documents maintained in accordance with the conditions of such licences, or agreements that give effect to documents so maintained, and(d) companies holding such licences.(6) In section 3A(2)(b) of the Electricity Act 1989 (c. 29) (duty to have regard to ability of licence holders to finance obligations) for “or Part 2 or 3 of the Energy Act 2004” substitute “, Part 2 or 3 of the Energy Act 2004 or Part 2 or 5 of the Energy Act 2008”.
(7) In this section—
“the Authority” means the Gas and Electricity Markets Authority;
“electricity licence” means a licence for the purposes of section 4 of the Electricity Act 1989 (c. 29) (prohibition on unlicensed activities);
“gas licence” means a licence for the purposes of section 5 of the Gas Act 1986 (c. 44) (prohibition on unlicensed activities).”
On Question, amendment agreed to.
Clause 94 [Parliamentary control of subordinate legislation]:
66: Clause 94, page 83, line 17, at end insert—
“( ) section (Feed-in tariffs: electricity)(6) (feed-in tariffs for small-scale electricity generation),”
67: Clause 94, page 83, line 17, at end insert—
“( ) section (Renewable heat incentives) (renewable heat incentives);”
68: Clause 94, page 83, line 20, after “section” insert “(Feed-in tariffs: supplemental)(3)(b),”
69: Clause 94, page 83, line 20, after “section” insert (Section (Power to amend licence conditions etc: transmission systems): supplemental)(3),”
On Question, amendments agreed to.
Clause 99 [Commencement]:
70: Clause 99, page 84, line 32, leave out subsection (1) and insert—
“(1) The following provisions come into force on the day on which this Act is passed—
(a) section 37, so far as is necessary for enabling the exercise on or after that day of any power to make an order that is conferred by virtue of that section, and section 38(1);(b) sections 81 to (Licensing of activities relating to smart meters) (and sections 93 and 94 in so far as those sections apply in relation to orders made under section 83(3)) and Schedule (Smart meters: licensable activities);(c) section (Application of general duties to functions relating to licences);(d) this section and sections 95, 100, 101 and 102;(e) paragraph 2B of Schedule 4 (and section 96(1) so far as it relates to that paragraph).”
71: Clause 99, page 84, line 37, leave out subsections (3) to (5)
On Question, amendments agreed to.
Clause 101 [Extent]:
72: Clause 101, page 85, line 23, at end insert—
“( ) sections (Feed-in tariffs: electricity) to (Feed-in tariffs: supplemental) (feed-in tariffs for electricity generation);”
73: Clause 101, page 85, line 24, at end insert—
“( ) sections (Power to amend licence conditions etc: transmission systems) to (Section (Power to amend licence conditions etc: transmission systems): supplemental);”
74: Clause 101, page 85, line 27, at end insert—
“( ) section (Renewable heat incentives) (renewable heat incentives).”
75: Clause 101, page 85, line 27, at end insert—
“( ) section (Application of general duties to functions relating to licences);”
On Question, amendments agreed to.
Schedule 2 [Property schemes]:
76: Schedule 2, page 105, line 20, leave out “asset owner” and insert “person who was the asset owner immediately before the scheme came into operation”
77: Schedule 2, page 105, line 28, leave out “asset owner or the successful bidder” and insert “the successful bidder or the person who was the asset owner immediately before the scheme came into operation”
On Question, amendments agreed to.
78: After Schedule 3, insert the following new Schedule—
Smart meters: licensable activitiesGas1 After section 41H of the Gas Act 1986 (c. 44), insert—
“41HA New licensable activities: smart meters(1) The Secretary of State may by order amend this Part so as to provide—
(a) for one or more activities within subsection (3) to be added to the activities which are licensable activities, or(b) where an order has previously been made under paragraph (a) in relation to an activity, for the activity to cease to be a licensable activity.(2) For the purposes of this Part activities are licensable activities if undertaking them without the authority of a licence or exemption constitutes an offence under section 5(1).
(3) The activities within this subsection are activities connected with the provision, installation or operation of relevant meters, including the provision or installation of infrastructure, or the provision of services, in connection with the communication of information by or to such meters.
(4) In this section—
(a) “relevant meter” means a meter of a kind prescribed by the order;(b) a reference to a meter includes a reference to a visual display unit, or any other device, associated with or ancillary to a meter.(5) An order under this section may make consequential, transitional, incidental or supplementary provision, including—
(a) amendments (or repeals) in any provision of this Act or any other enactment;(b) in the case of an order under subsection (1)(a), provision determining the conditions which are to be standard conditions for the purposes of licences authorising the undertaking of the activities;(c) provision modifying any standard conditions of licences.(6) Without prejudice to the generality of subsections (1) and (5), an order under this section may also make provision—
(a) for licences to authorise the holder to carry out the licensable activities in any area, or only in an area specified in the licence;(b) enabling the terms of the licence to be modified so as to extend or restrict the area in which the licence holder may carry on the licensable activities;(c) specifying that a licence, and any modification of a licence, must be in writing;(d) for a licence, if not previously revoked, to continue in force for such period as may be specified in or determined by or under the licence;(e) conferring functions on the Secretary of State or the Authority.(7) An order under this section may provide that it is to remain in force only for the period specified in the order.
41HB Section 41HA: supplemental(1) Before making an order under section 41HA, the Secretary of State must consult—
(a) the Authority, and(b) such other persons as the Secretary of State thinks appropriate.(2) The power to make such an order may not be exercised after the end of the period of 5 years beginning with the day on which section 41HA comes into force.
(3) An order under section 41HA may not be made unless a draft of the statutory instrument containing the order has been laid before, and approved by a resolution of, each House of Parliament.
(4) Subsections (1) to (3) of section 47 apply in relation to orders under section 41HA as they apply in relation to regulations under this Part.
41HC Competitive tendering for licences for new licensable activities(1) The Secretary of State may by regulations make provision for a determination on a competitive basis of the person to whom a licence in respect of new licensable activities is to be granted.
(2) In this section “new licensable activities” means one or more activities which are the subject of an order under section 41HA(1)(a).
(3) The regulations may—
(a) provide for the determination to be made by the Secretary of State or the Authority;(b) provide, in prescribed cases, for the publication of a proposal to grant a licence in respect of the new licensable activities; (c) provide for the inclusion in such a proposal of an invitation to apply for such a licence;(d) impose conditions in relation to the making of an application for a licence;(e) impose restrictions in relation to persons who may apply for a licence;(f) impose requirements as to the period within which applications must be made;(g) make provision for regulating the manner in which applications are to be considered or determined;(h) authorise or require the Secretary of State or the Authority, when determining to whom a licence is to be granted, to have regard to the person’s suitability for being granted both the licence and an electricity licence;(i) confer on the Authority or the Secretary of State functions in connection with tender exercises.(4) The regulations may also include provision—
(a) enabling the Secretary of State or the Authority to require prescribed persons, in relation to a tender exercise, to make payments, in the form and manner prescribed, in respect of tender costs;(b) about the effect on a person’s participation in the tender exercise of a failure to comply with a requirement imposed by virtue of paragraph (a), and the circumstances in which the tender exercise is to stop as a result of such a failure.(5) In this section—
“electricity licence” means a licence for an activity to which an order under section 56FA(1)(a) of the Electricity Act 1989 applies;“prescribed” means prescribed in or determined under regulations under this section;“tender costs”, in relation to a tender exercise, means any costs incurred or likely to be incurred by the Authority or the Secretary of State for the purposes of the exercise;“tender exercise” means the steps taken in accordance with regulations with a view to determining to whom a particular licence is to be granted.(6) Any sums received by the Secretary of State or the Authority under regulations made by virtue of this section are to be paid into the Consolidated Fund.”
Electricity2 After section 56F of the Electricity Act 1989 (c. 29) insert—
“56FA New licensable activities: smart meters
(1) The Secretary of State may by order amend this Part so as to provide—
(a) for one or more activities within subsection (3) to be added to the activities which are licensable activities, or(b) where an order has previously been made under paragraph (a) in relation to an activity, for the activity to cease to be a licensable activity.(2) For the purposes of this Part activities are licensable activities if undertaking them without the authority of a licence or exemption constitutes an offence under section 4(1).
(3) The activities within this subsection are activities connected with the provision, installation or operation of relevant meters, including the provision or installation of infrastructure, or the provision of services, in connection with the communication of information by or to such meters.
(4) In this section—
(a) “relevant meter” means a meter of a kind prescribed by the order;(b) a reference to a meter includes a reference to a visual display unit, or any other device, associated with or ancillary to a meter.(5) An order under this section may make consequential, transitional, incidental or supplementary provision, including—
(a) amendments (or repeals) in any provision of this Act or any other enactment;(b) in the case of an order under subsection (1)(a), provision determining the conditions which are to be standard conditions for the purposes of licences authorising the undertaking of the activities;(c) provision modifying any standard conditions of licences.(6) Without prejudice to the generality of subsections (1) and (5), an order under this section may also make provision—
(a) for licences to authorise the holder to carry out the licensable activities in any area, or only in an area specified in the licence;(b) enabling the terms of the licence to be modified so as to extend or restrict the area in which the licence holder may carry on the licensable activities;(c) specifying that a licence, and any modification of a licence, must be in writing;(d) for a licence, if not previously revoked, to continue in force for such period as may be specified in or determined by or under the licence;(e) conferring functions on the Secretary of State or the Authority.(7) An order under this section may provide that it is to remain in force only for the period specified in the order.
56FB Section 56FA: supplemental
(1) Before making an order under section 56FA, the Secretary of State must consult—
(a) the Authority, and(b) such other persons as the Secretary of State thinks appropriate.(2) The power to make such an order may not be exercised after the end of the period of 5 years beginning with the day on which section 56FA comes into force.
(3) An order under section 56FA may not be made unless a draft of the statutory instrument containing it has been laid before, and approved by resolution of, each House of Parliament.
(4) Section 60 applies in relation to an order under this section as it applies in relation to regulations under this Part.
56FC Competitive tenders for licences for new licensable activities
(1) The Secretary of State may by regulations make provision for a determination on a competitive basis of the person to whom a licence in respect of new licensable activities is to be granted.
(2) In this section “new licensable activities” means one or more activities which are the subject of an order under section 56FA(1)(a).
(3) The regulations may—
(a) provide for the determination to be made by the Secretary of State or the Authority;(b) provide, in prescribed cases, for the publication of a proposal to grant a licence in respect of the new licensable activities;(c) provide for the inclusion in such a proposal of an invitation to apply for such a licence;(d) impose conditions in relation to the making of an application for a licence;(e) impose restrictions in relation to persons who may apply for a licence;(f) impose requirements as to the period within which applications must be made;(g) make provision for regulating the manner in which applications are to be considered or determined;(h) authorise or require the Secretary of State or the Authority, when determining to whom a licence is to be granted, to have regard to the person’s suitability for being granted both the licence and a gas licence; (i) confer on the Authority or the Secretary of State functions in connection with tender exercises.(4) The regulations may also include provision—
(a) enabling the Secretary of State or the Authority to require prescribed persons, in relation to a tender exercise, to make payments, in the form and manner prescribed, in respect of tender costs;(b) about the effect on a person’s participation in the tender exercise of a failure to comply with a requirement imposed by virtue of paragraph (a), and the circumstances in which the tender exercise is to stop as a result of such a failure.(5) In this section—
“gas licence” means a licence for an activity to which an order under section 41HA of the Gas Act 1986 applies;“prescribed” means prescribed in or determined under regulations under this section;“tender costs”, in relation to a tender exercise, means any costs incurred or likely to be incurred by the Authority or the Secretary of State for the purposes of the exercise;“tender exercise” means the steps taken in accordance with regulations with a view to determining to whom a particular licence is to be granted.(6) Any sums received by the Secretary of State or the Authority under regulations made by virtue of this section are to be paid into the Consolidated Fund.”
[Amendments Nos. 79 and 80, as amendments to Amendment No. 78, not moved.]
On Question, Amendment No. 78 agreed to.
Schedule 4 [Minor and consequential amendments]:
81: Schedule 4, page 137, line 6, at end insert—
“Gas Act 1986 (c. 44)In section 64(2) of that Act (orders) after “41C” insert “, 41HA,”.”
82: Schedule 4, page 137, line 10, at end insert—
“2A In section 47 of that Act (general functions of the Authority)—
(a) in subsection (1A) after “microgeneration” insert “or small-scale low-carbon generation”, and(b) for subsection (1B) substitute—“(1B) In subsection (1A)—“microgeneration” has the same meaning as in the Climate Change and Sustainable Energy Act 2006;“small-scale low-carbon generation” has the same meaning as in section (Feed-in tariffs: electricity) of the Energy Act 2008.”
83: Schedule 4, page 137, line 10, at end insert—
“2B In section 106 of that Act (regulations and orders), after subsection (1) insert—
“(1A) Any power of the Scottish Ministers to make orders under section 32 is exercisable by statutory instrument.””
84: Schedule 4, page 137, line 10, at end insert—
“In section 106(2)(b) of that Act (regulations and orders) for “or 56A” substitute “, 56A or 56FA”.”
85: Schedule 4, page 137, line 26, after “section” insert “(Feed-in tariffs: electricity), (Power to amend licence conditions: transmission systems) or”
86: Schedule 4, page 137, line 26, after “section” insert “81 or”
87: Schedule 4, page 137, line 30, after “section” insert “81 or”
88: Schedule 4, page 137, line 31, after “information)” insert “—
“(a) in subsection (1)(a), omit the words from “or section 184(5)” to the end and insert “, section 184(5) or 185(5) of the Energy Act 2004 or section (Feed-in tariffs: electricity) or (Renewable heat incentives) of the Energy Act 2008;”,(b) in subsection (3)(a), after “2004” insert “sections (Feed-in tariffs: electricity) to (Feed-in tariffs: supplemental) or section (Renewable heat incentives) of the Energy Act 2008”, and”
On Question, amendments agreed to.
Schedule 5 [Repeals]:
89: Schedule 5, page 138, line 22, column 2, at beginning insert—
90: Schedule 5, page 138, line 23, at end insert—
“Electricity Act 1989 (c. 29) Section 3A(5)(ba).”
“Electricity Act 1989 (c. 29)
On Question, amendments agreed to.
In the Title:
91: In the Title, line 2, after “sources;” insert “to make provision relating to electricity transmission;”
92: In the Title, line 2, after “sources;” insert “to make provision about payments to small-scale generators of low-carbon electricity;”
93: In the Title, line 8, after “matters;” insert “to make provision about the duties of the Gas and Electricity Markets Authority;”
94: In the Title, line 8, after “matters;” insert “to make provision about payments in respect of the renewable generation of heat;”
On Question, amendments agreed to.
