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Grand Committee

Volume 760: debated on Tuesday 3 March 2015

Grand Committee

Tuesday, 3 March 2015.

Arrangement of Business


Electricity Supplier Obligations (Amendment & Excluded Electricity) Regulations 2015

Motion to Consider

Moved by

That the Grand Committee do consider the Electricity Supplier Obligations (Amendment & Excluded Electricity) Regulations 2015.

Relevant document: 20th Report from the Joint Committee on Statutory Instruments

My Lords, today we are considering three instruments that amend legislation that came into force last summer to implement electricity market reform, with the powers to make this secondary legislation found in the Energy Act 2013. This reform, as noble Lords will be aware, is designed to encourage the necessary investment into secure low-carbon electricity generation through two mechanisms: contracts for difference, or CFDs, which provide long-term price stabilisation to low-carbon plant, allowing investment to come forward at a lower cost of capital and therefore at a lower cost to consumers, and the capacity market, which provides a regular retainer payment to reliable forms of capacity in return for such capacity being available when the system is tight, and ensuring that enough is in place to maintain security of supply.

As noble Lords may be aware, the results of the first CFD allocation round were announced last week, with 27 contracts being offered to applicants, which could deliver more than 2 gigawatts of new renewable energy capacity. The allocation by competition has driven down costs to consumers, with this capacity costing up to £110 million a year less than it would have in the absence of competition. The first capacity market auction also completed in December, with 49.3 gigawatts procured for delivery in 2018-19. The below-expected clearing price of £19.40 per kilowatt in that auction is also great news for consumers, with costs driven down by competition between participants. I thank noble Lords for supporting the market reforms to allow us to reach this significant point.

In order to build on these successes, the Government are looking to make some small amendments to the mechanisms. This is in order to ensure compliance with state aid requirements, the successful remaining implementation of the scheme and that the legislation properly reflects the original intent. As well as the changes that I will describe, I inform noble Lords that the Government are committed to ensuring that the reforms remain effective and continue to represent value for money for the consumer. To this end, we are carefully evaluating and monitoring the measures implemented and will continue to do so.

Before we commence the debate, I will briefly describe each amending instrument in turn. First, the Electricity Market Reform (General) (Amendment) Regulations amend the original instrument that came into force last summer. This very minor amendment enables the Gas and Electricity Markets Authority to enter into arrangements with a CFD counterparty or the Secretary of State to carry out roles relating to the measurement and sampling of fuel. This ensures that generators are paid only for energy that is both renewable and sustainable, and applies to both those CFD contracts that have been signed by the Secretary of State and any future CFD contracts allocated under the enduring regime. The necessary expertise to carry out this work is held by the authority, and this amendment allows that provision of support.

The Electricity Supplier Obligations (Amendment and Excluded Electricity) Regulations, build on the supplier obligation mechanism that is already established. The supplier obligation will be levied on all licensed electricity suppliers in Great Britain from 1 April 2015, to meet the costs of the support provided to low-carbon generators under the CFD. This instrument does four things: it introduces an exemption from the supplier obligation levy for eligible imported renewable electricity; it introduces an exemption from the supplier obligation and operational costs levies for electricity supplied to eligible electricity-intensive industries; it sets the rate for the operational costs levy for the CFD counterparty for the financial year beginning 1 April 2015; and it makes a number of minor and technical amendments to the original regulations. As a condition of state aid approval for the CFD, the European Commission required that the eligible renewable electricity imported from other EU member states and supplied to consumers in Great Britain be exempt from the cost of CFD payments.

These regulations set out the proposed implementation of this exemption. This includes the way in which suppliers should submit their evidence of eligible imports to the CFD counterparty, how the amount of exempt eligible electricity is determined and how electricity suppliers’ liabilities for CFD payments will then be adjusted.

The regulations also set out an exemption from the supplier obligation for a proportion of the electricity supplied to eligible electricity-intensive industries. They set out the application process for the exemption, the criteria that will be used to assess eligibility, the proportion of electricity that will receive the exemption and the way in which the exempt electricity will be identified.

Thirdly, these regulations also revise the operational costs levy that electricity suppliers must pay to the CFD counterparty to allow it to recover its operational costs. The new rate will apply from April 2015. It is expected that this amendment of the operational costs levy will take place annually, alongside the setting of the operational costs budget of the capacity market settlement body, as both bodies’ operational costs change.

Finally, I come to the Electricity Capacity (Amendment) Regulations 2015, which amend the instrument that established the capacity market last August. This instrument amends the Electricity Capacity Regulations 2014 to enable electricity interconnectors to participate in the capacity market from 2015 onwards. It makes a number of minor and technical amendments and amends the Electricity Capacity (Supplier Payment etc.) Regulations 2014 to set the settlement costs levy that funds the budget of the capacity market settlement body from 1 April 2015. The main purpose of this final amending instrument is to allow electricity interconnectors to participate in the capacity market and to be eligible to receive one-year capacity agreements, if successful in a capacity auction, from 2015.

These amendments include a definition of a new category of capacity market unit, a requirement on the delivery body to provide more information on the capacity to be provided by individual interconnectors, and provision for a financial penalty to be imposed in the case of a new-build interconnector where the failure to reach a completion milestone can be ascertained only where the capacity agreement has already expired.

A further change mitigates the National Grid’s potential conflict of interest by allowing the Secretary of State to provide the derating factor for interconnectors. On this point, we have recently published further details on the derating methodology for interconnector CMUs in the capacity market which will be included in the capacity market rules.

We have also made a number of minor and technical amendments to the principal regulations, after consultation with external stakeholders. These include provisions to require a capacity provider to repay capacity payments if a capacity agreement is terminated on certain grounds. This instrument also amends the supplier payment regulations to revise the total amount of the settlement costs levy in order to fund the operational costs budget of the settlement body. The opportunity has also been taken to correct a minor drafting error in those regulations, removing the unnecessary duplication of a provision.

As a final point before we start the debate, I draw noble Lords’ attention to the Government’s intention to introduce further small amendments. They introduce an additional performance incentive scheme, designed to encourage developers to sign and deliver on their commitments under a CFD, and were laid before Parliament on 23 February. The amendments aim to deter speculative bidding in the CFD auction.

On the capacity market, we recently published a consultation on further minor amendments to the regulations and the rules, with a response intended to be published later this month. I look forward to the debates on these future changes in due course. I beg to move.

My Lords, I am grateful to the Minister for introducing these three statutory instruments. The first was correctly described as a minor and technical amendment to enable the certification of biomass. We are fully supportive of that instrument.

Moving on to the second and third instruments, I have some concerns about the policy that is being introduced to exempt heavy industrial emitters from the costs of the CFD. It is not really fair to describe this as a small amendment when it has quite a wide significance. We have sat in this Room and the Chamber debating the significance of the EMR over many months on the Energy Bill. It is a significant intervention into the markets. It introduces a level of intervention into those markets which will cause rather large sums of money to change hands between suppliers and the recipients of contracts for difference. Now we see that the distribution of that cost burden is being moved far more on to consumers and away from heavy industry, and I have a concern about that.