My Lords, I beg to move that this Bill do now pass. I thank noble Lords for their contributions to this Bill. Clearly, a great deal of progress has been made. The Government have welcomed the scrutiny that the Bill has received in your Lordships’ House. The numerous amendments that I have brought today are a product of the debate that has taken place in your Lordships’ House and the other place. I have no doubt whatever that this is a vastly improved, significant Bill. I am most grateful to all noble Lords for their constructive approach.
I do not think that I am supposed to do this but, since much of the work was done by my noble friends Lord Davies and Lord Bach, I should like to pay tribute to them. I should also like to thank the outstanding Bill team who have worked with all noble Lords and have played a significant role.
Moved, That the Bill do now pass.—(Lord Hunt of Kings Heath.)
On Question, Bill passed, and returned to the Commons with amendments.
Ownership of the News (Communications Committee Report)
rose to move, That this House takes note of the report of the Communications Committee on the ownership of the news (First Report, HL Paper 122).
The noble Lord said: My Lords, in this report the committee examined the impact of ownership of the media on the news that is provided for the public. First, I should like to thank the members of the committee for their extremely hard work on this report. It was a very good team and I very much appreciate all their work. I should also like to thank our small team of advisers and officials whose skill was invaluable. In particular, I should like to thank our clerk, Chloe Mawson, who is leaving us on promotion. She has made a tremendous contribution to this committee and its predecessor committee. I should also like to thank very sincerely the many people who gave evidence to us on both sides of the Atlantic. Again, their evidence was of enormous value. Perhaps I may pick out the evidence we received from very senior figures in the press and television in New York and Washington.
At the same time, I welcome very much to this debate the new Minister, the noble Lord, Lord Carter, about whom I shall say more later after he has made his maiden speech as the wind-up to this debate. I of course remind him that we expect his maiden speech to be uncontroversial. The only way he can achieve that is by agreeing with everything in our report. We look forward to that.
I shall start by setting out our belief. We believe that the news media have a vital role in a democracy. They report news from home and overseas. They can expose injustice and challenge officialdom and Government—any Government. At the same time, healthy media set out a huge range of views. It follows that media concentrated in too few hands can have the effect of limiting freedom of expression and diversity of view, which are the hallmarks of a democratic state. It can put too much power in the hands of one company or one individual.
In New York we interviewed Rupert Murdoch. I should add that he volunteered to be interviewed and was entirely frank about his position. He said that he was prevented by assurances he had given when taking over the Times and the Sunday Times from controlling their editorial stance, but when it came to the Sun and the News of the World, he was, in his words, the “traditional proprietor”. He set down the broad political stance of those papers, and hence the elaborate political courting of him by the political parties.
How concentrated is media ownership in this country? It is beyond doubt that over the past 30 to 40 years, ownership of the media in the UK has become more and more consolidated. In the national newspaper industry, one company has more than 35 per cent of the national newspaper market, while in the regional and local press, four publishers have 70 per cent of the circulation across the country. Radio news is dominated by the BBC with 55 per cent of radio listening, a position which has now been underlined by the announcement from Channel 4 that it will not enter the market after all. That leaves the commercial radio market dominated by four companies with a 77 per cent share. National television news is produced by three companies, the BBC, ITN and BSkyB. Only those companies produce national and international content. At the same time we have a position where there are increasing levels of cross-media ownership, notably owners with stakes in both newspapers and television.
There is an argument that this concentration of ownership does not matter much, with the implication that any special rules governing ownership of the media should be swept away and the matter left to ordinary competition law. The argument is that with such a multitude of providers, regulation to ensure competition is unnecessary. It is added that although there has been an increasing concentration of ownership, the traditional media of newspapers, radio and television are neither as big nor as influential as they once were. Certainly it is not difficult to find evidence of a commercial decline and a decline in readership and viewing figures.
Between 1992 and 2006, national daily readership reduced in this country by around a fifth, and the same is true for the Sunday newspapers. At the same time television viewing has also declined, with younger people in particular turning away. It should be added that the same is true in the United States. Newspapers there ended 2007 with an 8.4 per cent drop in daily circulation, and a decline of 11.4 per cent in Sunday circulation compared with 2001. The decline in US television news viewing is just as dramatic. Ten years ago the three big US networks, ABC, CBS and NBC, all expected an average news audience of approximately 10 million; now they each attract between 6 million and 7.5 million.
A complaint on both sides of the Atlantic is that more and more advertising is moving to the internet. The traditional news-gathering companies are seeking to adapt, but are struggling to make a profit from the internet. One of the more disturbing findings in our report is that this is leading to widespread editorial economies and a reduction in the service that the public once received. Foreign news bureaux have closed down, investigative teams have been disbanded and specialist correspondents have been cut. There is more reliance on news agencies and public relations handouts. The argument is that the internet is taking over and that in such a situation, why spend time devising special measures to regulate the traditional media whose day has probably gone?
We do not accept that argument because the figures show clearly that the traditional media are still an enormous influence in this country. It may be right that newspaper circulations have generally fallen, but they remain at around 20 million people reading a newspaper every day. It may be true that television news viewing has reduced, but again people watch on average around 90 hours of news a year on terrestrial television. The new forms of media have developed phenomenally, but it remains the case that two-thirds of the public still say that television is their main source of news, 14 per cent say that newspapers are the main source, 11 per cent say it is the radio—what we would do without the “Today” programme? Noble Lords are not required to answer that question—and only 6 per cent cite the internet. Anyone who thinks that the traditional media no longer have influence might remember that last week a dispute over a programme on Radio 2 eclipsed the biggest economic crisis since the war and provoked interventions by the Prime Minister and the leader of the Opposition.
None of this is to say that the internet is not very important and that it and other means of communication have not had an effect. Some have benefited the traditional media. When I was a reporter in the 1967 Middle East war, there were two possible ways of getting the news out, by phone to a copy taker in London—but the line could be cut off—or by taking the story to the cable office where it had to pass the eyes of the official censor. When my stepson reported the Iraq war he was able to communicate directly with his paper either through the internet or with his global phone. No one doubts that there are many more platforms by which the news can be delivered. What is more questionable is whether that has led to a proportionate increase in investigative journalism and companies originating news. Companies such as Google and Yahoo do not gather news; they are basically indexers enabling the public to be guided towards news stories provided by other companies. And who is that news provided by? It comes from traditional newspapers such as the Guardian, the Times, the Telegraph, the Mail, and of course from the BBC. Equally, the big internet players like AOL and MSN do not find their own news; they rely on news agencies.
I do not accept the case that the development of the new media has in some way has in some way invalidated the case for special rules for the traditional media. We cannot do a great deal about the past and the consolidation that has taken place, but we can at least ensure that the public interest is protected in the future and that our media are not controlled by even fewer companies. Our report makes a number of proposals in this respect.
The Communications Act 2003 was deregulatory in its approach and lifted many historical limits on media ownership. However, to ensure that the public interest was protected in the new deregulated environment, this House—the noble Lord, Lord Puttnam, is in his place—designed the public interest test, which is an incredibly important part of the legislation. It is there to ensure that no single voice becomes too powerful. Our recommendations are aimed at making that public interest test as independent, robust and streamlined as possible. We are concerned that the criteria in the test against which mergers are judged need to be reviewed and amended, and we make proposals to that end.
I want to add one point. There are concerns about regional and local newspapers because their advertising income has been particularly hard hit by the internet and by the financial crisis. Here we have proposed a significant relaxation in present regulation concerning local cross-media ownership. We see no reason why they should not be able to take over local radio stations. Subject to public interest considerations, we saw no need for specific cross-media ownership restrictions at the local level.
But we have an even more fundamental point to make. We have had regulations in the past, and the rules have sometimes worked and sometimes not. We would be entirely foolish to rely on regulation if the aim of policy is to have as wide and as good news provision as possible. In that respect, Britain has one very substantial advantage. We have a system of public service broadcasting which provides news coverage that is both independent and of high quality. The BBC is not the only public service broadcaster, but it is certainly the main one.
Here, I want to now say something which just now is extravagantly controversial: I am an admirer of the BBC. I think we would be literally mad to turn our backs on it and allow it to be undermined. Obviously I and the committee have our criticisms of aspects of policy, to which I shall come, but our basic stance is a respect for the high standards of the BBC, particularly in the area with which we are concerned of reporting of news and the breadth of its coverage. Against the trend, the BBC reports from overseas with the authority of foreign-based correspondents and specialists and does not rely, as so many others do, on agencies or reporters acting as firemen, to be flown in only when there are crises. For those who doubt, they should check on the BBC’s reputation abroad—the World Service certainly, but not only the World Service. It was striking in our United States trip how many senior figures in the broadcasting world there paid tribute to the BBC and the high standing of reporting it maintained.
We put reporting the news as the first priority of the BBC. In our report we noted Jonathan Ross’s comment that he was worth 1,000 BBC journalists. It is to be hoped that that was intended as a joke—it is about as good a joke as his latest one—but it raises a fundamental point. If there was a choice, I know what my choice would be: it would be to choose for the journalists. The point is that people like Mr Ross can be afforded only once the public service duties such as news and current affairs have been financed. Our report, written long before the present controversy, is sceptical about the size of the pay packets given to some entertainers. I think it is an own goal for the BBC: it gives the impression that it is swimming in cash and gives ammunition to the critics of the BBC and of the licence fee. Sometimes the BBC behaves as if it has no enemies when in fact, out there, it has several who are very powerful, very influential and very determined. It should take note of that.
The BBC needs to find some new mechanism to decide these massive salary packages which dwarf anything paid to the executives. Although their salaries are determined by special remuneration committees, that is certainly not the case with entertainers. However, I would add in parentheses that the review of payments might also include the salaries awarded to those top executives. It is open to question whether 25 executives funded by the public should have salaries greater than the Prime Minister.
The public will not have been encouraged by the way in which the corporation and those executives handled the Russell Brand/Jonathan Ross case over the past two weeks. When speed was required we had delay; when action was required we had prevarication. I believe that this points to a fundamental fault in the top organisation of the corporation. In 2005, the predecessor body to this committee—the Select Committee examining the BBC charter—said it would be much simpler and much more effective to have a chairman and a board governing the BBC with Ofcom dealing with the complaints, as it does for other broadcasters. Instead we have an extraordinary hotchpotch. We have a chairman of the BBC Trust who is a regulator and can use the title “chairman of the BBC” only as an honorary title; we have an executive board with non-executive members; and we have complaints like the present ones which go to both the BBC Trust and Ofcom and other complaints which are exclusively the preserve of the BBC Trust.
Apart from its confusion for the public, this stands in the way of swift and certain action. It is also difficult for a chairman, who is first and foremost a regulator holding the balance, to argue wholeheartedly the BBC case at a time when everyone agrees that the debate on the future of public service broadcasting has never been more important. Above all, it means that the important and supportive relationship between chairman and chief executive is absent. My hope remains that all this can be revisited and I am interested to see that others are now beginning to take the same view.
However, public service broadcasting is not only a question for the BBC. The committee wants to see the continuance of public service broadcasters such as ITV, Channel 4 and Five, with ITN and Channel 4 News providing competition for the BBC. We regard the decision by ITV radically to reduce its regional programmes as a retrograde step and we are well aware that there are other bigger issues and problems ahead. The switchover from analogue to digital means that the implied subsidy for companies such as ITV and Channel 4 will disappear. That will leave them with a financial black hole and the Government will have to decide whether they should be supported in some other way or whether they are content to see them fade away.
We believe that public service broadcasting cannot be left only to the BBC and we propose for consideration a number of ways in which help can be given. For example, the present £600 million scheme financed by the licence fee to help people with switchover to digital is likely to be underspent—I hope it is. Any residual funds left over could be used to support the commercial public service broadcasters. Equally, it is sensible that Ofcom should look to see whether the present regulations on ITV—a case that I see Michael Grade putting again today—unreasonably constrain its commercial hands and whether it is feasible that the other companies should share BBC facilities. In our report we are cautious about top-slicing further the licence fee—for, of course, digital switchover is a form of top-slicing—but we will continue to review the issues.
At the start of my speech I paid tribute to the witnesses who came to give evidence to our committee. It is fair to say that not all were as willing as, for example, the chairman of the BBC, the chairman of ITV or, for that matter, Mr Rupert Murdoch. I am glad to say that Mr James Murdoch has also stated his willingness to give evidence to future inquiries of the committee. One or two needed some persuasion, including Rebekah Wade, the editor of the Sun, who, when she came, turned out to be an absolute star performer, although we were not entirely convinced that, as she claimed, she and she alone was responsible for the political stance of the Sun given the evidence of her own proprietor.
However, one proprietor—Mr Aidan Barclay, the chairman of the Telegraph—did not come. I wrote four times and four times he declined, offering only a private off-the-record interview in his office. This is now a matter for the Procedure Committee, which has said that it takes very seriously the committee’s concerns and is discussing improvements in the system of calling witnesses. I have no wish to personalise this as a dispute with one man. As I said, others—curiously, all in the newspaper world—were reluctant to appear too.
I would, however, make a general proposition about the media. As I said at the start, the media generally and newspapers in particular are there to expose. That is also their claim, and it is an important claim in a democracy. Doubtless at times they expose private lives; doubtless at times they overstep the mark. But also at times they serve the public interest, as when the Sunday Times exposed the thalidomide case. The Philby case was also exposed by newspapers. Their position is that they have a right to ask questions and to expose the truth, and it is a right that I strongly support. That is the essential claim of a free press in a democracy. But people who live by that claim cannot then turn round and say, “But you cannot ask questions of me”. It is a defence which is simply not open to those who own or work for the media.
As well as a politician, I was once a journalist. I need only to become an estate agent to have done the three most unpopular jobs in this country. I notice how many people say today that the media do not meet the same standards as they once did. I do not agree with that. If you look at my old paper, the Times, it is more interesting, better written and better laid out than it was in my day, and I say the same about much of the British press. If you look at television news or listen to radio news, again, it is better. It is certainly nothing like as deferential as it once was, and that is a good thing too, while the internet provides a whole new range of opportunities in bringing news to the public.
Rupert Murdoch told us in New York that the media are in a state of flux, and he is right. They face severe financial pressures, and like any other industry they must be allowed to compete. However, we should not be stampeded into making changes that would for ever restrict the ownership of the news in this country. That also is important. The worst thing would be if the media became dominated by even fewer players than they are today. That would not be in the public interest. I beg to move.
Moved, That this House takes note of the report of the Communications Committee on the ownership of the news (First Report, HL Paper 122).—(Lord Fowler.)
My Lords, I welcome this debate on an important report on an important issue. I thank the noble Lord, Lord Fowler, both for his chairmanship of the committee that produced it and for his introduction to this debate. In fact, he has covered the issue so well that I am not sure what he has left for the rest of us to do.