It was only last week that we sat in this Room and discussed fuel poverty, and the outrage that so many people currently suffer from poorly insulated homes and are unable to pay their bills. The inequality of the economy exacerbates their poverty, meaning that they are classed as fuel poor. Any Government ought now to introduce a test so that any policy change is thoroughly scrutinised for its impact on poorer communities. In fact, I see in the impact assessment that some attempt at acknowledging this is made. It says:

“As low income households typically spend a higher proportion of their income on electricity, lower income households are disproportionately affected by an electricity price increase”.

This move to insulate heavy industry and shift the burden will have an impact, which will grow over time as the potential sums of money being spent under the CFD mechanism grow. I seek reassurance from the Minister about what is to be done to compensate for the impact of this policy by improving the level of intervention we are making on fuel poverty. There ought now to be a rule that anything which puts the burden of decarbonisation disproportionately on to consumers must take into account the impact on fuel poverty. I note that there was obviously a consultation exercise and that papers say that 47 responses were received. How many of those were from consumer groups or those associated with the fuel poor? What did they think of this policy mechanism?

I am of course not blind to the reason behind the proposal, which is to try to ensure that we do not see the flight of industrial manufacturing jobs from this country. That is because of the fact that they are facing increasing costs for a number of reasons, not least the financial crisis raising the cost of capital. It means that there is a potential that we will see more jobs lost in the heavy industrial sectors as we face the pressure of globalisation, coupled with the need to invest in our energy infrastructure. There needs to be a solution but I am not convinced that simply handing out exemptions and compensation payments for evermore is going to give us that answer. The answer has to be in providing incentives for heavy industry to invest in decarbonisation. One of the problems with energy policy, at the UK and EU levels, has been that we have focused so much on the power sector, almost to the exclusion of the industrial sectors. This has left them in a situation where they face increasing costs, as a result of carbon prices, but have no incentive to invest in decarbonisation. I am sure that those who can will invest in CFDs if they have on-site power generation, but if they do not and are simply receiving electricity or process emissions and have a heat load, few incentives are available to them. There is no equivalent to the RHI that allows them to invest in carbon capture and storage. We have been very slow to realise that carbon capture and storage is a technology needed as much by the industrial sector as the power sector.

What is the department doing to ensure that we move quickly to provide incentives for industrial players properly to invest in decarbonisation? Otherwise, I fear that we will always be in a game of catch-up, where policies are introduced but exemptions have to be made, introducing great levels of complexity, form filling and definitions, which means that energy policy in the UK gets ever more complex and full of red tape. We should really be thinking about how we structurally help industry to invest in the UK in a new industrial revolution based on decarbonised energy systems. That has to involve CCS for industry.

Those are my concerns with that SI. Moving to the capacity mechanism regulations, it will come as no surprise to the Minister that I have concerns about the capacity mechanism, which I have raised on numerous occasions. I am pleased, however, to see that this intervention will allow interconnectors to be eligible to bid in the capacity mechanism. That was raised by noble Lords during the passage of the Energy Bill. A Lords committee report on interconnectors recommended looking at them with a higher degree of interest.

It is lamentable that this has come as an afterthought and as a result of the EU stipulating as one of its state aid qualifications that we must do it. The department was asked to do it a long time ago, but said it was impossible or dragged its heels. Finally, it is being introduced, but rather later than it need have been and only really as a result of the EU making it a condition of state aid. The provision is overdue, but I am pleased to see it there.

There is a general question mark about the capacity mechanism. The more we give away three-year contracts for old coal, as we did in the capacity auction in December 2014, the more we squeeze out cleaner and more enduring solutions. By that I mean interconnectors—and gas investments where they can be profitably brought on stream. If we are to continue to make changes to the capacity mechanism—I was interested to hear the noble Baroness refer to further reforms to it—we need to look again at how it interacts with our low-carbon objectives. It cannot be sensible to be giving old coal money to stay open at the same time as we are charging everyone money to close and replace coal. Something must be built into the capacity mechanism to prevent us locking into high-carbon infrastructure. We need to reconsider the provision of three-year contracts for coal.

There is also a question about small-scale gas generation. The noble Baroness will be aware that in the auction in December, a range of smaller gas-generating plant qualified for 15-year contracts. Those small gas plants are scaled exactly to avoid any form of carbon price, avoid entry into the ETS and therefore avoid any payment of carbon pricing of their externalities—of pollution. At the moment, the number bidding in totals about a gigawatt, which is not an insignificant amount of capacity. Will we see more of that? Will the next capacity auction see yet more small-scale gas bidding without a carbon price? That is distorting competition. If they are not facing a carbon price but other gas generators are, that is a distortion. Yet again, the capacity mechanism is not dovetailing with the other objectives of the Government’s energy policy. We need to look again at that.

It will also come as no surprise that I think we need to look at whether an energy performance standard needs to be applied to stations qualifying that would help us control their CO2 . That concludes my comments on those three statutory instruments. I look forward to the response from the noble Baroness.

My Lords, I am extremely grateful for the contribution of the noble Baroness. Of course, she raises questions to which I need to respond but, as with all these things, if I do not respond today I will undertake to write to her.

The noble Baroness asked about the cost of EII exemption to consumers. To lay out the context, first and foremost we do not want to see our industry moving away from the UK because of what our policies will cost to other countries that do not take our commitment to reducing carbon emissions as seriously as we do. We have to make sure that we do not lose our heavy industry simply because we want it to be more compliant than industries in other nations. We want to make other nations follow what we are doing and ensure that they are helping to reduce carbon emissions on the same scale as us. I think that the noble Baroness understands that all of these things will have a cost implication if we are mindful to have a blanket look at trying to reduce our carbon emissions and work with member states to help them to reduce theirs.

The policy should benefit the consumer ultimately. Let us look at what the exemption does for heavy industry, and what its net cost is across the population. On balance, we think that this is the right approach. The noble Baroness was right to say that this was heavily discussed during the passage of the Energy Act. We need to put it in the context that it will be an increase of 0.3%, which is about £1.80 on bills in 2020. In overall terms, if we are to ensure that we do not lose heavy industry, keep competitiveness as part of the bigger equation, and ensure that consumers benefit and do not lose out, these steps have to be taken. I am as mindful of fuel poverty as the noble Baroness, and I know that both of us work closely to ensure that rising energy costs have the least impact on those who can least afford to bear those increases.

Ultimately we have to look at the market as a place of competition. During discussions on the Energy Act, the noble Baroness asked why coal was allowed to be part of the auction. It is because of energy security and the cost implications to the consumer. If we are genuinely serious about ensuring that the marketplace is open and offers best value, we have to take on board that, for at least the short to medium-term, coal will play a role. But the more we get the renewable sector to grow, strengthen and bring its prices down, the less dependent we will be on coal. We see it as eventually coming out of the marketplace. The noble Baroness is aware that we have been very supportive, through the measures taken in the Energy Act to ensure that the renewables sector has had the opportunity to work on a much more even keel alongside the more traditional fossil fuels. So I do not buy the argument that coal should not be there. It has to be there for the ultimate reason that I have always laid out: we cannot allow a focus not to be technology neutral. It has to offer the long-term benefit to the consumer in the end. That is the crucial point.