I welcome my noble friend the Minister to his first debate in this House. He brings an expertise to the job that I think most of us welcome, because he has been involved in the area of communications for a long time. If I resent him for anything, it is for the fact that he makes me feel very old and is lowering the average age of the House.
I am in some difficulty on this. There are some aspects of what the noble Lord, Lord Fowler, said and what is in the report that I agree with, but I make it clear that there are aspects that I do not think go far enough. The first thing that I disagree with the noble Lord on is the coverage of the Ross-Brand affair. We heard much during our inquiry of the need to maintain the highly skilled and balanced investigative journalism that we have in this country. As someone on the committee who has no employment past either as a journalist or within the communications industry, I always had doubts about whether such an animal had ever existed.
My suspicions were fully confirmed last week when the media went collectively mad over the Ross-Brand affair. What that pair of so-called comedians did was wrong and unpleasant, but the totally over-the-top reaction by most of the British media, including the BBC itself, was close to absurdity. So-called serious newspapers, such as the Times and the Guardian, used most of their front pages to tell this non-story, while the BBC headed its main news bulletins with lengthy coverage of it, as long as six or seven minutes. This was when the US elections were reaching their climax—and I take the opportunity to congratulate President Obama on his overwhelming election—the credit crunch was still going on, anarchy in the Congo was just beginning and there was an earthquake in Pakistan that passed almost totally unnoticed. It was not the best example of the British media.
The report deals, in depth and with insight, with the present ownership of British national, regional and local newspapers. It also deals well with the news provided by the main five public service broadcasters, both their national news bulletins and their regional output. Of course that is right; as the noble Lord has said, many people still buy and read newspapers and therefore who owns them is of importance in a democracy. It is, however, perhaps of particular importance to the generation represented in this House. Equally, many of our generation still wait until 6 pm or 10 pm to get the BBC or ITV news. Therefore, how those organisations maintain impartiality and how their public service commitment is carried out also remain important.
In a democracy, where the media are an important part of the democratic process, who owns or controls the news is still very relevant, so much so that there are those who, like me, would argue—following on to some extent from what the noble Lord, Lord Fowler, said—that those parts of the media that are publicly funded in any way should be subject to the same freedom of information legislation as other publicly funded people are. I know that most of the committee do not agree with me on that, but it seems to me that if John Humphrys is allowed to know the expenses and everything else of people in Parliament, civil servants or whoever, then so should the public know what he earns. He is an important part of the democratic process and should be involved.
Having said that about the media, I wonder how many of us now really wait on a Saturday afternoon—I shall use football terms—to find out how our team has got on. We certainly do not wait to find out the result in the paper on Sunday morning, as we used to have to do. We probably do not even wait until we listen to a news bulletin, which will likely not give the score anyway. If a major story is breaking, do we wait until we read the newspapers to find out the latest news? Of course there are those who do and many of my colleagues tell me that the traditional news sources therefore remain of paramount importance. Yes, newspapers are still read, but they are now more likely to be read for comment and views rather than for news. As Tony Blair, our previous Prime Minister, said, they are becoming “viewspapers”, not newspapers. That may be worth while, but it is not about news itself. To cite a small example, yesterday in the Library I looked at the front page of the Herald, the Glasgow-based Scottish paper. There simply was no story on that front page that I had not already heard or read elsewhere. So while the report is good, it deals with the past and present. It does not say enough about the future.
Younger people—that is, almost anyone younger than most of us here—have access to an enormous range of information, including news. We live in an information-rich society. The public have access to sources of information that were undreamt of when I was a young man or even when I first entered politics. In the past 100 years, we have gone from being entirely reliant for our news on a few newspapers—remember, even they are mainly less than 150 years old—to a world that has radio, television and, perhaps above all, the internet. I know that my colleagues will say, “He will talk about the internet; he is always talking about it”. You can read almost any newspaper in the world online, find out any piece of information and, yes, keep up with the very latest sports results.
I accept that, in a rapidly changing technological world, those who try to predict the next breakthrough are likely to get egg on their face. However, some things that are going to happen in the future we already know about. Within four years the switch from analogue to digital television will be complete. Then, every household that has a television, which is nearly all of them, will have access to at least two 24-hour news channels—the BBC, probably Sky and possibly one more—as well as the continuing news services on the main channels. They will also have access to many more radio stations than they do at present. Already more than 70 per cent of households, before the switchover becomes mandatory, have digital television.
Many of those people—the figure is close to 70 per cent—also have access to the internet through broadband connections. Companies such as Virgin, Sky and BT increasingly offer bundles that include television, broadband internet access and telephony. As a result, users can obtain news from an enormous number of local, national and international websites. Last night, I was able to watch on my laptop computer at home coverage of the US elections from US websites rather than being dependent on British newspapers, radio or even the BBC. The noble Lord, Lord Fowler, wants to see the BBC employing people abroad. I may differ with him on that, as it seemed that every bar and party in the United States last night was manned by some BBC reporter—I gather that almost 100 of them were over there covering the election. I did not need to watch that; I could watch and read about it in other ways from a variety of sources.
The major issue must be to ensure that everyone has the same access. I again disagree with the noble Lord, Lord Fowler, in hoping that, if the Government decide to top-slice the BBC licence fee after 2012, that money will go towards ensuring that all households have broadband access rather than subsidising other television channels. That would be a much more useful way of ensuring that people have access to the news.
I shall suggest one or two ways in which access to news will be increased enormously during the next few years; although this debate is not time-limited, I do not want to spend a lot of time on this. People will say that the internet is limited and that you have to go to and turn on a computer to watch it. The next step—it is in a comparatively early stage of development, but the technology exists—is for the user wirelessly to access the internet through their television set. You will be able to watch almost any television programme or news bulletin from around the world, as well as look at specific news websites. You will be able to read newspapers, not just from this country but from elsewhere, from the comfort of your lounge and not from a seat in front of a computer screen in some less comfortable part of the house.
We are beginning to see also the development of electronic books, which look like books, are the same weight as books and whose pages do not glare at you as does a computer screen. With these devices, you will be able to download newspapers from the internet as you sit on your train or bus, or where you would normally read a newspaper or book. I know that some people shake their head and say I am way out on this, but I believe that it is going to happen.
More people are using mobile phones to get their news. When I am abroad, I do not have to find an internet café or watch Sky News on a television; I can simply go to the BBC website on my mobile phone and see exactly what is happening in the UK. I certainly do not wait until the following morning to buy yesterday’s newspaper to get the news.
Thus we already live in a world where most people have access to news from almost anywhere in the world. They will also have access at a very local level, whether it is to their local council, their local sports club or their children’s schools’ websites. News will be very local or national, but it will not be dependent on the traditional news sources.
Of course, some important questions are raised. First, while we have this enormous wealth of information and news, is there any evidence that people are better informed or read more news? Secondly, even if the evidence suggests that they are not and do not, should it be our concern? It is the responsibility of government and Parliament to ensure that everyone has access to as much information as possible, but it is not our responsibility to try to make them use it. When people need news that either they consider important or affects them personally, they will seek it out.
In a democracy, we would like all our electors to be well informed by balanced media. I do not believe that that has ever been the case. As a politician, I have never noticed that the media are particularly balanced; they are more likely to give one side of the argument. Indeed, most people in a democracy are more informed than in the past. Their number will continue to grow. The ownership of existing sources of news is still important, as the noble Lord, Lord Fowler, said, but control of the new platforms that are developing, will spread and will become increasingly important to younger people in particular, is largely outside the control of this country—it will be in the USA. The platform, rather than news source, will be important. I do not know whether we will ever be able to come to international agreements to control it or, indeed, whether we should.
My Lords, I welcome the opportunity to debate the Communications Committee report. I add my thanks to those offered to the noble Lord, Lord Fowler, for the expert way in which he guided the committee through its various stages. Possibly his most difficult task arose on our trip to America when, on a visit to the Washington Post, we were being led to a committee room to do some serious discussing about the future of the news and we learnt that Brad Pitt was being given a tour of the newsroom only a few feet away. There was mutiny in the air but the noble Lord managed to get us all into the committee room, and none of us caught a glimpse of Brad Pitt.
I also welcome the Minister—the more Carters in this House, the merrier. The inquiry was held against a backdrop of multiplying numbers of news platforms, the ever-increasing ways of accessing news and declining advertising revenue. Alongside that is a perception that the provision of news on television and in newspapers is in decline. Within this decline, foreign news reporting and investigative journalism are particularly hard hit. As we state in the report,
“The proliferation of news sources”—
which the noble Lord, Lord Maxton, so eloquently discussed—
“has not been matched by a corresponding expansion in professional and investigative journalism”.
In the area of television, public sector broadcasting is under threat. I declare an interest as an associate of an independent production company, but also as someone with insider knowledge, having worked for many years making PSB television for the BBC, Channel 4 and ITV. We on these Benches believe that it is essential that public service sector broadcasting is preserved, that it is free at the point of use and that there is choice for the consumer.
During the past week, as both the previous speakers have mentioned, we have seen the BBC come under sustained attack because of the unacceptable behaviour of Jonathan Ross and Russell Brand. The fact that the BBC is funded by the licence fee, a levy on the public, means that it must respond immediately when that public are upset about what is being broadcast. However, I agree with the noble Lord, Lord Maxton, that politicians and the rest of the press went over the top. It is important to work out what went wrong and ensure that it does not happen again. That means that we understand, as the Guardian pointed out last week in a leader, that,
“The BBC is a universal broadcaster but does not serve a nation with universal tastes”.
We should all think long and hard about what will happen to many of the wonderfully innovative BBC programmes if producers are no longer prepared or allowed to take risks.
We were told on our trip to America by many in broadcasting, newsprint and politics how lucky we were to have the BBC as a cornerstone of public service commitment. What is happening in the US is a cautionary tale. We held meetings with senior vice-presidents of the three network channels; they are all facing serious problems with declining audiences for their evening news programmes. There is a practical reason for this downturn, alongside the competition posed by cable channels and the internet, which is the time at which the news is broadcast. The people it is aimed at are working longer hours, with longer commutes, and they do not get home in time to tune in to the evening news. But in America there is no possibility of rescheduling because advertising slots in peak time are too precious. The market rules, despite the fact that Mr Slavin from ABC told us that if this group continues to turn away from the evening news, it is not inconceivable that it will disappear altogether. Here, we have the admirable Channel 4 News at seven o’clock and news on BBC, and now again on ITV, at 10. This accessibility and plurality must be maintained.
Mr Murdoch, whom we also met, does not think that we are lucky to have the BBC but, then, his favourite broadcaster is Roger Ailes, who runs Fox News. Mr Ailes told us that his definition of news was that it should be new. So, for instance, Fox News did not cover the events at Abu Ghraib prison unless something previously unknown emerged. It was showing liberal bias to do otherwise. Mr Murdoch told us that he wished Sky News here would follow the Fox philosophy. He also said that nobody at Sky listens to him. That demonstrates exactly how lucky we are to have the BBC and how crucial it is, at a time when PSB is under threat, that we respect its independence and guard the licence fee.
Ofcom has suggested that research it recently conducted demonstrates that we overemphasise the connection in the public’s mind between the licence fee and the BBC. But when people were presented with a list of all TV services and asked what the licence fee paid for, 87 per cent said the BBC. To me, that suggests a pretty strong connection. It might, of course, help the 13 per cent who did not make the connection if the BBC put its name on the licence we receive.
We on these Benches believe, as does the report, that topslicing the licence fee would undermine the ability of the corporation to do what it does best. We are also concerned that if Channel 4 were to take public money, its unique independence would be compromised. However, the BBC must fulfil its obligations. Last October, the Director-General announced a series of cuts to news. He told us that the BBC can deliver the same or higher quality of journalism with somewhat fewer people. This may be so in some areas but not all of them.
I used to be a producer on “Newsnight”. At the 2007 MacTaggart lecture, Jeremy Paxman said:
“On Newsnight … over the last three years we’ve been required to make budget cuts of fifteen percent. We have lost producers, researchers and reporters. Nor can we make the films we once made … and I cannot see how the programme can survive in anything like its current form if the cuts are implemented”.
That rings true to me, and I think it shows on the screen. High-quality news programmes are central to the BBC’s PSB remit. It makes cuts to its news operation at its peril.
The multi-channel landscape of the digital future poses particular problems and challenges to the commercial public service broadcasters. The BBC should not become a monopoly supplier of PSB and, according to Ofcom, that view is held by 86 per cent of the public. Plurality of public service broadcasting must be an aim of public policy. We agree with the noble Lord, Lord Fowler, that if money is left over from the digital switchover targeted assistance programme, it should go to help the commercial PSBs.
The other suggestion is that the BBC offers practical partnerships to the commercial public service broadcasters. It seems to have responded very positively to this, offering to share facilities and expertise. That must be properly acted upon rather than being just words.
It is not just broadcast journalism that is facing problems. The newspaper industry has seen readership numbers fall and the loss of advertising revenue to the web. As with television news, cuts are being made across the industry, particularly in investigative and foreign journalism. We agree with the report that the public interest consideration for newspaper mergers and broadcasting across media mergers should be amended to refer specifically to a need to establish whether a merger will impact adversely on news gathering.
However, we should not be dismissive of the journalism of the internet. It has been hailed as vital to the process of democracy in America in the historic election we have just witnessed. It enfranchised swathes of people by enabling those who had laptops to access speeches, campaign ads and news broadcasts in their own time and repeatedly. While on our trip to the United States a year ago, only one story dominated the conventional media—the arrest of OJ Simpson for armed robbery. Suddenly a new story emerged. In Jena, Louisiana, people were marching against a perceived injustice. Six black students had been charged with assaulting a white classmate and were facing prosecution and jail. A fight occurred following an incident in which three nooses were hung from a tree in the high school grounds by white students the day after black students had sat under the tree. The story emerged not in the newspaper or on TV but through the internet. As the bloggers and citizen journalists spread the word, so did the protests. The story grew out of Jena and out of Louisiana, and thousands from across America converged on the town. That is a whole new way for news to travel.
There is a lot that is good about this world but it is not regulated, and people know this. They do not trust the news they get from it, as they do the news they get from newspapers, radio and television and, in particular in this country, the BBC. As the noble Lord, Lord Fowler, said earlier, 65 per cent of the population identify television as their main source of news, with only 6 per cent citing the internet. In what Will Lewis, editor of the Telegraph, calls the world of multiple confusion, people need and want to access news from the traditional sources they know and trust. We do not agree with those who argue that the media ownership rules in this country are out of date now that there are so many news outlets from which to choose.
We believe it is still the case that consolidation of ownership in the media risks giving disproportionate influence to a small number of companies and owners, and that media ownership regulation must be maintained.
My Lords, it is a great pleasure to welcome the Minister to your Lordships' House, to congratulate him on his appointment and to be present for the occasion of his maiden speech as a Minister. Many of your Lordships will, like me, have valued their exchanges with the noble Lord during his important reign as the first chief executive officer of Ofcom and will be looking forward to further exchanges with him in your Lordships' House.
Turning to our report, and in common with other members of the Select Committee who have spoken, I commend our very expert media chairman, together with his staff and advisers, for enabling us to open up a view of our field which is as penetrating as it is comprehensive. I have the impression that the Government’s response is rather narrower than that, focusing too exclusively on basic commercial considerations and taking insufficient account of the title of our report, Ownership of the News, and the need for diversity in that respect. I have a sneaking feeling that the Government’s response might have read rather differently had the Minister been in post at the time it was written.
It is certainly not in the public interest for diversity in the ownership of the news to be diminished, and still less desirable for it to be homogenised or, worse still, monopolised. We do not need to be reminded of the pressures that have been, and certainly still will be, working in that direction. The newspaper industry and the media generally are facing serious problems. Readership is falling, young people are turning to other sources of news, and advertising is moving to the internet. Newspapers and broadcasters have less and less revenue with which to support expert or specialist journalists, and still less to support a worldwide network of many of them.
I am only too aware of that as a result of the changes that have taken place since the days when I used to travel the world with my noble kinsman, when he was Foreign Secretary, with up to a dozen or so specialist journalists in the same RAF plane, including diplomatic correspondents, not just from the Times, the Guardian and the BBC, but from the Glasgow Herald, the Mail, the Mirror and the Sun. Today, all that seems to happen for most of the time is a chorus of press criticism of Foreign Secretaries for flying abroad at all. It is against that background that our committee drew attention to the fact that the proliferation of ways to access the news, alongside consolidation of ownership, had certainly not been matched by any improvement in journalistic results. On the contrary, all too much of the news has simply been repackaged from elsewhere.
In the USA—and we have heard a great deal about this already—we noted that the quality and range of television news had steadily diminished. This is, thankfully, still in contrast with the position in this country, where public service broadcasters continue to provide an invaluable wide and diverse range of home and overseas news. Ed Richards told us that for him the most significant, indeed crucial, statistic in New News, Future News, was that television news remains the primary source of news for two-thirds of the UK population. In that setting, the BBC plays a pivotal role and, as we point out,
“it is vital that nothing be done to diminish that role”.
Recent events which have already been touched on—I have in mind, of course, the disgraceful behaviour of Jonathan Ross and Russell Brand—must underline, for the BBC, the folly of shooting itself in the foot. Moreover, if UK news standards are to be maintained, public service broadcasting competition in this area is also vital. As ITV/Channel 4 and Channel 5 and others find it increasingly hard to compete for internet-bound advertising, without the spectrum advantages of the past, our report makes it clear that other forms of funding will be needed to stimulate competition with the BBC’s news service, as in other public service broadcasting areas. However, unlike the noble Lord, Lord Maxton, I hope that the BBC can reassure us that it has no plans to topslice the licence fee for such funds. As our report says,
“the commercial public service broadcasters should not be supported at the expense of the ability of the BBC to do what it does best”.
Here I entirely endorse every word said by the noble Lord, Lord Fowler, and the noble Baroness, Lady Bonham-Carter, on the value of the BBC to this country, which goes well beyond our national boundaries.
A further issue that I should like to underline is the consolidation of media ownership, with its risk of disproportionate influence. Eight owners now dominate the national press, with that power increased by cross-media ownership, as most have holdings in other media enterprises, including regional and local news as well as TV and radio. Hence, Simon Jenkins’ view that the industry’s self-regulation remains inadequate is increasingly widely held. Even so, freedom of the press—and I acknowledge its considerable importance—is one reason why we are prepared, although only just, to tolerate the Press Complaints Commission as it is, even though it includes a number of influential journalists and has a decidedly limited remit.
Andrew Neil told us that,
“no newspaper group in this country, none, covers its own affairs well”.
Even so, with a spread of eight powerful press barons competing with each other, there remains at least some hope that, if some dubious activity is taking place in one group, another newspaper will air the issue. Dog sometimes does eat dog.
However, a very large question mark remains firmly on the agenda. Every current editor assured our committee of their freedom to investigate and write on any issue, But that was certainly not supported by the example of what actually happened when Andrew Neil, then editor of Rupert Murdoch’s Sunday Times, published articles alleging corruption in the Malaysian Government, just at the moment when Murdoch was hoping to persuade their Prime Minister to allow Star TV into their country. Andrew Neil soon became an ex-editor—and I think that that speaks for itself.
I come to the last issue I want to emphasise and, in particular, to ask the Minister and the rest of the Government to think again. The Communications Act 2003, as we all know, gave a far greater emphasis to consumer—that is, to technical and economic—issues than to those of the citizen, which, as chairman of the Broadcasting Standards Commission in the past, was an area I was particularly concerned with. I do not for a moment question the importance of those consumer interests that Ofcom has championed; indeed, I am rather more convinced of the value of what it has done than I was at the outset. In the rapidly changing IT world we have lived in since the Act was passed, it has become clear that it has needed to act fast and keep as much up to date as it can, with the fairly limited remit it was given by the 2003 Act in some respects. But undoubtedly that commercial emphasis has meant that content, very often and very much a citizen’s concern, has taken a back seat.
The decisions of the Content Board remain very much in-house. It was interesting that when the consumer council was first in existence, it seemed to have rather more publicity and gave us more information about what it was recommending to Ofcom than did the Content Board. As a result, the Content Board still has much less impact than it ought to have. Quite simply, it should be much more powerfully publicised. That is why it is so important, when a merger is being considered, that Ofcom should be given the power, as we recommend, alongside that of the Secretary of State, to initiate the public interest test. As we say, that sits more comfortably with its clear statutory duty to promote the interests of the citizen. I shall not go into the long battle that we have had on the blurring of the word “consumer” and “citizen”, because there has been repentance all round on that one.
To concede such responsibility would in no way remove the Secretary of State’s power to decide against any recommendation that Ofcom chose to make, but it would mean that any citizen’s issue that Ofcom considered important would quite definitely be aired publicly.
My Lords, I am delighted to follow the noble Baroness’s most interesting observations on an area in which she took acute interest well before she came on to the committee, although she worried me and the learned clerk when she referred to her husband as her kinsman. There was some discussion as to whether that was actually the correct description. However, we all know who he is—a distinguished Foreign Secretary, as he was.
I join others in welcoming the Minister to his new position. If I may say so without embarrassing any of his predecessors, he is much more qualified to reply to this debate than one or two other Ministers whom we have had. He is also, I hope, much more qualified to contribute to policy because of his previous experiences. I hope that in a quiet moment, if he gets one, he will have the opportunity—I appreciate that he took over his responsibilities only very recently—to read our earlier reports, because there are items of merit in them.
I congratulate my noble friend Lord Fowler, who is an outstanding Select Committee chairman. I do not wish to embarrass him, but he is his own creature. Those who serve on the committee are pleased to serve on it and are doing a valuable job. I think the House will have heard in the power of his speech and in the range of his contributions not only his great personal experience in journalism but his wider interest in the subject and in the responsibility inherent in the ownership of the media. He has covered the water-front in his wise and powerful speech.
I have regarded membership of the committee as a learning process. I note—the noble Lord, Lord Maxton, would remind me pretty quickly if I did not—that we started this process 15 months ago, and some of the evidence that we took is pretty out of date now. Some of the things that happened at the time were technical, and some were financial, but they have advanced things in significant ways. I say unashamedly that when I first joined the committee I never used to get my news from BBC News online, but now I turn to it regularly as a much more immediate way of hearing the news. I can also choose what I want to hear and do not have to wait for the order of march that has been detected by some editor or producer, or perhaps wait for longer than I wish to, to hear the items in which I am particularly interested.
The quality and range of provision and the technical capabilities are growing enormously, and with them the challenges. There is the challenge of ownership, as my noble friend Lord Fowler has said, as well as the challenge of determining where the news is coming from and under whose oversight or influence it may be perpetrated, no matter on what channel or by what outlet, whether it is a news aggregator or one of the internet offerings of one sort or another. From where does the news actually originate?
It is very common for noble Lords—we all do it—to stand up and say how wonderful this House is. However, speaking as someone with some modest experience in government and some experience in the House of Commons, I think that this House is rather better placed at forming a committee of people of experience with a background or other involvement in the industry to address some of these issues.
The honest truth is that Members of Parliament, particularly Prime Ministers and members of Governments, have great difficulty taking a totally objective view of some of the issues of ownership when they are trying to persuade particular owners to continue their loyal support in coming elections. It is no secret—I have seen this myself, more as an observer than a practitioner—how successive Governments of different parties have been faced with these issues of ownership and have found it impossible to dismiss concerns about whether their decisions might impinge too seriously on the attitude of Mr Rupert Murdoch, who is the classic illustration of this, and on his publication.
As my noble friend said, we took fascinating evidence. I congratulated Mr Murdoch on the candour of his evidence to the representatives of the committee. However, he stated that he did not really interfere with the Sunday Times or the Times, although I think it is true to say that Andrew Neil, in his evidence, had a slightly alternative view and presented a slightly different version. He was also contradicted by a current editor. He also said that in the case of the Sun and the News of the World he was a more traditional proprietor. We then had the extremely engaging and sparky evidence of Rebekah Wade, who implied that the only thing that exercised him was the concentration on celebrities and that he was critical of the fact that the Sun spent too much time on them.
It should be recognised that the committee, which had difficult birth pangs in getting the House to agree to it, has a real role to play, and in the very important respects that I have outlined is significantly better placed to play it than the Commons is. There is a sense that the committee has a more independent view.
I entirely echo what the noble Baroness, Lady Howe of Idlicote, has said about corporate governance at the BBC. My approach to this is entirely as a committed supporter of the BBC, which is one of the few real jewels in our national crown. It is important not only domestically but around the world, and is respected and admired. The most remarkable convert of all time was probably Mr Gorbachev, who at the time of the coup against him was President of the Soviet Union. He had been committed to trying to jam the BBC World Service, but in his moment of crisis at his holiday home in the Crimea, when he tried to find out what on earth was going on in the coup he turned to the BBC World Service as the one service that he trusted to produce an accurate account of the events. I make my comments against that background.
We set out very clearly in our earlier report our concern about the bizarre, compromised structure that had been established of the trust and the executive board of the BBC. As my noble friend Lord Fowler has instanced, Sir Michael Lyons, who is an excellent person in so many ways, is allowed only the honorary title of chairman of the BBC, if that is not confusing to the general public. I did not expect our criticisms to be justified quite so quickly by events. I was waiting for the first problem to arise that would put the new arrangements to the test. One only has to read the header of last week’s Times leader, which says:
“A Failure of Governance … The BBC Trust cannot ride two horses at the same time”.
More colourfully, Greg Dyke says in a Times article that,
“some of us have that ‘we told you so’ feeling”.
I am afraid that it may shock certain members of the committee to learn that they are described by Mr Dyke in the same article as,
“a motley collection of members of the House of Lords”—
what a way to describe the Select Committee, but I let that pass—
“academics, former BBC chairmen and directors-general who told everyone who would listen that the new system of running the corporation wouldn’t work”.
Ironically, I cannot fail to remember that the strongest defender of the BBC, Michael Grade, said in his evidence that the new system certainly would work. Within about four or six months of giving us that evidence, he had departed to ITV.
That leads on to the next point in our report. If the Government get another problem like this—if there is another crisis and the same sort of problems emerge about how it is being handled, who is responsible and how quick the reaction will be—the pressure to go back to a sensible, strong, unitary structure will be great. Of course, we cannot really do that because our other recommendation is that the BBC should be governed not under its charter but by an Act of Parliament. It might be slightly easier to move an amendment to an Act of Parliament or produce a new Bill, but with the charter’s fixed timeframe nobody can do much about it. We raised the issue of the Act of Parliament and the Government talk about it in their response, particularly in terms of parliamentary approval of the licence fee and the difficulties that they see arising. If, as now, you have a structure that does not work and is under such strain, there are wider considerations in this rapidly changing world for more opportunities to change it.
I also strongly agree with my noble friend Lord Fowler about the news media. He quoted Mr Rupert Murdoch talking about its chaotic state. Of course, Mr Murdoch had said that before we hit the credit crunch and the financial challenges that we currently face. There will clearly be even greater economies throughout the media—even more cuts of one sort or another. The news agency feed, the PR press release and the alternative sources of news that emerge will become increasingly prevalent.
Against this rapidly changing background, one of the real challenges now is the condition of the regional and local press, which is under enormous pressure. I have been watching the four major groups involved with interest. For one of them, the share price is now down to 5 per cent of what it was about three years ago. Our report said that, despite the pressure that they might face, the competition rules should still apply. I have seen reports in the past day that certain of the four major local groups are in discussion about how they might rationalise and harmonise some of their back-office activities as a way through.
However, there may be an argument for waiving the competition rules. Look at Lloyds TSB and HBOS, where the national interest, the challenges they face and the interest in maintaining those activities because of the importance of banks and building societies meant that the Prime Minister and the Secretary of State announced that they would suspend the competition rules. I understand that a former chairman of the Competition Commission came to a recent all-party group in this House to say that that is all very well, but it does not rule out reassessing at a later stage, in happier times, whether Lloyds TSB and HBOS could then be referred back to the Competition Commission, even though they had been allowed to merge. You could reassess whether that merger had subsequently proven to be in the national interest in terms of effective competition in calmer times. If there was an argument for saying that some mergers might help to ensure the survival of the regional and local press, the Government might need to bear that in mind against the real challenges that they currently face.
I was unimpressed by the Government’s answer to our proposal that Ofcom should have the power to initiate the public interest test. We were not suggesting that that should replace the power of the Secretary of State to do so, but that Ofcom should have it as well. Of course, the Secretary of State will have to take the final decision. However, coming back to the difficulty of separating politics from executive decisions by the Government, it seemed that it would actually strengthen the Government’s position. If they were not referring something, and Ofcom did not think that it was necessary to refer it either but had the power to do so, it would underpin the Government’s position. The Secretary of State would still take the final decision, but on a much more transparent basis.
The Minister may not have been involved in the preparation of the Government’s reply. I hope that, if he is involved in future government responses, he brings some of his skills to bear and makes a rather better written reply than many government responses to Select Committees. They seem as dismissive as possible and pretty unsatisfactory. I hope that the Minister will look at that.