The noble Baroness spoke about carbon capture and storage, and we continue to support its development. We see it as very much part of the debate going forward. She is aware that £1 billion has been set aside to support it. I was desperately trying to remember the two projects that we are supporting following the competition that took place. Unfortunately, inspiration did not come forward and I cannot rack my brain to remember the names, apart from Peterhead. Again, I undertake to write to the noble Baroness on where we are with those two projects.

Overall, I think the noble Baroness accepts that these are difficult choices, but we have to make them on the basis that we constantly review what we are doing to make sure that the end-user—the consumer—ultimately gets the best value. If there are issues that she feels that I have not cleared up, I will read Hansard very carefully to ensure that I can give her a much more detailed response if she feels that I have not satisfied her thus far.

What I am trying to get across is that we absolutely agree that we do not want to see the flight of industrial players in our economy. However, we cannot simply keep loading the responsibility for decarbonisation on to consumers and not put in place a positive policy for the decarbonisation of industry. The two CCS projects are Peterhead and White Rose, but they are power projects. I am talking about heavy industry: steel, cement, chemicals and oil refining. How will those enter into the CCS market? We need to get an incentive in to help them to do that and we need the EU to support us.

Overall, my fear is that the net effect of these instruments might be that we exempt green electricity from overseas, which will be able to come in without bearing any of the costs that we have in this country. We may see that UK plc simply bears the cost but does not see the investment that we need in our industries. I hope that we will continue this dialogue. This whole raft of policies and how they interrelate has to be kept under a close eye.

I agree with the noble Baroness that we have to keep a close eye on this. We constantly look at whether those policies have the positive impact that we expect them to have. I always have to restate the importance of balancing that with the fact that we need to make sure that we do not lose our industries to places that are less ambitious about the reduction of carbon emissions.

We need to work closely with business. We are working all the time to make sure that we are not disincentivising it from trying to make sure that it can reduce emissions. Ultimately, this is about what the public are prepared to pay. We have to be mindful of this balancing act of making sure that it is not a burden on the consumer, while making sure that we do not lose manufacturing and that we keep our manufacturing base strongly here, which generates jobs and allows the economy to grow. It is very much a balancing act, but I agree with the noble Baroness that this should be kept under review, and that we should constantly look at how we can ensure that the renewable sector plays a bigger role as we work towards a much more low-carbon economy.

Motion agreed.

Electricity Capacity (Amendment) Regulations 2015

Motion to Consider

Moved by

That the Grand Committee do consider the Electricity Capacity (Amendment) Regulations 2015.

Relevant document: 20th Report from the Joint Committee on Statutory Instruments

Motion agreed.

Electricity Market Reform (General) (Amendment) Regulations 2015

Motion to Consider

Moved by

That the Grand Committee do consider the Electricity Market Reform (General) (Amendment) Regulations 2015.

Relevant document: 20th Report from the Joint Committee on Statutory Instruments

Motion agreed.

Electricity and Gas (Market Integrity and Transparency) (Criminal Sanctions) Regulations 2015

Motion to Consider

Moved by

That the Grand Committee do consider the Electricity and Gas (Market Integrity and Transparency) (Criminal Sanctions) Regulations 2015.

Relevant documents: 21st Report from the Joint Committee on Statutory Instruments, 25th Report from the Secondary Legislation Scrutiny Committee

My Lords, our liberalised energy markets, which are underpinned by robust independent regulation, are a critical part of the UK economy. Effective competition in the wholesale energy markets is a key driver of lower prices, which is why this Government are continuing to take steps to strengthen competition so that markets work more effectively for consumers. The Government have made clear their commitment to maintaining a strong and stable regulatory framework that delivers transparent and competitive markets and has the right penalties for those who step out of line. One component of this is having strong sanctions against those who abuse energy markets.

The UK wholesale energy markets are of great significance to the UK economy and to Europe as a whole. For example, trading on the GB wholesale energy markets has been estimated to be worth between £297 billion and £333.5 billion each year. In addition, a significant volume of trading of European energy products is done through London-based brokers. The UK acts as a hub for gas; the GB gas market is used as a reference price for gas delivered elsewhere in Europe and into the electricity market, where gas is a significant and sometimes marginal price-setting fuel. The large figures involved and the importance of the wholesale energy market for financial services, industry and UK and European consumers make the integrity of the market a matter of national and international importance.

The EU REMIT regulation has been in force since 28 December 2011. REMIT prohibits insider trading and market manipulation in wholesale energy markets across the EU. The wholesale energy market regulators in Great Britain and Northern Ireland have civil powers to deal with market manipulation and insider dealing in wholesale gas and electricity, including the ability to impose unlimited financial penalties, access to information and the power to enter premises. To strengthen this regime the Government set out the case for new criminal offences of insider dealing in and the manipulation of wholesale energy markets.

In June 2013, the Government made civil enforcement regulations for REMIT. They then signalled their intention in October 2013 to consult on strengthening this civil enforcement regime by creating new criminal offences in line with the prohibitions relating to market abuse in REMIT. That consultation ran through August and September 2014 and included a joint stakeholder event on the proposals with Energy UK which 30 industry organisations attended. Fourteen responses were received to the consultation from a range of organisations, including large vertically integrated energy companies, trade associations, sector services organisations, legal organisations, a small supplier and a private individual. Having considered views expressed through the consultation and stakeholder event, the Government have prepared and laid before Parliament these regulations under the powers in Section 2(2) of the European Communities Act 1972. These regulations would be enforced by Ofgem for Great Britain and the UK offshore marine area, and by the Northern Ireland Authority for Utility Regulation for Northern Ireland.

I think it would be helpful if I briefly set out for the Committee the effect of these regulations. Regulation 3 would make it a criminal offence for a person to breach the prohibition on insider dealing set out in the EU REMIT regulation. A person would be committing the offence if they intentionally or recklessly: used inside information to acquire or dispose of wholesale energy products to which that information relates, either on their own account or on behalf of others; disclosed inside information except in the normal course of their duties; or used inside information when recommending that another person acquire or dispose of wholesale energy products, or when inducing them to deal in wholesale energy products.

Similarly, under Regulation 4, a person would be committing a criminal offence if they breach the REMIT prohibition on manipulation of wholesale energy markets. A person who enters into a transaction or issues an order would commit the offence if they had the intention to send misleading signals or to secure the price of a wholesale energy product at an artificial level, or were reckless as to whether their actions would have that result. A person would also be committing this offence if they disseminated information with the intention of giving, or reckless as to whether it would give, false or misleading signals as to the supply of, demand for, or price of a wholesale energy product.

These behaviours are already within the scope of the existing civil penalties regime, but we believe that it is right to strengthen the enforcement regime because there is a real risk that, for a small number of organisations or individuals, civil sanctions alone may not have a sufficiently strong deterrent effect because, as I am sure we are all aware, there can be very strong incentives to break the rules. By framing these new criminal offences around the prohibitions in REMIT, we have ensured that these criminal offences cannot be wider than the matters subject to existing civil sanctions. This addresses one of the key concerns raised by industry during the consultation. Conduct that becomes a criminal offence under these regulations will remain covered by the civil regulations too, so that the regulators will have a choice of which regime to pursue offenders under. The regulators would be expected to act proportionately and take into account the seriousness of the conduct and all other relevant factors in choosing whether to prosecute or impose a civil penalty.

I would like very briefly to outline the effect of the other regulations. Regulations 5 and 6 will ensure that the regulators, Ofgem in Great Britain and the Northern Ireland Authority for Utility Regulation in Northern Ireland, are able to investigate these proposed offences. Regulations 7 and 8 ensure that, in line with the REMIT regulation, the regulators can pursue legal persons as well as natural persons if they have committed these offences. If an offence is committed by a legal person, such as a company, because of the commission or omission of an officer of that person, the regulators would also have the power to pursue prosecution of that officer. Regulation 9 would require the regulators, in consultation with others, to produce enforcement guidance about how they would propose to handle these offences.

Regulation 10 would enable the Serious Fraud Office and the Director of Public Prosecutions to institute criminal proceedings for these offences as well as the energy regulators. Regulation 11 sets out that the maximum penalty available to courts for breach of these offences is two years’ imprisonment. This is less than the penalty that is available for similar offences in the financial services industry. We have already indicated our intention to consider whether this discrepancy is right as financial services regulation develops.

I hope that noble Lords agree that this is a measured and sensible strengthening of our existing regulatory regime to address a small but real risk of serious abuse of wholesale energy markets. These new offences would mean that energy markets and the consumers that rely on them have similar safeguards to those in place in financial markets in which the relevant regulator has the ability to prosecute for criminal offences. I therefore commend these regulations to the Committee.

My Lords, I am grateful to the noble Baroness for introducing the regulation. This is a good example of why it is good to be part of Europe. Here we have some sensible interventions, with criminal offences being acted against by the European Union as a whole. It shows why the UK should be a strong and leading voice in Europe. My first question is: why has it taken us so long? The regulations in Europe were passed in 2011, and it is now 2015. The only other question, which is broader, is: given that there is a need for such regulation in the wholesale energy market for gas and electricity, does the Minister think that there is a case for us to apply our sights to the transport fuel sector? It would be interesting to know, whether at EU or UK level, whether the way in which the wholesale markets work in transport fuels has ever been explored. I have said this before, but I feel that there is a strong case for our energy regulator to look into the transport fuel markets, because energy is more than just gas and electricity.

My Lords, I am grateful for the noble Baroness’s support for this instrument. She asked a couple of questions. First, why not before? Although it is really good that Europe has come together on this, the remit does not set out how member states should create penalties. We went through that process for the benefit of the UK, and the provisions are now ready to be put in place, if approved. That sends a clear message that we will not tolerate any breach or any market manipulation but will take this very seriously, as we always have, but now the regulators will have the power to reel in any improper behaviour.

The noble Baroness also asked a question that completely escapes me. I should have written it down, but I have not. I may have to come back to her on that in writing after I have read Hansard. In the mean time, I commend the regulations.

Motion agreed.

Renewables Obligation Closure (Amendment) Order 2015

Motion to Consider

Moved by

That the Grand Committee do consider the Renewables Obligation Closure (Amendment) Order 2015.

Relevant documents: 21st Report from the Joint Committee on Statutory Instruments, 26th Report from the Secondary Legislation Scrutiny Committee

My Lords, the renewables obligation, or RO, is a long-standing support mechanism to encourage the generation of electricity from renewable sources in the UK. It is designed to ensure that it provides effective support for the renewables sector as a whole and is managed within the department’s levy control framework. As noble Lords will know, that sets annual limits for the overall cost of the department’s levy-funded policies, enabling the Government to meet our renewable energy and decarbonisation targets while providing value for money to the consumer.

Solar PV is an important part of the renewable energy portfolio, and the sector has seen strong growth in recent years due to support from the RO and the small-scale feed-in tariff scheme. In 2013-14, we saw record levels of new capacity, with the industry maintaining strong levels of deployment at both domestic and large scales. Thirty-seven per cent of all RO accreditations by Ofgem were attributable to solar, amounting to more than 1 gigawatt of capacity.

Our solar strategy, published last year, set out the actions that we will take in partnership with the industry to ensure the sector’s ongoing success. Although in many ways this progress is good news, making a valuable contribution to our renewable electricity generation, noble Lords have raised concerns about its impact on the levy control framework budget and the need to introduce cost control measures. Back in 2013, when we published the Electricity Market Reform Delivery Plan, we set out a potential range of between 2.4 and 4 gigawatts for large-scale solar, a range assessed as being affordable which we expected to support through the RO and through contracts for difference by 2020. However, following our consultation last year, we now expect significantly more deployment and, without intervention, we estimate that between 6.6 and 10 gigawatts could be deployed. That poses a significant risk of breaching the levy control framework within the next two years, putting at risk our commitment to deliver value for money to consumers.

The draft order would amend the RO closure order to close the scheme early to large-scale solar—above 5 megawatts—across Great Britain from 1 April 2015. It would apply both to new generating stations and to existing stations that wish to add additional capacity that would take them over the 5 megawatt threshold.

As well as controlling costs, however, the Government are committed to protecting investors who have already made significant financial commitments. That is why the order provides for a number of grace periods that will enable new solar stations, and existing stations wishing to add additional capacity, to continue to be eligible for the RO after 31 March 2015 if they meet the eligibility criteria.

Sitting suspended for a Division in the House.

My Lords, I will continue from where I stopped and get my thread back.

The grace periods are not, however, designed to provide protection against the reductions in support that were set out in the last comprehensive banding review. The first grace period is for operators of generating stations that were granted preliminary accreditation by Ofgem on or before 13 May 2014—the day on which we published our consultation. The second is for generating stations where significant investments had been made on or before 13 May 2014. There was extensive engagement with the industry during the consultation period and we have listened and made changes to the eligibility criteria in response to its views. As a result, the requirements around grid connection, land rights and planning are now more aligned with the practical realities of solar PV project development processes and timelines.

The final grace period is for operators of generating stations that have been subject to grid connection delays that are outside their control. Again, the case for this grace period was made by the industry during consultation to reduce the risks to investments. It has been designed to align with that available to other technologies experiencing grid delays when the scheme closes to new generation in March 2017. This will enable Ofgem to take a consistent approach to the administration of the grace periods.

To benefit from one of those grace periods, the new generating station will need to be commissioned and accredited by 31 March 2016. To reduce the administrative burden, a decision on eligibility for both accreditation and the grace period will be taken at the same time by Ofgem. Similar grace periods for significant investments and grid connection delay will also apply to existing generating stations wishing to add additional capacity.

When the closure comes into force, we believe that there will still be a valuable route to market for large-scale schemes, with developers being able to apply for support under the contracts for difference regime. The announcement last week that five solar projects have successfully competed in the first auction round, all at less than £80 per megawatt hour—far below the support rate under the RO—indicates that the new allocation process can work for solar PV.