Reciprocal rights—for UK companies to have the same rights as we give to foreign companies operating in this country—came up in 2003. The Government said that they were taking steps to ensure that reciprocal rights were achieved. When we suggested that very little had been done and that an annual report on progress might be one way to keep up the pressure on the Government to work on this, what did we get? “We do not think that an annual report would be particularly helpful”. For the Minister’s maiden initiative of real decisiveness, taking a grip on his department—which we all encourage him to do—I say that that is not good enough as a response. If you are not going to make an annual report, at least set up some arrangement whereby a report is made to Parliament on an issue on which Parliament and Government are united, on which there should be reciprocal rights, and on which pressure from Parliament could help the Government to achieve objectives that they otherwise might not. I hope that the Minister feels able to act on that point, which would be of assistance to UK companies.
I strongly support my noble friend Lord Fowler in his coverage of the main issues of the report. I wish the Minister well in his positive and spirited reply to the debate.
My Lords, I have an unpleasant feeling that everything that needs to be said has been said. I am rather tempted to say that I agree with everything and sit down. That would probably be a great relief to Members of your Lordships’ House who are thinking about dinner, which is probably most of us. However, I fear that it would also be a discourtesy. First, it would be a discourtesy to my noble friend the Minister, who is here to give his maiden speech, to which we are all greatly looking forward. I join everybody else in welcoming him to his place. Secondly, it would be a discourtesy to our much esteemed chairman, the noble Lord, Lord Fowler. He is esteemed not only for his excellent chairmanship, but for the excellent way in which he set out the committee’s stall earlier in the debate. I have no wish to offend the noble Lord, so I am afraid that I am going to plough on. In doing so, I add my thanks to our committee Clerk, Chloe Mawson, and her team, who managed a particularly lively, perhaps even volatile, evidence-gathering process with great discretion and determination. We were also fortunate in having two excellent special advisers in Professors Steve Barnett and Mike Feintuck.
For me, coming to this inquiry with no background in news gathering or dissemination, the experience was salutary. Like the noble Lord, Lord King, I learnt a great deal more from it than I contributed to it. I learnt in the main about the pressures under which the purveyors of news, print and broadcast, have to work and about their changing priorities in a fast-moving environment. This is a matter of great concern to everybody, as was much mentioned by those who have already spoken. I said that I could have sat down having said that I agreed with everything that had been said, but that would not have been true, as I do not agree with my noble friend Lord Maxton. He will not be surprised by that because he thinks that I am a dinosaur and I think that he is an anorak, albeit a very high-class one.
Indeed, my Lords, as my noble friend rightly says from a sedentary position, we are probably both right. However, his view of this world of multiplicity within which information is available to anybody who wants to access it in many forms, including on mobile telephones, through a television, via the internet and so forth, is one that, although I understand the seductive nature of his description, none the less seems to me neither particularly desirable nor the one in which most people live.
As someone who is easily confused by the explosion of news sources, mainly driven by the internet, I found some aspects of what emerged from the evidence that we took a pleasant surprise. For example—this has been mentioned by other speakers—it is clear that there is still a relatively small number of trusted sources of news, among which the BBC and the broadsheet newspapers, whether they appear in print or online, still rank highly. The noble Baroness, Lady Bonham-Carter, mentioned this, as, indeed, did our esteemed chairman. Ofcom stated in written evidence to the committee:
“Television—particularly PSB evidence—is by some margin the main source of news for the majority of UK consumers … Among the TV providers, the BBC takes more than 50% of the television news audience … and ITV1 more than half the remaining audience”.
Evidence also shows that although the readership of paid-for newspapers both national and regional—freesheets are another matter, as the committee discovered—is much smaller than the audience for television news, those newspapers are still significant sources in terms of the trust that is placed in them.
This leads me to my main point. Despite all that we have been told, mainly by my noble friend Lord Maxton, but by others as well, about the growing influence of the internet, with its huge diversity of views, who owns or controls the conventional—my noble friend might say old-fashioned—sources of news remains a matter of undiminished significance in which, for the sake of democracy, we must continue to take an active interest because those people still wield enormous influence over the views of a majority of the population. Here I take issue with something that my noble friend Lord Maxton said as regards what people read newspapers for. He implied that newspapers are frequently out of date and that people read them for views and comment. It strikes me that views and comment are precisely what influence people to make the choices that they do, in particular the choices that they make that influence how they behave as citizens and how they exercise their democratic rights. Therefore, the news is surely more than just what happened.
Looking at the evidence—this was mentioned by the noble Baroness, Lady Howe—I was struck again by how anxious serving editors and current owners of newspapers were to reassure the committee that owners are not in any way involved in editorial decision-making. We even heard the owner of the Daily Mail, Lord Rothermere, volunteer that he and his board would be unconcerned if their editor decided to promote the legalisation of cannabis or entry into the euro, or even to back the Labour Party. There was a resounding noise of jaws hitting the floor at that moment.
Evidence was given by Ms Rebekah Wade, as has been mentioned by other members of the committee. She certainly won some hearts. I have to say that she did not entirely win mine, but there we are. Ms Wade attempted to persuade the committee that the interest of her proprietor, Rupert Murdoch, in the content of her newspaper was limited to being,
“dismayed by the amount of celebrity coverage … particularly on ‘Big Brother’ for example”.
It is unfortunate for Ms Wade, as was mentioned by several other speakers, that the minute of the committee’s meeting with Mr Murdoch in New York—I am sorry to say that I was not present at the meeting, but I did read the minute—reveals a slightly different story. As we have been told, he makes it quite clear that he treats his most successful newspapers, the Sun and the News of the World, very differently from the way in which he treats the Times and the Sunday Times. His influence on them is constrained. None the less, he clearly said that he acts as a “traditional proprietor” in respect of the Sun and the News of the World. The minute continues:
“He exercises editorial control on major issues—like which party to back in a general election or policy on Europe”.
That is a direct quotation from the minute that the committee submitted of the meeting with him.
Mr Murdoch’s straightforward acknowledgement of his direct involvement in the editorial stance of those newspapers is rather refreshing in the context of so much convoluted denial from other people. Ex-editors who gave evidence, including Andrew Neil, who has already been mentioned, Andrew Marr and Dominic Lawson, presented the issue of ownership differently from their serving colleagues. Mr Neil was particularly forthcoming about the nature of the UK newspaper industry when he said:
“Our newspapers are dominated. Even when they are PLCs, even when they are quoted companies, they are essentially dominated by one individual ... in effect they are run like private companies. The Rothermere family controls The Mail and the Murdoch family controls the News International papers”.
He went on to say that the UK situation was significantly different from what prevails in Europe or North America, maintaining that,
“owners have never been as influential in America as their equivalents have been in this country”.
Andrew Marr made some trenchant remarks about the kind of interference from proprietors that, while not directly political, none the less influences the integrity of the output. This relates to a point made by the noble Baroness, Lady Bonham-Carter. Andrew Marr said that,
“the great danger for newspapers is that the reporting job, people out there finding stuff out and sticking it in the newspaper that you would not otherwise know is what is being cut and cut and cut”.
That is the kind of influence that was brought before the committee over and over again both in respect of newspapers and television. It is a serious matter.
This brings me back to the question of trusted sources of news, which are still very few in number, as I have said, even though they may manifest themselves in a variety of forms. The fact that they are so few makes the question of who owns and controls them even more important. The degree of access that those owners have to policy-makers is a matter of legitimate public concern, as the committee makes clear in its recommendations. The evidence received from Mr Alastair Campbell was illuminating on this matter. His description of the courting of Mr Murdoch and others by the Labour Party in opposition and subsequently in government—as referred to by the noble Lord, Lord King—was careful and measured but gave a clear insight into the importance attached by policy-makers to having the ear of newspaper proprietors. In this environment, the greatest possible diversity of ownership is one way of ensuring that what my noble friend Lord Puttnam—whom I am very glad to see in his place—in his evidence described as “cartel behaviour” does not get a hold. He rightly pointed out that the interests of the citizen, as opposed to the consumer—a distinction mentioned by the noble Baroness, Lady Howe—are best served by what he called “plurality of input”, engendering,
“the ability to try to imagine issues and situations influencing and affecting your life”—
in other words, engaging with your duties and responsibilities as a citizen. I hope that the Government will recognise that fierce protection of this plurality of input will always be necessary and that they will maintain a regulatory regime strong enough to withstand pressure to downgrade the importance of diversity of ownership.
I cannot conclude without mentioning public service broadcasting, much mentioned in the debate so far and thrown into very unfortunate sharp relief last week by the BBC’s difficulties with Messrs Ross and Brand. Ofcom has not yet completed its review of public service broadcasting, but it is already clear that the commercial television companies are seeking to reduce their obligation to produce public service programming, including, crucially, news provision, local, regional and national. Some of that provision has already been cut back. The levers available to keep those commercial companies in the game are limited, as Ofcom’s interim report on the results of its consultation shows. For example, it states that,
“access to reserved spectrum will retain some value beyond the completion of digital switchover in 2012 ... but this will not be enough to sustain the current level of provision by ITV 1 and Channel 4 across a range of genres. The value of the ITV 1 licences will fall below the cost of their current obligations before 2012 with the result that ITV plc may have incentives to surrender those licences”.
This is a serious matter. The BBC, for all its present difficulties—I agree with a great deal of what has been said about the governance of the BBC—is a uniquely valuable resource. I would not want anything that the committee said or anything that might have been said in this debate to be used as ammunition against its continued support at a level sufficient to meet the very high expectations that we all have of it. However, as others have said, it should not be left to fly the public service broadcasting flag on its own. That would be bad for us and it would be bad for it.
Ofcom’s prediction to the committee that by 2012-13 the BBC will receive 91 per cent of all public service broadcasting funding is worrying, but the Government’s response to the report does no more than note that the issues are being considered by Ofcom and will be, at some unspecified point in the future,
“considered as part of the Government’s own consideration of the future funding arrangements for public service broadcasting in the UK”.
I rather hope that the Minister’s eagerly anticipated maiden speech will allow him to amplify that response a little. As has been said, he has special expertise and his contribution, not only to this debate but to the discussion of these issues in the future, will clearly be of enormous value.
My Lords, it is a very long time indeed since the committee first agreed to carry out the report. I recall that when we started it, the frontrunners in the American presidential election were Hillary Clinton and Rudy Giuliani, crunch was a breakfast cereal and banks were owned by private companies. In that time, we have produced a report of which we can be enormously proud.
I agree with the noble Lord, Lord King, that in many ways it is the sort of report that only the House of Lords could produce. It has taken a very great deal of time and patience, and it is about having the ability to call and engage with witnesses at the level that we have done. As a relative newcomer to the arena, I was amazed at the willingness of journalists, proprietors and all sorts of organisations involved in news gathering to engage with the Select Committee. I was hugely impressed by the support that we got from our advisers and from the Clerks.
I say all that because there is a palpable sense of disappointment when one reads the government response. It does no service to the quality of the work that the Select Committee has done. I sincerely hope that the noble Lord, who I, too, welcome today, will be able to bring a fresh eye to this and be able to treat the report with the respect that it deserves. I do not imagine that the Government would agree with everything in it, but there is so much detail here that it will not just serve as a useful starting point for policy now but, as years go by, it will be an interesting piece of academic work, because it sets out exactly where we are in an ever-changing environment.
When I was a child and thought about the news, it had a particular resonance for me, because everything stopped. There was one news bulletin that we all watched at around 6 pm, and woe betide you if you chatted during the news, because your parents had to wait another three hours before there was another news bulletin. I was reflecting yesterday about how different it is now and how, as the noble Lord, Lord Maxton, so graphically described, we are now surrounded by news. Even if you do not particularly want news, it comes at you through your car radio, or through vendors thrusting free sheets at you when you get on the Tube. It is superficially apparent that there is a lot more news about, but when you scrape not very far below the surface, you see that the mass has increased, rather than any sense in which the quality has increased. Our report highlighted well how the proliferation of ways in which the news comes to us simply has not been matched by an expansion in professional news gathering.
In private organisations, government departments, local authorities and hospitals, one of the burgeoning industries has been PR, which is growing to feed the insatiable demand for news; except that it is not news. It is produced by organisations with a partisan view and, to a large extent, it is often regurgitated wholesale by the recipients. From the point of view of citizens, it generates very little genuine new information. Given the starting point of the committee, which was the role that the news media plays in our democracy, this is about more than academic interest. The point that the noble Lord, Lord Maxton, made about balanced views is really important, but you can get a balance of views only if you have a diversity of supply.
I have spent around 20 years working in and around local government and, like all noble Lords, I believe passionately in the idea of a vibrant and participative local government. Local news media have always played an important part in that. In many ways, the role of local media ought to be more important now than ever. As ties of community decline and people do not talk to each other so much as word of mouth declines, accessing local news through newspapers and radio ought to be more important now than ever. It is also the case that local authorities have changed the way in which they do things. We now have cabinets rather than committees; we have local strategic partnerships, and hospital trusts meet in private. It is difficult for citizens to get a sense of what is going on in their area.
Local media have consolidated in the same way but in many ways in an accelerated form. Something like 70 per cent of the local newspaper market share is held by just four companies. Some 55 per cent of radio listening is to the BBC, and the remaining is the commercial sector, produced by just four companies. Does that matter? The National Union of Journalists certainly thinks so. In its evidence, it talked about how local papers have become part of a,
“vehicle for profit making for shareholders”.
It sees that it results in a,
“widespread cutting back of formal reporting”,
and it goes on to describe how time pressures are forcing local journalists to put through copy that is lifted straight from the press release.
When I became a councillor, every committee and sub-committee was attended by a reporter. It may have been a junior reporter, but someone was always there to report to local people what was happening. That does not happen any more. The Newspaper Society put a rather more rosy gloss on things, as we would imagine. It gave evidence about how economies of scale, sharing back-office functions, and so on, were beneficial. Even here, we heard that there are knock-on effects. For example, printing newspapers further away from the location that they serve results in stories having to be filed a day early. That means that quite often journalists are reluctant to put in a breaking story, because they fear that it will be out of date by the time it gets printed; so they are printing different sorts of stories.
Local radio news has gone through many similar processes. When I was first elected to the council, I would regularly go on to talk to the local commercial radio stations, but their news now is all syndicated. The calls that I get now are from BBC Radio Suffolk. That is fine, but we have to consider whether we really want there to be just one source of local news. Being pragmatic, it may be that, particularly in the current economic climate, consolidation is the only way of keeping any local news at all. Maybe we just have to be pragmatic and accept that. Certainly, the financial outlook for the local print media and commercial radio stations is not good, given their reliance on advertising and the migration of advertising online.
It is partly for that reason that we recommended that the Government look again at the regulations governing cross-media ownership on a local level. It is rather counter to the general thrust of our report, which is more pro-regulation, but in this case the committee felt strongly that it will simply not be viable in some areas to sustain a minimum of three independent media voices all engaging in news gathering. We believe that if local mergers were subject to a public interest test, Ofcom could make these decisions on a case-by-case basis and reflect the different circumstances that pertain in various parts of the country.