Those developers with projects at or below 5 megawatts are not affected by this closure and can continue to apply for accreditation until the scheme closes to all new generating capacity on 31 March 2017. That decision was taken on the basis of the available information, which suggested that they posed less of a risk to the levy control framework. However, consistent with our responsibility for managing RO expenditure under the levy control framework, we are closely monitoring deployment of sub-5 megawatt projects and will consider taking measures to protect it if deployment is growing more rapidly than can be afforded.

I am sure that noble Lords will agree that there is a need to avoid the kind of spending bubble we saw in the feed-in tariff scheme back in 2012, which still costs the levy control framework budget £300 million a year over and above what was originally planned to the solar PV sector. Our current assessment of expected deployment without intervention under the RO would cost up to £400 million a year more than our delivery plan projections and would cause us to exceed the levy control framework cap, putting at risk our commitment to deliver value for money to consumers. It is therefore important that we take steps now to ensure that large-scale solar PV remains affordable in the context of the RO and contracts for difference, not least because without action it is likely there would be little or no money for the early years of new contracts for difference, which has been shown to offer better value for money than the RO.

I commend the order to the House.

My Lords, may I ask the Minister a general question about the role of solar PV in our energy strategy? Quite large amounts of electricity are being planned and spoken about, as the Minister told us. I assume it is the case that photovoltaic generation is available only during daylight and is negligible after dark. Therefore, I assume that this capacity will not be available when we have peak demand, which occurs after dark, typically in the early hours of darkness. Therefore, are we in a sense subsidising capacity that will not be available when we need electricity most?

My Lords, I am grateful to the Minister for presenting this order and for the comments from the right reverend Prelate. This is a very good example of a difficult balancing act; clearly, having intervened in the market to take on important decisions about where we put money, which technology to support, how much it should cost and at what volumes, it is challenging.

However, it is true in all of this that we have to think about investor confidence. Just today an article appeared in the Telegraph saying that a lack of clarity over UK energy policy is forcing the UK’s ranking in the green power league down; we are now at number eight, having dropped a place. Also, if you look at where we are in the ranking of renewable energy deployment in the EU, we are almost in the relegation zone, at the bottom of that league table when you look at energy across the piece, with a very modest deployment of renewable energy into all primary energy, with only the Netherlands, Luxembourg and Malta below us in that table in the EU.

Clearly, we cannot afford to throttle back completely on any success story. Although it is true that solar has a limited availability in winter peak moments, it is also true that the costs are coming down and that, in terms of least-cost decarbonisation, solar is potentially an important component of what we need to deploy to hit our targets.

The Minister has already referred to one of my questions—namely, that there is a fear that we will have a boom in investment and in applications, and that this will cause a repeat of what happened with the feed-in tariff. I think it is fair to say that the feed-in tariff process was pretty badly handled. My bigger question here is: what mechanisms are the Government using to track these potential bubbles? How can we signal in advance—as we do with the RHI, although I am no fan of it—a steadier approach to how the levy control framework funds will be deployed? It is not easy, and I do not think that there is a silver bullet or an answer to this. The long-term goal has to be to try to get this back more into the market so that we have to do less of this administrative handling. We understand the reasoning but we need to think again about how we are going to manage this because I suspect that we will come back to it again and again.

My Lords, I am extremely grateful to the right reverend Prelate and the noble Baroness for their contributions. The right reverend Prelate raised the wider issue of daylight peak capacity of solar. One has to look at this as a whole, and solar has to be part of the energy mix. We recognise that solar is a successful part of our energy mix. We do not want to see it drop out of the mix, given that we want to increase our usage of renewables as opposed to traditional fuels. While solar may have a downside, in that when there is no sunlight there is no solar production, we should not—I was going to say “excommunicate” but I think that is the wrong word—remove it from the mix simply because it is not a 24-hour supply. As I say, it plays a very important part in the energy mix.

With regard to the noble Baroness’s comments, we have to recognise that past mistakes enable us to learn lessons. However, we should celebrate the fact that solar has become a successful part of our energy mix and we are seeing costs come down. We are working closely with the solar industry to ensure that we do not impose great difficulties in this area, but at the same time we need to respond to the costs that will be imposed on the consumer. As with all these things, compromises need to be made and these are hard balancing acts to achieve. However, the noble Baroness is absolutely right that we should constantly review our responses to technologies that were new but are now maturing and are very much part of our framework.

However, the bigger issue is that we need to have greater consistency in what we mean by energy policy because our energy policy needs to instil confidence. Investors need to know that politically there will be no dramatic changes, so it is very important that we work towards a long-term consensus on what we want to deliver. It is true that over the past four years or so we have seen record amounts of investment coming to the UK renewables sector. We should celebrate the fact that investors want to invest and generate jobs in the long term, and that they view the UK as a good place to invest. However, that needs to be viewed against the backdrop of ensuring that the political landscape aligns itself with not uprooting very sensible policies when they are put in place, and we have a role to play in that. Overall, though, the fact that the noble Baroness has acknowledged that this is a good thing to do and that the right reverend Prelate by and large recognises—

I wonder whether I can come back briefly. I would not want to excommunicate any form of renewable energy, or burn it at the stake for that matter. I would not want to sell indulgences either at too high a price, though, especially if we are selling them to generate electricity at times when it will not be available when we are facing peak demand. I have anxieties that two or three years down the line we may suddenly get exceptional winter weather and no electricity will be available from the continent at the level that typically comes in. I take the view that such indulgences as we sell—subsidies—should be available for electricity that will be available when we most need it. Is the Minister confirming that solar PV is not part of our calculation as to how we meet peak demand?

I do not want my views to be taken out of context. It is important to see solar as part of our energy mix. The capacity markets and auctions are there to ensure that we have the balance: when we need peak, other means of energy generation are available to us, but when we have tight periods we do not run the risk of the lights going out.

We need to be clear that we have a number of targets that we need to meet. Part of that is our carbon emissions, part is trying to strengthen the renewable sector and part is to ensure that there is not an unreasonable cost to the consumer when those technologies are maturing. The steps that we are taking recognise that. We will find technologies that, just as we are trying to displace coal, may one day displace some of the technologies that we see today as being far more effective. I hope I have allayed the fears of the right reverend Prelate, although I think not.

I am a simple soul in a complicated world and, no doubt, speak as a fool. Still, there is a syllogism that solar PV is not available after dark but peak demand arises after dark, so solar PV capacity is not available at times of peak demand. It is a relatively simple logical proposition, and I wonder whether the Minister is denying or agreeing with it.

That is a fair point. However, peaks may shift. We may have a summer peak, especially if we have very hot summers and need air conditioning, due to climate change. Summer peaks happen quite a lot on the continent. We have probably dealt with this question—we will have storage. There will be times when we have a great deal of solar power during the day going into storage to be used at night. These are engineering problems that can be solved.

Motion agreed.

Proceeds of Crime Act 2002 (Cash Searches: Code of Practice) (England and Wales and Scotland) Order 2015

Motion to Consider

Moved by

That the Grand Committee do consider the Proceeds of Crime Act 2002 (Cash Searches: Code of Practice) (England and Wales and Scotland) Order 2015.

Relevant document:18th Report from the Joint Committee on Statutory Instruments

My Lords, these orders give effect to four codes of practice that provide guidance on the use of various powers under the Proceeds of Crime Act 2002—POCA. The amendments to the codes of practice are necessary purely as a consequence of amendments to POCA previously approved by this House. It is therefore important to note that we are not debating the powers themselves, but rather the content of the codes which give guidance on the use of those powers.

The codes provide an important safeguard and ensure that the powers in POCA are used in a targeted, consistent and effective way, thus providing vital reassurance to the public that the powers are being used appropriately. POCA stipulates that the Secretary of State must prepare and publish a draft of any new or revised code, consider any representations made and modify the draft as appropriate. I can assure the Committee that proper consultation has been undertaken on all the codes that I will refer to today.

The first of these codes, on cash searches, governs the use of powers to search for cash suspected to be the proceeds of, or intended for use in, crime. The second order gives effect to a new code of practice governing the use of search and seizure powers to prevent the dissipation of property that may be used to satisfy a future confiscation order made under POCA. The code also governs the use of the power to detain such property. The third order before the Committee gives effect to a revised code of practice providing guidance on the use of the powers of investigation by law enforcement officers under POCA.

POCA has been amended so that the Crown Court, rather than the High Court will deal with investigation powers relating to a detained cash investigation. Civil recovery investigation powers have been extended to cover persons as well as property, and provide for requests for evidence to be made overseas. The revised code addresses those changes. The Attorney-General put forward similar amendments to the code he made in relation to the investigation powers available to prosecutors in civil recovery cases.

The amended codes before noble Lords build on previous codes issued under POCA. They closely follow those issued more widely to police officers under the Police and Criminal Evidence Act 1984. The codes provide an important safeguard and ensure that the powers are used in a targeted, consistent and effective way, thus providing vital reassurance to the public that the powers in POCA are being used appropriately. The orders before the Committee will bring all the relevant codes of practice into effect, ensuring that effective and up-to-date guidance and safeguards are in place and enabling full commencement of the POCA amendments that I have described.

Once commenced, the new powers will give officers important new tools for the recovery of criminally obtained assets. This is a key pledge of our serious and organised crime strategy and this Government’s commitment to tackling all levels of crime. We are working towards a common commencement date for these new powers across Great Britain of 1 June 2015. Commencement of the powers in Northern Ireland will be slightly delayed, as we have only recently secured legislative consent for the Assembly to fully extend the NCA’s powers to Northern Ireland. However, we expect these new powers to commence in Northern Ireland before the end of the year.

The use of these powers will rightfully be guided by the codes of practice. They are an important safeguard to ensure the targeted, proportionate and effective use of these powers, balanced against the rights of individuals and communities. I therefore ask the Committee to approve these orders. I beg to move.

My Lords, as the Minister has reminded us, we are not here to discuss the original legislation but the codes of practice. However, the question is just how successful will the codes of practice be in achieving the goal that is set out in the legislation. These draft codes of practice have been set out to guide law enforcement officers and accredited investigators in the exercise of their functions when conducting investigations under the relevant parts of the Proceeds of Crime Act 2002. Indeed, the codes go through many facets of the investigation of proceeds of crime, including search and seizure warrants, monitoring orders, interview conditions and obtaining evidence from abroad.

It was not that long ago that we made our thoughts known on the effectiveness of the recovery of criminal assets in the UK. Indeed, the Serious Crime Bill will update further the provisions that we are debating today. Amendments relating to POCA in that Bill were in part a response to the NAO report, which detailed the weaknesses in asset recovery in the UK. The report noted that only 26p out of every £100-worth of confiscation orders imposed by the courts is being taken back from criminals.

During debates on the Serious Crime Bill, we raised concerns about the levels of overseas co-operation and since the investigations code of practice touches upon obtaining evidence from abroad, I will again express our concerns about international co-operation in this area and the apparent lack of effective consultation on how to strengthen it. I think it is also the case that the pages of guidance for the investigations apply to the National Crime Agency. Can the Minister say how seriously or otherwise asset recovery under the Proceeds of Crime Act is taken in the light of the very recent admission from Mr Bristow, the head of the agency, that more than £1.3 billion owed by convicted criminals to the taxpayer is unlikely ever to be recovered? That is £1.3 billion out of a total of, I think, something like £1.46 billion outstanding from confiscation orders and waiting to be clawed back. Such an approach to asset recovery was described by the chair of the House of Commons Home Affairs Select Committee as “a little depressing”. Surely, few would disagree with that comment.

We are told that in order to implement these amendments to POCA—I think this is in the Explanatory Memorandum—including training as far as the codes are concerned, the National Crime Agency will require about £20,000 for training. We, of course, support the strengthening of legislation surrounding the investigation of proceeds of crime and the relevant codes, but the legislation and codes must not be made merely for show. They must be properly implemented to ensure that the Mr Bigs of this world are not getting away with it. I hope that the Minister will be able to provide some assurance that these codes are going to contribute towards a more effective operation in the areas of concern to which I have referred. Finally, can the Minister assure us that if we are to put further money into the National Crime Agency, the organisation will be in a position to adopt a more effective line in future on the recovery of ill gotten gains?

I thank the noble Lord for his questions on these orders. He asked four main questions. If I leave anything out, I will be very happy to write to him subsequently.

His first point was on the level of recovery, and he said that the NAO report states that only 26p in every £100 of profits that criminals made was confiscated in 2012-13. We have never recognised that 26p figure. However, the Government have made it plain in the Serious and Organised Crime Strategy that more should be done to attack criminal finances. That is why we are seeking to amend the Proceeds of Crime Act to significantly strengthen sentences for those who refuse to pay off their orders, to enable restraint orders to be made more quickly and easily and to tackle third-party claims. These are quite important aspects in dealing with that point.

The Government’s approach is not restricted to legislation. The Criminal Finances Board, which is chaired by the Minister for Modern Slavery and Organised Crime, is also working across government, law enforcement agencies and prosecution agencies to improve performance and make it harder for criminals to move, hide and use the proceeds of crime. The noble Lord asked about international asset recovery, which is a very important aspect of recovering proceeds of crime. The UK does not require a formal international agreement to be able to co-operate with another country in respect of freezing, confiscating and sharing or repatriating the proceeds of crime because it has 37 bilateral mutual legal assistance agreements. However, as part of the cross-Whitehall asset recovery international strategy, the CPS has posted specialist asset recovery advisers to Spain and the UAE. Two further asset recovery advisers have taken up posts covering Europe and the Caribbean, and another asset recovery adviser will soon be in place in South Africa. We are also at the point of ratifying the most recent Council of Europe convention relating to money-laundering, confiscation and financial investigations.

The noble Lord asked about comments by the NCA director, Keith Bristow, and his expectation of only £124 million being recovered out of the £1.46 billion outstanding from confiscation orders. The Government are implementing a multiagency criminal finances improvement plan to recover assets more effectively, and to tackle the £1.5 billion stock of outstanding confiscation orders, including by concentrating enforcement action on the priority confiscation order cases, and we have recovered £40 million so far. We are working more closely with the financial sector and deploying specialist CPS asset recovery advisers to improve the recovery of criminal assets from overseas, while provisions in the Serious Crime Bill will substantially increase the penalties for those who refuse to pay their confiscation orders.