In my childhood we moved around a lot because my father was in the air force. One of the things that gave me a sense of place and identity was watching the local news. Whether it was the Anglia knight or Mike Neville presenting “Look North”, I had a sense of place because of the television that I watched. That sense has been disappearing for some time now as ITV television regions have become larger and their commitment to producing local news has diminished. This leaves a problem, because the BBC is rapidly gaining a virtual monopoly on the provision of local news. As we have heard, particularly from the noble Baroness, Lady McIntosh, that makes it very difficult for ITV, and the commercial constraints make it difficult for it to produce local and regional news. There is a decision for us to make as a society—whether we think it acceptable to have a single source of local news, in other words the BBC; or whether we have to find mechanisms for keeping some competition in the system. Like the noble Baroness, Lady McIntosh, I believe that it would be better for the BBC and the public if there were checks and balances through a multiplicity of provision. The Government will certainly have to look very closely at the governance of the BBC if we are to go further down the road of it being the only provider of local and regional news.
Michael Grade, in his evidence to us, was very honest about the fact that he thought the days of local and regional television were numbered. He saw the future solution as the rollout of a broadband service using ITV Local. He may be right in that, and the noble Lord, Lord Maxton, would certainly agree. However, the broadband service must be improved. Where I live in Suffolk the broadband service is not good enough to receive that news, and we are a long way from it. Where I disagree with the noble Lord is that this is not an either/or situation. If money is put into providing broadband but there is no money to gather the news in the first place, then having the broadband is irrelevant.
That brings me to my final point, which is at once simple and infinitely complex. We are all agreed that there are many news platforms, but we come back to the question of who pays to gather the news. It is not cheap to collect news, particularly international news. Someone has to pay for it. If advertising revenues are falling and people are reluctant to pay by subscription and do not want to pay the licence fee, there is a question about how important we as a society think independent newsgathering is and how it is to be paid for.
My Lords, I am delighted to take part in this debate. It was originally programmed for last week and I would not have been able to participate, so I begin by thanking those who changed the timing—which, I fear, was an inconvenience to almost everyone else. Like other noble Lords on the committee, I have very much enjoyed our work preparing this report and seeing the titanic struggle between the noble dinosaurs and the noble anoraks. We have produced a conclusion which commands, in very general terms, the support of all of us. That is an interesting and worthwhile reflection on our work. I, too, welcome the Minister to this House and his maiden speech, although I fear that I will be disappointed, because, by convention, he is not allowed to say anything controversial. There will always be another occasion.
I should declare an interest as the non-executive chairman of the Cumbrian Newspaper Group, which owns local newspapers and radio. I do not wish to say anything about that, other than the fact that those sectors are under the financial cosh and are vulnerable to regulatory decisions which put them under more financial pressure.
Like many of the contributors to this debate, I have been involved in the media and politics, which enjoy a rather curious and slightly incestuous relationship. For me, my involvement in politics almost entirely preceded my involvement with the media. I can now fully understand why so many of my press releases about Europolitics were “spiked”.
It is a truism, although it may be slightly pompous, to say that the freedom of the press is a precondition of a responsible democracy and political process, but it is not any the less true because of that. It is equally true that checks and balances are important underpinnings of our liberties and freedoms and should have a proper place in the way in which we regulate the kind of topics that we are debating. Moreover, for journalism and the media properly to fulfil what I might describe as their civic function, news must be recognised as being not merely facts, but must cover comment and views which, after all, will inevitably be at best coloured and at worst partisan. Without that explanation, the facts may not make much sense to those who have them.
As we know, all those news and views are delivered to our fellow citizens by a range of increasingly varied instruments of communication, including newspapers, TV, radio and the internet. None is an exclusive means or conduit of communication to the wider world. When we look at the topics that we are discussing from a political perspective, from the House of Lords or government, it is terribly important to recognise the essential wholeness of the various means of communication, because although they are very different, and it is all a muddle, there is homogeneity across the whole scene.
No doubt, as with so much in this country, if we were starting from scratch to provide a legal and regulatory context to the provision of news, we would certainly not design it in the way we have. That is the starting point for discussing many United Kingdom institutions and systems. It is also important to recognise that if these means of communication are privately owned, they are likely, at least to some extent, to reflect the emphasis of the person who happens to own them. After all, that is a legitimate and inevitable consequence of ownership.
In that context, I ask the Minister what the Government’s line would be if a sovereign wealth fund, particularly one from a country which was not necessarily well disposed to ours, bought a UK national newspaper to advance its case. It seems obvious that proprietors of newspapers, whoever they are, do not appoint editors who are likely to organise that newspaper against the wishes of the owner, although the newspapers may not necessarily reflect the owners’ political views—although they might. The relationship between proprietors and editors does not depend on the issuing and receiving of detailed instructions from on high; rather, as I think I put it to Dominic Lawson, it is more like the relationship between a football manager and his chairman. At the end of the day the relationship depends on a paper being produced in a manner that gives satisfaction to whoever happens to be the proprietor. That involves fulfilling a financial and an editorial remit.
Also, if we are considering the nature of the relationship between the media and their owners, it is important to recognise that, while it is often supposed that the owner of any part of the media may wish to influence government, it may be in the interests of the proprietor, particularly if they have a wide range of other interests, to align themselves with the person whom he or she thinks is likely to be successful in the immediate future to safeguard their other interests.
Against that general background in the media world, it is right that there should be a number of legislative and regulatory rules to deal with potential problems and mischiefs. First, media companies are just like any other company, they are businesses. We have in this country antitrust rules and a competition authority which deals with that aspect of activities. I do not see why the media should in any way be outside that general system. Secondly, we know that in the interests of plurality of voice, there is a public interest test to ensure that there is no undue concentration of sources of news and information, in terms of the kind of message given to our citizens, which would undermine the ability to have free debate—a precondition of a free society.
Finally, particularly since the advent of television and radio, we have introduced into our media world a series of benchmarks in order to provide truth, accuracy and impartiality in the provision of news. That is important because it provides a basis from which comment can then be evaluated. Of course, in this context, carrying out this role is one of the major responsibilities of our public service broadcasters. Indeed, if we look at the regulation of broadcasting in this country, we see impartiality rules that go beyond the normal definition of public service broadcasters. Although I suspect that very soon we may see considerable changes in the public service broadcasting world, it is vital that this role, as the benchmark of impartiality and accuracy in the provision of news, is preserved and carried forward into what I suspect will be a very different picture in not many years to come. I echo the noble Baroness, Lady Scott, and others who have said that this cannot be left to the BBC alone; there must be a plurality as much in the provision of impartial news as in any other aspect of what is being delivered across our airways and down our fibre-optic cables.
As I touched on a moment ago, in terms of general antitrust policy, it seems to me that media companies are no different from everyone else and, in that regard, they should be regulated by the competition authorities. I believe that plurality and impartiality should come within the role of Ofcom. I, like a number of other speakers, think that the idea that the BBC charter somehow safeguards its status is basically an outdated and romantic anachronism. After all, it was quite easy to sling out a large number of Members of your Lordships’ House by one Act of Parliament. I should have thought that, if you can do that, you should be able to change the BBC charter by an Act of Parliament without any trouble at all. I also agree with earlier speakers who suggested that the BBC’s current bicameral system—if I can put it that way—is not working properly, and I hope that the Government will reconsider some of their response in that regard.
I also regret that the Government are still opaque, although they are more emphatic, in their attitude towards the initiation of proceedings to remedy problems, where they clearly hanker to be the sole initiator of the process of remedying wrongs where wrongs might exist. After all, one of the underlying ideas behind regulation in the areas that we are talking about is to deal with the mischief of monopoly. It seems to me that if there is a monopoly of enforcement, such a monopoly is potentially sensitive, and perhaps dangerous. I am sorry that the Government seem to be unwilling to countenance the idea that there should be a right to a shared initiative in the areas where Ofcom is involved, particularly in the public interest test. It is important that we do not forget that, in the area of criminal law, a decision on whether to prosecute is outside the Government’s direct control.
The report is concisely entitled, The Ownership of the News, although this might be a tease because, just like wild animals and birds, no one can own the news; rather, it is relatively easy for those who own the presentation and delivery of the news to distort, edit and colour it. It thus seems to me to follow that it is essential, as part of contemporary political life in this country, that there should be a number of those who supply the news, a plurality of voice among those who present the news, and a datum level of impartial news against which opinion and the wider provision of information can be assessed. Finally, there should be no monopoly in the ability to initiate enforcement of the rules, not least as, whatever their political complexion, Governments are parti pris in some way or another to almost all news that matters.
My Lords, I am very grateful to the House for allowing me to speak in the gap, and I am very conscious of the time constraints under which that places me. I feel as though I have crashed a private party, so I shall at least endeavour to bring a bottle.
I have three reasons for wanting to speak. The first is to welcome, and listen to the maiden speech of, my very good and much valued noble friend Lord Carter. We are very fortunate to have him take up this role at this point in the media cycle.
The second reason is to congratulate my noble friend—he is my friend—Lord Fowler for taking on the role of chairing this committee. A number of noble Lords in this Chamber fought very hard for the creation of the Communications Committee, most particularly the noble Lord, Lord McNally, and the noble Baroness, Lady Howe. What I feel has been achieved is the legitimisation—in fact, the permanence—of this committee. I cannot imagine a situation in which the House authorities would decide that we could go on without a Communications Committee. That is an enormous triumph and I take my hat off to the noble Lord for achieving it.
The third reason is to quickly say something about the BBC. It was pointed out to me that 11 years ago today I had the privilege of entering your Lordships’ House. I want to try out a hypothesis on your Lordships. When I arrived here, I argued that there was overwhelming, and at the time relatively unconditional, support for the BBC. Equally, I argue that 11 years later there is still significant, but far from overwhelming, support for the BBC, and most of it is thoroughly conditional. That is not the fault of your Lordships’ House; the BBC should look long and hard at how this situation has been arrived at. I would argue that one reason is the BBC’s own ambiguities and contradictions, and its almost compulsive need to be seen to be doing everything. That is odd because the quality, breadth and range of its output—particularly its news output—have never been better.
Another problem is a very uneasy conflation of public purpose and commercial ambition. If the Government are to look at any one aspect of the BBC, it should be at beginning to unravel and untie that conflation. BBC Worldwide’s recent purchase of Lonely Planet set off a wholly unnecessary fire-storm. I do not know why it was felt necessary, but it has brought a lot of problems to the corporation, which it could unquestionably have done without.
The last thing that I want to say about the BBC’s problem is that it has to stop seeing its role as solely the defender of what it regards as its rights and understand that what we seek of it is a clear-eyed architecture of its own future. It must be the architect of its own future. I am afraid that I do not see that in any of the recent speeches of any of the senior members of the BBC—the director-general or even the chairman, both of whom I like very much indeed. They do not seem to have the breadth of vision to offer a future for the BBC. Their vision seems to be constrained entirely to defending where it is, what it is and giving up no ground whatever. I have never known any organisation successfully argue that position over a number of years.
I suggest that the Minister takes a good long look at the public purpose of the BBC and understands that, as a number of noble Lords have said, it is the gold standard that applies to all broadcasting. Sky News and ITN are as good as they are because of the BBC; it is our gold standard. At the same time, he should try to regularise, and give a coherent place in the totality of the UK’s media ecology to, the BBC’s public purpose role as against its commercial ambitions, which I think are doing it far more harm than good.
My Lords, I was delighted that the noble Lord, Lord Puttnam, intervened in the gap. I am only sorry that he was not able to make a longer and more substantial contribution. I certainly count among the high points of my political life serving on the Puttnam committee—the pre-legislative committee that looked into the 2003 Act. As his time in this debate was constrained, perhaps I may add another contribution for him that I pulled out of the files. The noble Lord said that,
“when the public interest finds itself, even marginally, at variance … with the workings of the marketplace, the public interest test must be judged not as co-equal, but as being of paramount importance. For in the end, the achievement of ‘plurality and diversity’ is not just … the aim of this particular Government; it must be a core ambition of any plural democracy”.
I enjoy keeping that quote on file because it catches very much why I continue to keep an interest in media matters—it is important in the essence of our democracy.
I welcome the noble Lord, Lord Carter, to his place. I was a little worried when my noble friend Lady Scott launched an attack on the PR industry. I am sure she had forgotten that both he and I have had distinguished careers in public relations. Perhaps she has also forgotten that the slogan of public relations is, “Give us the truth and we’ll varnish it for you”.
On the previous career of the noble Lord, Lord Carter, it is amazing just how much we accept and respect Ofcom. I was a member of the committee that looked at Ofcom before the legislation came in. There was great concern about creating an across-the-waterfront regulator with such responsibility. The fact that Ofcom is so respected has set the standard of research-based regulation and I believe it owes no little debt to the role played by the noble Lord, Lord Carter, as its first executive. I hope that he will be as innovative in his new job as he was when he took on Ofcom.
The noble Lord, Lord King, referred to the birth pangs of this committee, as did the noble Lord, Lord Puttnam. It really was a struggle to get the committee established. I pay tribute to the persistence of the noble Baroness, Lady Howe. I like to think that if she is the godmother of the committee, I can think of myself as the godfather. I raise this point because the noble Lord, Lord Puttnam, might be being optimistic. There is no guarantee that the committee will continue in the next Parliament. Its terms of reference are for the life of this Parliament. As the noble Lord, Lord Puttnam, said, it would be absolute lunacy to lose the committee, having regard to its track record and its future agenda of communications. I put that on the record so that, at the beginning of the next Parliament, we are ready to fight to ensure that the committee stays in place and continues its work.
I associate myself with the committee’s concern about the attendance of witnesses. As I am a member of the Procedure Committee and the Privileges Committee, I treat this matter very seriously. If appearing before Select Committees of Parliament became a matter of choice, the work of the committees would be fatally undermined. It is worth considering that if anyone did that in the United States, they would be put in jail. I think that both ends of Parliament should look very hard at an offence of contempt of Parliament for defying an investigation of a committee; otherwise, we will never have a committee system of Parliament which is given serious respect and authority, as we often want.
I think the Government’s response is pathetic. It is part of a line of government responses to committee reports, not just of this committee but others, and, as parliamentarians, we have to ensure that the Government treat reports, into which a great deal of work has gone and which deserve better consideration, with proper respect.
Many contributions have mentioned the reason why we regulate the media. I have gone through this with various media moguls and they have to understand that successive Parliaments under successive Governments have distorted the market. We are not in the business of guaranteeing an absolutely level playing field and a perfect working market. Why? Because Parliament realises that we are talking about an area of society which is not the same as selling beans, to use the usual cliché. We are considering how we talk to ourselves and to the world. Many speakers have emphasised that to do that we need to protect the public interest and to nurture and sustain one of the great gifts that we have inherited, which is the BBC and public service broadcasting.
I am well aware that we have moved into a new era. I have heard the noble Lord, Lord Maxton, before and he sounds very much like my 15 and 18 year-old sons. I was talking to my 18 year-old son about the United States election. He has been on chat rooms with American students talking about the issues in the election. They work in a different way from us. Nevertheless, as a number of speakers have made clear, the old systems, the print press and the major television companies, are still very important.
I strongly support the idea that Ofcom should be given power to initiate the public interest point, and the noble Lord, Lord King, put his considerable authority behind that. I agree with the noble Lord, Lord Inglewood, that the business competition side is well covered by the Competition Commission and therefore the committee’s idea of a separation of powers makes a lot of sense. As the noble Baroness, Lady Howe, said, we had a lot of discussion about where the rights and responsibilities of the citizen and the consumer lay. I am pleased that this committee is much in favour of the citizen.
I reach the BBC. It must be reassured by yet another parliamentary debate in which speaker after speaker stands up and says that he will defend the BBC but, by gosh, it makes its friends’ jobs difficult. As somebody said, it must realise that it is not its own worst enemy; it has a hell of a lot of worst enemies out there. Why it plays into their hands, I do not know. The Ross/Brand affair involved two men who, although they do not know it, are fast slipping into middle age, aping teenage behaviour that I would not tolerate from my sons. It was rather sad. Perhaps Jonathan Ross might use his three-month sabbatical to read the biography of Simon Dee.
What the noble Lord, Lord King, said about the BBC Trust was spot on. Over 80-odd years the board of governors did not do too bad a job. It managed to sack director-generals, intervene when needed and, most of all, protect the BBC from interventions by politicians. It only broke down with an intervention that will remain a stain on the record of this Labour Government, who lost a very good chairman and a very good director-general in a political row. I hope that the new Minister will have a look at the committee’s suggestions about a statutory basis for the BBC and a system for its governance that will inspire more confidence than the present one.
I have now become chairman of the All-Party ITV Group. As with all all-party groups, it involves no financial benefit. The truth is that I became chairman of the All-Party ITV Group by arriving five minutes late for the annual general meeting. Nevertheless, I have always taken an interest in the diversity of our broadcasting. Last night, Michael Grade attended a meeting of the group. He spoke to Members of the Lords and Commons. There was a goodly turnout. There is strong parliamentary concern about the BBC’s plans for regional news and about losing one of the great strengths of ITV, its regional basis. I still remember the pride I took, especially when I was down at university in London, when up on the telly came “From the North, Granada presents”. It had regional pride, which is still important.
It is also important that we listen to Michael Grade’s warning. The regulatory regime that ITV finds itself in, coupled with the present financial circumstances, puts ITV in peril. We ought to make a proper and rapid judgment about how best we make sure that we keep what is best in ITV, which is, as Michael constantly emphasises, a £1 billion investment in Britain’s creative industries. That is not to be sneezed at when one considers—the BBC aside—the paucity of investment in those creative industries by the other players in the market.
I watched the American elections not just last night, but for weeks—I am an anorak in that respect. I dip into Fox News. I have to ration myself because I can feel my blood pressure rising. If anyone doubts why we must defend the BBC, I recommend carefully measured doses, under medical advice, of Fox News to see what we are fighting against and what we are trying to defend. Over the years, people have accused me of being obsessed with Rupert Murdoch. I am not; I am a great admirer of Rupert Murdoch. My only plea is that Ministers defend the public interest with the verve with which Mr Murdoch defends his shareholders’ interests.
The committee has already established itself as one of the great committees of this House, but I believe that its really important work may be yet to come. That is why I not only wish it well for the rest of this Parliament, but strongly hope that we commit ourselves at the due moment to its continuance in the next Parliament.
My Lords, I, too, thank my noble friend Lord Fowler for introducing today's debate on the report by the Communications Committee, which I read with interest. It is a very timely contribution to the debate on this huge, fascinating and, as we have heard this evening, controversial subject.
We on these Benches welcome the noble Lord, Lord Carter of Barnes, to the House. I doubt that there could be a more apt debate on which he could make his maiden speech. I am sure that his experience in broadcasting and the communications industry will allow him to bring great expertise to his brief, and his sojourn as chief of strategy and principal adviser in No. 10 Downing Street will allow him to hit the ground running. We look forward to hearing from him.
As we know, there are ongoing changes in the way that our media are run and how they disseminate information, as changes in technology open up new avenues and close down old ones. As we heard from my noble friend Lord Fowler, the committee was right to place such focus on the provision of news in a free and pluralistic society, the free exchange of ideas and the provision of information. That is as important as ever.
We in Britain have a fine, though not flawless, tradition of reporting the news, in print, by wireless, internet and on television. I share with my noble friend Lord Fowler, the noble Baronesses, Lady Howe and Lady Bonham-Carter, and many other noble Lords the belief that this country is served by one of the most successful public broadcasting services in the world. The cornerstone of that system is, of course, the BBC. The corporation may well be the most respected news-gathering organisation anywhere and it has a long established—although, again, not flawless—reputation for impartiality. The BBC has had a major impact on creative industries in this country, and the achievements of British public service broadcasting owe much to its work in the area.
However, the real success of British public broadcasting lies in its diverse nature. As we have heard, the presence of other high-quality providers, whether ITN, Channel 4 or Sky, has led to creative competition, which, in turn, has compelled the BBC to drive up the quality of its output. We feel that this model should be seen as one to follow: a number of separate news organisations, all contributing to the high-quality informing of their viewers.
This model is under threat following the Government's switch to digital. Despite all its crackles, there will be a cacophony of channels, not bound by the same public service requirements but which will split the advertising revenue available to those which are. We are already seeing cuts in the high-quality news programmes, not just on ITV and Channel 4, but on the BBC. The challenge for the Government, who have championed the switchover, is to come up with imaginative ways to maintain the provision of the high-quality and impartial news that we have a right to expect. I hope to hear that the Government have some thoughts of their own on that and are not simply waiting for Ofcom to tell them what they should do.
In the printed media, conversely, the trend has been towards consolidation of ownership into the hands of just a few organisations and individuals. As several noble Lords, especially the noble Baroness, Lady McIntosh, and my noble friend Lord Inglewood said, a balance should be struck that allows a diverse range of opinions to be aired and the news to be reported without proprietors telling their staff what they can and cannot report. However, I remember the noble Lord, Lord Black, on “Desert Island Discs” a few years ago unashamedly and honestly admitting that one of the purposes of owning a newspaper was to have a certain amount of influence on it.
The Communications Committee is quite right—I congratulate the chairman—that all parts of the media play an important role in modern democracies, although I notice that much of the report was given over to developments in this country. It briefly covered interviews that the committee made during its visit to the United States. However, I have attended several important international conferences on cross-media ownership—in Luxembourg in 1988, in Paris in the early 1990s and in Rome last year. I trust that the committee took into account their reports on this subject. The title of the report might be “The British Ownership of the News”, as it basically covers only British and American views.
In an increasingly internationalised world where media companies bestride continents and the impact of new technologies, as rightly stressed by the noble Lord, Lord Maxton, is truly global, I trust that the Government have policies to put in place which will cope with that reality. I was surprised and fascinated that only the UK and the US have been mentioned this evening. It would be far too parochial to ignore the international dimension. I agree with Mort Zuckerman, who says in the report that he is “a junkie for journalism”. I am pleased that this report has stirred up some imaginative questions and I hope that the Government have some imaginative solutions.
My Lords, before I respond to the excellent debate initiated by the noble Lord, Lord Fowler, I should like to say a few words of a personal nature about myself and my role. I begin by extending my thanks to noble Lords for the warm welcome I have received from all sides of the House over the past few weeks. I genuinely appreciate the convention and the sincerity in the welcoming remarks made this evening. I particularly thank the noble Baroness, Lady Bonham-Carter, on her comments on the expansion of the Carter membership of this House—a view, I must say, that is shared by my mother—although it has to be said that, on any measure, I am at best half the Carter she is.
I hope that the confidence of the noble Lord, Lord King, in my alleged subject expertise will stand the test of time in this evening’s debate and beyond. I can advise him that I have not only read some of the committee’s previous reports, I have, unlike some newspaper proprietors, been called for evidence, appeared and given it. I hope that that will give me some knowledge as well.
Finally, perhaps I may highlight the welcoming comments from my noble friend Lord Puttnam, whose experience is extensive and includes his position as deputy chairman of Channel 4. He has been a friend and mentor of many, and I count myself fortunate to have been one of those. It was a particular pleasure to have been introduced to your Lordships' House by him and my noble friend Lord Currie, the noble percher. The noble Lord, Lord Puttnam, is and always has been expert and elegant in offering constructive criticism to the friends and organisations he likes and admires. His comments on and to the BBC today are perceptive, and I hope that some members of the BBC senior management team are listening rather than broadcasting.
Perhaps I may also put on record my appreciation to the staff of this House for their helpfulness. On the day of my introduction, among other things, they could not have done more to put my two young children at their ease in this palace of gilt and grandeur, which can so easily overawe. My wife and I will be forever grateful for that.
I confess, given my ministerial brief, to being more than a little in awe of the extent and depth of experience and knowledge in this House about matters broadcasting and business, which have been so ably exemplified in this debate, not to mention the many professional political communicators who have mastered the skilful art of media communication and the cut and thrust of debate in the other place before going on to mastery in this House, a number of whom we have heard this evening.
In many ways I was brought up with the communications industries. In my early life, my father worked in the newspaper industry during the period described as the dynastic period of newspaper power and patronage. When the Daily Express was a broadsheet, and rather a fine one at that, if I may say, the Sun and the News of the World had recently been bought by a young Australian entrepreneur, and Bill Gates was just graduating from high school and writing his first payroll program in COBOL. I vividly recall my father’s time in Fleet Street, among other things renegotiating union arrangements for an earlier technology change, the transition from hot-metal printing.
Like many children who were among the first in their family to go to university, I used it both as an opportunity to leave home and experiment, and to gain a social and educational grounding, for which I remain deeply grateful. I spent a very enjoyable five years at the University of Aberdeen reading law and practising life, although it has to be said not always in equal proportions. My years studying law, however, resulted in a career in commercial rather than legal advocacy, which over the past 20 years has led me to various parts of the communications industry, from advertising and—yes—financial public relations to telecommunications and pay television, through to the launch of broadband and cable, and subsequently to the communications industry regulator, Ofcom. Among other things, over four years we helped to create the framework to build broadband out to the level that Britain enjoys today.
I have always considered myself extremely fortunate to have worked in and across an industry that crosses boundaries both of background and of geography, and one where the power of ideas and originality is valued above the power of individuals and institutions. It is therefore a double pleasure both to participate in this House and to do so on my own subject.
It is also apposite that I should open my innings in this House by responding to this evening’s debate, initiated by the noble Lord, Lord Fowler, on the Communications Committee’s thorough report on the ownership of news and the broader themes that it touches on: plurality, impartiality in news, effective democratic debate, quality, a responsive regulatory framework and the future of the media and communications industries. These are all vital ingredients of a healthy society and as such will be the key components of the Digital Britain Report, which is central to the ministerial brief commissioned by the Prime Minister when for the first time appointing a Minister for Communications, Technology and Broadcasting in one person, one brief and possibly one anorak.
Before expanding on that, I shall respond briefly to the specific questions raised by the noble Lord, Lord King, and my noble friend Lord Maxton on the two current and topical issues of BBC governance and content regulation. On the issue of content regulation, I hope that my noble friend Lord Maxton will forgive me—or, perhaps, given his comments, he will support me—if I do not join in the chorus of commentary on the Ross/Brand affair. Suffice it to say that, after an unacceptably slow or possibly false start, the BBC, its trust and the industry regulator are now all doing what they are there to do. As my last comment on this affair, I hope, the only thing I would like to put on the record is that I hope sincerely that it does not serve as an incident that either undermines the BBC or induces too much creative or editorial caution in the ranks of the commissioners and controllers.
The noble Lord, Lord King, asked some penetrating questions about the division of responsibility and the efficacy of those responsibilities between the BBC Trust, the BBC non-executive board, Ofcom, and the court of public and media opinion. These are fine judgments and, as the noble Lord made clear, in most instances—including the BBC Trust—these are new institutions learning for the first time how to exercise both their regulatory and supportive powers under extreme examination. I remember the debate at the time of the creation of the current arrangements, and it was always judged to be a balance. There were many, and I think I included myself with them, who argued for a singularity, the unitary structure referred to by the noble Lord both in terms of regulation and governance. For good reasons it was judged right at the time to go for the mixture of arrangements that have been put in place. My comment to him would be that at this time I think we should live with those structures and hope that those currently occupying positions within them learn from what has happened in recent weeks.
On the particularly evocative question of reciprocity, I should like to reply to the noble Lord in writing. As he knows, within the European Union there is already full reciprocity and the question extends to other markets. I know from my experience in other markets where British companies encounter unfair discrimination, whether in ownership or regulatory rules, the Government are ready and willing to take up their cases. Nevertheless, a strong point has been made and I should like to reply to the noble Lord in writing.
Noble Lords do not need me to remind them that as our media are doing this well and consistently, our economy is wrestling with the fall-out from the credit crunch, as is every major economy in the world. As a consequence, many of those economies, including our own, are rightly looking to nurture those parts of the economy which can generate the jobs and growth potential to compensate for what we are losing from financial services. The French Government have recently produced France Numerique 2012, a comprehensive plan to build the infrastructure, services and content of their digital economy. It is notable. However, I believe that we in this country can and must match it—and preferably better it—in scope, ambition and comprehensiveness.
As many noble Lords have made clear, we start with many advantages: the strength of our content and creative sectors in publishing, advertising, television and other audio-visual production; the competitiveness of our communications market; our openness to new ideas and new investment; the reach and pervasiveness of our existing broadband and mobile networks; the thinking, if not yet the full realisation, of a market in wireless spectrum; and 60 years of a successful plural broadcasting network in radio and television, to which many noble Lords have referred.
As the debate has highlighted, these issues also have an equally, and perhaps critically, important citizen component at their heart; civic values and objectives that are central to a healthy society and a modern economy. Therefore today’s debate is a timely debate. Tomorrow, as my noble friend Lord Maxton pointed out, the process of digital switchover in terrestrial television begins in earnest with the progressive switch-off of the analogue broadcasting signal in the Border region. Terrestrial television is now catching up with the realities of a market that has in many other respects already become digital. By the end of the switch-over process four years from now, every household and every television in every household will be fully in the multi-channel, interactive age. It has been a national commitment to build out and fund, in part, a universal digital infrastructure, with an immediate capital investment of nearly £1 billion and a lifetime infrastructure investment by the transmission and broadcasting companies of several times that number.