The Serious Crime Bill will make it easier for prosecutors to freeze assets earlier in an investigation and to take money held in bank accounts to satisfy confiscation orders. It will also require judges to consider imposing travel bans. Asset freezing and recovery is a very effective tool for disrupting organised crime groups. Performance is not just about the amounts recovered; it is about the amounts denied to criminals so that money cannot be used to further fund criminality.

The noble Lord’s fourth question was on training and monitoring. The proceeds of crime centre in the NCA trains and closely monitors all financial investigations. They are among the most closely regulated investigations. The staff have to undertake ongoing training, passing continuous professional development, and they are reviewed fully every two years. I hope that that answers the noble Lord’s questions. If there are any outstanding questions then I will write to him, but in the mean time, I beg to move.

Motion agreed.

Proceeds of Crime Act 2002 (Search, Seizure and Detention of Property: Code of Practice) (England and Wales) Order 2015

Motion to Consider

Moved by

That the Grand Committee do consider the Proceeds of Crime Act 2002 (Search, Seizure and Detention of Property: Code of Practice) (England and Wales) Order 2015.

Relevant document:18th Report from the Joint Committee on Statutory Instruments

Motion agreed.

Proceeds of Crime Act 2002 (Investigations: Code of Practice) (England and Wales) Order 2015

Motion to Consider

Moved by

That the Grand Committee do consider the Proceeds of Crime Act 2002 (Investigations: Code of Practice) (England and Wales) Order 2015.

Relevant document:18th Report from the Joint Committee on Statutory Instruments

Motion agreed.

Proceeds of Crime Act 2002 (Investigative Powers of Prosecutors: Code of Practice) (England and Wales) Order 2015

Motion to Consider

Moved by

That the Grand Committee do consider the Proceeds of Crime Act 2002 (Investigative Powers of Prosecutors: Code of Practice) (England and Wales) Order 2015.

Relevant document: 21st Report from the Joint Committee on Statutory Instruments

Motion agreed.

Anti-social Behaviour (Authorised Persons) Order 2015

Motion to Consider

Moved by

That the Grand Committee do consider the Anti-social Behaviour (Authorised Persons) Order 2015.

Relevant document: 20th Report from the Joint Committee on Statutory Instruments

My Lords, I beg to move the order, which was laid before Parliament on 14 January 2015. The purpose of the order is to enable local authorities to authorise a housing provider to issue community protection notices under Section 43 and fixed penalty notices under Section 52 of the Anti-social Behaviour, Crime and Policing Act 2014, in Chapter 1 of Part 4 of that Act.

Along with other new powers under the Act, community protection notices came into force on 20 October 2014. They are intended to deal with particular, ongoing problems or nuisances which negatively affect the community’s quality of life by targeting those responsible. Community protection notices can be issued by local authorities, the police or police community support officers, where designated by their chief constable, or a person designated by the local authority to individuals over the age of 16, or to a business or organisation.

A notice may be given if the issuing body is satisfied on reasonable grounds that the conduct of the individual or body is having a detrimental effect on the lives of those in the locality, is persistent or continuing in nature, and is unreasonable—for example, noise nuisance, dog-related anti-social behaviour or environmental anti-social behaviour such as littering. Before a notice can be issued, a written warning must be given to the person committing the anti-social behaviour. The written warning must make it clear that if a person does not stop the anti-social behaviour, they could be issued with the notice. Enough time must be left between a written warning being given and the issuing of a community protection notice to allow the person to deal with the matter. The person can appeal against the issuing of the community protection notice to the magistrates’ court. The notice should give details on how an individual can appeal.

If a notice is issued it may impose requirements to stop doing certain things, to do certain things, or to take reasonable steps to achieve certain results to prevent the behaviour occurring in future. Failure to comply with a community protection notice without reasonable excuse is a criminal offence subject to a fixed penalty notice or prosecution. A person found guilty on summary conviction may receive a fine. However, a person given a fixed penalty notice may discharge any liability to conviction for the offence if they pay the penalty amount of up to £100 within 14 days.

As I mentioned, community protection notices can be issued by a person designated by the relevant local authority. Only persons specified in an order made by the Secretary of State may be designated in this way. As housing providers in England and Wales manage a vast number of dwellings and deal with thousands of complaints of anti-social behaviour every year, we believe that there is a formal role for them in using the community protection notice. The order will therefore allow local authorities to designate housing providers—namely, a housing trust, a housing action trust, a non-profit private provider of social housing, a landlord under a secure tenancy, or, in relation to Wales, a Welsh body registered as a social landlord—to issue community protection notices and fixed penalty notices in order better to protect communities from anti-social behaviour.

The order makes a relatively minor but important provision that complements the wider anti-social behaviour reforms introduced under the Anti-social Behaviour, Crime and Policing Act 2014, which gives front-line professionals faster and more effective powers to protect victims and communities, and I commend the order to the Committee.

I have read the proceedings on this order, which took place in the other place on 23 February. The noble Baroness has just explained the purpose of the order. There is really only one issue that I want to raise, arising from the response given by the Minister in the Commons during the debate on the order.

The Minister in the Commons was asked to confirm the date by which she expected all the provisions in the Act to be fully enforced, particularly the injunctions to prevent nuisance and disorder, for which it was believed the regulations were still awaited. In reply, the Minister said that there was one outstanding provision,

“which is the civil injunction to replace the antisocial behaviour order”.

She went on to say that:

“While all the other powers were introduced in October 2014, except the one in the order”,

which they were debating and which we are debating today,

“the civil injunction is yet to be commenced. It has been delayed due to the need to consult and to make arrangements for legal aid changes to support its introduction. Agreement to publish the Government response to the legal aid consultation was delayed while the Home Office and the Ministry of Justice came to a final agreement on the costs of implementation and meeting additional costs arising from commencement. Subject to Parliament, we now expect the civil injunction to commence on Monday 23 March”.—[Official Report, Commons, Third Delegated Legislation Committee, 23/2/14; col. 6.]

The answer given by the Minister in the Commons during debate on this order related to the introduction of the injunctions to prevent nuisance and annoyance. Those injunctions have to be obtained through the Crown Court, albeit there is no criminal sanction for breaching them. The IPNAs have not yet been brought in and the answer from the Commons Minister suggested that there had been a bit of a difference of view between the Home Office and the Ministry of Justice over the cost of implementation and meeting additional costs arising from their commencement, presumably including legal aid, in the light of the Crown Court’s involvement.

Can the Minister give an assurance that this argument between two government departments, which the Minister in the Commons revealed, has definitely now been resolved? Can she say what the costs and additional costs to which the Commons Minister referred cover, and what they amount to? Can she also clarify the Commons Minister’s statement that subject to Parliament, “we now expect” the civil injunction to commence on Monday 23 March? Presumably, a further SI will be required to bring in the IPNAs. Can the Minister confirm whether that is the case, when that SI will be before this House and the House of Commons, and whether the Government are still saying that they expect the civil injunction to commence on Monday 23 March or are now saying that it will commence then, subject to Parliament? Finally, is there any likelihood that the IPNA will not commence prior to the Dissolution of Parliament, unless it is because Parliament has rejected the necessary SI?