Alongside this infrastructure and that of the cable and satellite companies many people will also have high-speed broadband services, so called IPTV, and, increasingly popularly, mobile broadband services. For many of those people and the devices that they are using, the boundaries between broadcast and broadband audio-visual content will be increasingly blurred.
To digress slightly, in 2008 we have begun to take broadband Britain for granted, although I, for one, remember when it was both a political and national problem. I was summoned, as the then managing director of the second largest telecommunications company in the country, into Downing Street to discuss what might be done to encourage deployment and take-up and remove this national problem. As I emerged from Downing Street that time round, I remember thinking that that went better than expected and was relatively easy. How little I then knew.
Broadband for everyone is, in a non-partisan sense of the word, a progressive objective. It is about inclusion rather than exclusivity; it is about access to information rather than control of information; and it is about participation. Therefore, practically rather than just rhetorically, broadband is a democratic activity. For businesses, broadband is about efficient distribution, lower costs and lower carbon consumption as we move to an economy that increasingly moves bits and bytes rather than people and goods.
However much has been achieved in broadband Britain over the past eight years, we must all recognise, and this evening’s debate reminded me of this, that we are still considerably further advanced and, frankly, more concerned, as a broadcast nation than we are as a broadband nation. We have as a nation consciously embedded—and, in part, publicly funded—universal access to digital broadcasting, but we have not yet embedded or publicly funded universal access to broadband, however defined. If Lord Reith was right, as in many things he certainly was, in his assertion that the broadcasting system of a nation should be a mirror of that nation’s conscience, surely our ambition should be for the broadband system of the nation to be the engine of the nation’s mind.
In summary on this point, we need to be a nation of both poets and plumbers, but we need to deliver the plumbing before celebrating or protecting the poetry or we will be left behind. That includes, although this is not exhaustive, a fully digital television service universally available on multiple platforms; a universally available broadband system competitively priced, at meaningful speeds; a national digital radio network universally available with true nationwide coverage; and mobile and wireless services that can do for video what they have done for the spoken word. If we can achieve those four things, we will have connected the nation to the next generation of plumbing and given ourselves a comprehensive infrastructure for the digital age.
As the noble Baroness, Lady Rawlings, made clear, these changes are significant, but we can make for a better outcome if we are clear about what the future infrastructure is before we make lasting policy decisions about what the future creative solutions should be—because then we can focus on the poetry. We can focus on creativity in film, in television, in advertising and online. We can focus on rights, their value and where and how the rewards of creativity should be shared. We can focus on ensuring a continued supply of original UK-originated content that works on all those platforms that we have built and delivered. We can focus on the delivery of plural and impartial news—funded, independent, truly local, national and regional—and we can focus on competition for quality in both the private sphere and the public service context.
On a number of the Communications Committee’s recommendations, the Government’s written response contains soft words. However, discerning readers—and it would appear that there are a number here today, including the noble Baroness, Lady Howe—appear to have detected a sense of less than total, and possibly even less than requisite, enthusiasm. I offer some personal context. Digital technologies and the market, as many have said today, have created a profusion of new content. Production costs are lower and there are many more routes to the viewer and the user. We have seen, and will continue to see, thousands of flowers bloom, whether in user-generated content, local and special interest sites for information and social interaction, or 200-plus specialist channels on digital television. This revolution has also taught us how to get more out of what we hitherto took for granted. Televised sport is a prime example. Digital has given us, in one notable respect, an award-winning, fully market-funded UK news channel. However, in news overall, particularly national, regional and local news, all parties can agree on what the noble Lords, Lord Fowler and Lord Inglewood, made clear—that the picture is by no means as rosy as this.
During the past decade or so, many in your Lordships’ House, and I include myself in that otherwise illustrious company, have overseen, or in some instances conducted, a series of transitional agreements, which we could even call “deals”, with the commercial public service broadcasters to preserve the breadth of and investment in public service content, particularly national and regional news. These arrangements have sought to manage and slow the pace of decline. Frankly, though, decline is exactly what it is and has been. It is retreat, not creation. While these arrangements have to varying degrees served the viewer in the transition, that transition is ending. The levers of exhortation and the levers of regulation are ceasing to have purchase at a pace which few truly appreciate.
We must look urgently at how best to secure a shared civic agenda—effective political debate, plural and impartial news, but in the changed circumstances of a fully digital world that I tried to describe. If we want things to stay the same, or return to the quality they once were, they are going to have to change radically.
We will need more far-reaching, radical and different forms of intervention than those we have all grown accustomed to and in some cases grown up with. The noble Lord, Lord McNally, put it as ever well when he described the media as a form of national conversation, not just a form of national commerce. However, I believe that he recognises that we are now in that place where we need to look more surgically at the differences between the institutions operating in those markets that the state can continue to control and influence and those that, frankly, we cannot and probably should not.
We may be comfortable as a society with the BBC as the sole purveyor of impartial news in television, in radio or at a local level, but I doubt that many, including the BBC, would see that as an ideal outcome. The noble Lord, Lord Fowler, clearly laid out the disproportionate strength of the BBC in the current news market in his introduction to this debate. Of course, some would say, we do not have the BBC alone; we have the BBC plus the market. But perhaps I may refer briefly to what is happening in the market.
The report of your Lordships’ Communications Committee rightly touches on two trends that represent increasing pressure points, particularly on the advertiser-funded model that has delivered us quality from a range of broadcast providers in news and other genres over the years. This model has, alongside the cover price, sustained a range and quality of news in national, regional and local papers that is the envy of many other countries. The two trends of consolidation and of audience fragmentation, driven by the ineluctable shift to digital technology, are having a profound effect on all our media— press and broadcasting. Those trends featured throughout this evening’s thoughtful debate. Audience fragmentation among other things crucially affects the broadcasters’ ability to earn the revenues necessary to sustain investment in quality news and other programming. That is, however, a clock that we neither can nor should seek to turn back. One viewer’s audience fragmentation is many other viewers’ exercise of a choice that they did not previously have. We therefore need to address its consequences, not to deny or redress its realities.
Another interesting reality that we need to recognise is that, while the new platforms that I unashamedly champion and the new revenue streams that they have brought are very significant—subscription in television is worth more than £4 billion a year; broadband revenues are worth more than £2.5 billion a year; and mobile telephony call revenues are worth more than £15 billion a year—they generate very little new or additional UK-originated content, at least outside premium sport. It is perhaps of the order of £100 million a year, including market-based news. That should be compared with approaching £2 billion of advertiser-funded UK audio-visual content, and the same order of magnitude from the licence fee.
Many of this evening’s contributors have made it clear that, as a society and an economy, we must either get used to UK content being spread ever more thinly across a wider range of platforms, or find or encourage new business models, new revenue streams or new forms of funding that will sustain and preferably enhance content creation, including well resourced news gathering, in this country.
The committee’s report rightly highlights that consolidation carries a risk of disproportionate influence landing in the hands of too few individuals or too small a number of organisations. However, in at least some parts of the media world, consolidation with the right remedies is on balance a response to, not a cause of, concern. I would point to cable consolidation, in which I was involved and which gave the initial impetus for today’s broadband competition; consolidation in local radio, which sustains 600 stations and has contributed much to a digital platform that covers 90 per cent of the population; and even consolidation in commercial television and satellite, which, funded by advertising and subscription, today gives us the better part of £1 billion a year of original UK production. The impact of the internet on local and regional newspaper and local radio revenues, particularly when coupled with an economic downturn, means that consolidation may be a necessary alternative to licence hand-back or title closure, or, perhaps even worse, the slow degradation and hollowing-out of any quality in their news provision. My sense is that this is in part the analysis that lay behind the comments of the noble Lord, Lord King.
We welcome the committee’s recommendations about the need to revisit the current ownership constraints, particularly on local radio and newspapers. The Government agree that there is an argument for change to be considered and the issue will very firmly be on the agenda of the Digital Britain report over the coming months.
More generally, let me cover the two key issues that ran through the committee’s report: the operation of the public interest test and impartiality. The purchase of shares in ITV plc by BSkyB plc was the first time that the Government have used the Enterprise Act power to investigate the media public interest test. In light of this experience and on balance, we are satisfied that the present arrangements for initiating such a test are appropriate. If I am allowed to make a personal comment, let me say that I am unconvinced that a change in who can initiate a public interest test is, on balance, merited at this stage. It is still right that the decision to make such an exceptional intervention falls to Ministers directly answerable to Parliament, not to the independent regulator. Similarly, it is right that the Competition Commission, not the sectoral regulator, should conduct the final investigation into both the competition and public interest issues arising from any merger. In truth, the requisite depth of experience rightly resides within the commission, not within the regulator.
The Government fully endorse the committee’s considered view of the importance of the impartiality requirements, especially on, but beyond, public service broadcasters. Not only are these rules an essential part of the regulatory framework, but they have, as the noble Baroness, Lady Bonham-Carter, pointed out, served to condition the market for news in this country. In a way, we should seek to underline, not undermine, those rules. I believe that it explains in part why in this country the market produced Sky News rather than Fox News.
Of course the print media are very different. It is a long-standing principle that the content of the press should be free from state intervention. We continue to believe that robust self-regulation is the best way of ensuring high standards of reporting in the press. In fact, as the traditional media place greater emphasis on the internet to deliver content, we may need to trust more to effective self-regulation. However, I would like to put it on record that we may therefore need to expect more from this system.
As I have said, tomorrow in the Scottish Borders the terrestrial television switchover begins. Terrestrial television is playing catch-up with the market-led digital world of satellite, cable, mobile and broadband. The benefits are clear: greater choice and interactivity for viewers and opportunities for growth and innovation in business. The challenges are equally clear. First, broadband and broadcasting need to be seen by policy-makers as of equal import, with the recognition that the former is having a significant impact on the economics and cultural reach of the latter. Secondly, not all solutions will necessarily come from existing structures and institutions. Thirdly, we should embrace new forms of content but recognise that the forces that enable that content do not necessarily favour or fund the creation of well funded, impartial news. Lastly, UK-originated content is a significant and critical contributor to the sector.
Again, I thank the noble Lord, Lord Fowler, and his colleagues on the Communications Committee for what I believe is a comprehensive analysis of the issues. I also thank them and other noble Lords for their contributions tonight. I hope that I have covered most, if not all, of the issues raised. I also hope that noble Lords will understand if I have not, at my first outing at the crease, quite managed to hit all the balls that have been bowled at me. I hope that as the Government take forward these important issues in the Digital Britain report, this House in particular will continue to engage its expertise with the matters that are so crucial to our society, to our economic success and to our political debate.
On this day of all days, let me follow in the fine tradition of transatlantic political word-sharing and echo the words of the President-elect, Senator Obama, who said:
“Let us be the generation that reshapes our economy to compete in the digital age”.
To those words I would add, “But let us do so as both citizens and consumers and, as it relates to news in particular, let us do it in that order”.
My Lords, first, I pay a sincere tribute to the noble Lord, Lord Carter, for his elegant and forceful maiden speech. Everyone who listened to it would have been impressed by it. No one who has come to that ministerial job is better qualified than he is to do it. As he would expect, there were parts of his speech with which I personally did not agree, and which we would like to debate, but now is not the time to do so. Genuinely, I thought it an outstanding maiden speech. It was fascinating to hear what he said about corporate governance at the BBC and his original views. We were always written off as eccentrics for having those views, so it is nice to know that those eccentric views are now shared by others—and even more are coming out of the woodwork.
Let us look back on the Minister’s career. He was educated in Edinburgh and was student president of Aberdeen University in 1985-86. I think that one could see some of that coming out this evening. After graduating from Aberdeen, he went to J Walter Thompson, where he was made managing director at the age of 31, if my arithmetic is correct. He went on to become the chief executive at Brunswick before going downmarket and becoming Gordon Brown’s chief of strategy and principal adviser at No. 10. Fortunately, that did not last long and we very much welcome him to his job today.
It is customary to say at this point that we look forward to hearing from the Minister again, but I do not think that there is any particular point in repeating those words. He will find himself being much used on the Front Bench and, on future occasions, we might even interrupt him from time to time, but I know that he will be able to deal with that.
To speak generally about the debate, I did not refer to the Government’s published response to our report because I did not think it worth referring to. It was a pretty inadequate response from the department, whose instructions seemed to have been to play a straight bat and concede nothing. That is exactly what the response did. I hope that the new Minister can improve on those responses.
I thank everybody who took part in the debate. I thank the noble Baroness, Lady Bonham-Carter, for what she said about the BBC and her warning about programmes such as “Newsnight”. The noble Baroness, Lady Howe, put an emphasis on the interests of the citizen and the importance of the Content Board. The noble Lord, Lord King, made a number of points, including a particularly important one about reciprocal arrangements between the United States and us. It is ridiculous that a company in the United States can take over ITV and we are totally unable to have the same reciprocal arrangements. The department needs to do rather more than just play a straight bat on that one.
The noble Baroness, Lady McIntosh, referred to a conflict between the views of current editors and those of former editors of newspapers on the influence of owners, pointing out the frankness of former editors on the issue and the slight reserve of the current ones. The noble Baroness, Lady Scott, pointed out that the report had taken some time, as indeed it did. In parenthesis, I wish her luck in the election in which she is engaged. The noble Lord, Lord Inglewood, pointed out that we are not in the days of Lord Beaverbrook, who stood over editors saying, “Thou shalt do this and thou shalt do that”. Editors now operate in an envelope rather than under that detailed instruction.
I particularly thank the noble Lord, Lord Puttnam, who patiently listened to the contributions to our debate—virtually everyone who has spoken has been on the committee—and who was constrained to make a speech of only a few minutes. He has vast experience, so that was a great pity. His points were important, including the point that the BBC should be careful about losing public support. I think that all of us who support the BBC would wish to send that message.
I thank the other two Front-Bench speakers, the noble Lord, Lord McNally, and my noble friend Lady Rawlings, for their contributions. I also thank the noble Lord for his support for the committee. I almost left out the noble Lord, Lord Maxton—the noble anorak himself—who only very occasionally agrees with the chairman of the committee. I think that it is fair to say that his views are firmly anti-religious. My greatest achievement ever when chairing the committee was to get him and the right reverend Prelate the Bishop of Manchester to agree on our report on religious broadcasting. I am not sure how I did that, but the noble Lord probably regrets it.
This has been a useful debate, and it will continue. I thank the Minister again, as I thank everyone who has taken part.
On Question, Motion agreed to.
Employment Bill [HL]
The Bill was returned from the Commons agreed to with amendments and a privilege amendment. It was ordered that the Commons amendments be printed.
House adjourned at 9.26 pm.