I thank the noble Lord for his comments. I am afraid that I cannot comment on differences between departments being referred to in the House of Commons, other than that they have been resolved and referred to normal discussions between government departments. The civil injunctions aspect will commence on 23 March. The noble Lord also asked whether that meant that the SI would be there in good time, before the Dissolution of Parliament. By inference, the answer would be yes. He also asked about costs. I do not have any costs before me; if it is okay, I will return to him on that.

Motion agreed.

Extradition Act 2003 (Amendment to Designations and Appeals) Order 2015

Motion to Consider

Moved by

That the Grand Committee do consider the Extradition Act 2003 (Amendment to Designations and Appeals) Order 2015.

Relevant document: 23rd Report from the Joint Committee on Statutory Instruments (Special attention drawn to the instrument)

My Lords, the statutory instrument before us brings into effect a number of changes to the Extradition Act 2003. This order has two significant purposes. First, it makes several consequential amendments that are needed to bring into force the new appeals filter, which was agreed by Parliament during the passage of the Anti-social Behaviour, Crime and Policing Act 2014. Secondly, it adds to the list of territories designated under Part 2 of the Act, and amends some existing designations.

I shall briefly explain in a little more detail why these changes are being brought at this juncture and the effect that they will have on our extradition arrangements. Under the 2003 Act, UK extradition partners are designated under either Part 1 or Part 2. The territories designated under Part 1 are EU member states and Gibraltar, which operate the European arrest warrant. Territories are designated under Part 2 on the basis that they are parties to the 1957 European Convention on Extradition, parties to the Commonwealth scheme on extradition or have signed a bilateral extradition treaty with the UK.

Since 2004, from time to time, further territories have been designated for the purposes of Part 2 of the 2003 Act, for example, where territories have joined the European convention, where particular bilateral treaties have taken effect or where experience of extradition cases has shown that designations are required. It was only right, therefore, that in his review of extradition arrangements in 2010, Sir Scott Baker recommended that the Government periodically review Part 2 designations and their evidential requirements. The Government, in response to Sir Scott Baker’s report, undertook to conduct such a review and this order now draws on the findings of the first part of a two-part internal review of designations.

Specifically, in acting on the conclusions of the first part of this review, the Philippines is now being designated as a result of the negotiation and ratification of a bilateral extradition treaty. The existing designation for Serbia and Montenegro is being amended to reflect the fact that they are now separate countries. Kosovo is being specifically designated to reflect its status as a separate territory. The Dutch and Danish overseas territories are being designated because they are parties to the 1957 convention and we, therefore, have a legal obligation towards them. In addition, the British Overseas Territories are being designated following a court ruling that the existing arrangements which were put in place when the 2003 Act came into force did not apply in relation to requests from a British Overseas Territory to the UK. This order will resolve that anomaly.

The order also removes any requirement to provide prima facie evidence for the Dutch and Danish overseas territories, Monaco and San Marino when they make an extradition request to the United Kingdom. This reflects the fact that they are parties to the 1957 convention and our obligations therein. The order removes Monaco and San Marino from the list of territories that are afforded a longer than normal period in which to provide a full extradition request to the judge where a person has been arrested under a provisional warrant. The normal period of 45 days from arrest will now apply to those territories, again to reflect that they are parties to the 1957 convention. The order adds Saint Helena, Ascension and Tristan da Cunha to the list of those territories afforded 65 days to provide the relevant documents. This is because these territories are accessible only by sea and, as such, more time is required to send the original papers.

The second part of our internal review of designations will focus on UK extradition relations under the non-binding Commonwealth scheme for extradition. It will consider matters such as human rights and whether there has been a disproportionately long period of time since any request has been received from a territory, and the effect that that should have on its designation. If it is found to be appropriate to either designate or undesignate a territory or territories, both Houses will be afforded the opportunity to debate this by way of an order before Parliament.

Turning to the other purposes of this order, the Baker review recommended introducing an appeals filter to appeals against extradition under the 2003 Act. This was introduced by the Anti-social Behaviour, Crime and Policing Act 2014. The provisions before us will make amendments to the 2003 Act that are consequential on the operation of the appeals filter. The filter represents one of the major reforms to our extradition arrangements, and will apply to extraditions in both Part 1 and Part 2 cases, and to appeals made both by the subject of the request and by the requesting state.

At present, once extradition has been ordered, the person may appeal directly to the High Court. The Baker review found that very few appeals to the High Court succeed. The appeals filter, once it has been commenced, will make it clear that an appeal lies only with the leave of the High Court and should help avoid unmeritorious appeals clogging up the court.

Before the appeals filter can be commenced, a number of minor consequential amendments are required to be made to the 2003 Act. These technical changes will be made by this order in the interests of clarity and to ensure that the appeals filter operates effectively from the moment it comes into force.

I urge noble Lords to support these changes in the interests of efficiency and of ensuring that our extradition arrangements are clear and effective. I beg to move.

My Lords, as the Minister has said, the Extradition Act 2003 provides for two distinct sets of procedures to apply to incoming extradition requests. Part 2 of that Act provides a system that includes ministerial involvement, unlike Part 1 of the 2003 Act. Part 2 is applied to territories that are not EU member states with which the United Kingdom has extradition relations. As the Minister has said, the Baker review of the UK’s extradition arrangements recommended that those territories designated under Part 2 of the Act should be intermittently reviewed, and this order now draws on the findings of the first part of a two-part internal review of designations.

I raise two or three pretty minor points. The Minister referred to the second part of the internal review, which, as I understand it, has still to take place. Can she estimate when it is likely to be completed? Paragraph 7.2 of the Explanatory Memorandum says that that second part of the review,

“will also consider whether there has been a disproportionately long period of time since any request has been received from a territory, and what effect that should have on its designation for the purposes of the 2003 Act”.

Are any of the territories specifically referred to in the Explanatory Memorandum likely to come into this category of the,

“disproportionately long period of time since any request has been received”,

or are we talking about different territories, so that none of the territories specifically referred to in this EM would come into the category being looked at under the second part of the internal review?

The Minister also referred to the change in the number of days addressed in paragraph 7.7 of the Explanatory Memorandum, where it says that,

“in provisional arrest cases involving Saint Helena, Ascension and Tristan da Cunha, the period in which the full papers must be provided to the judge is 65 days (rather than the normal 45 days)”.

I have not entirely understood why this situation arises. How many such cases are there each year from these territories? If the present requirement is 45 days, though I am not sure that it is, what are the actual difficulties that have been encountered? Have they meant that we have no alternative but to apply the 65-day period, since obviously the three territories have not only just become accessible by sea? Some would say that that situation may have existed for some time. As I say, I accept that my question may show that I have not fully understood the purpose for, or the reason behind, the change.

The Minister will be aware of what the Joint Committee on Statutory Instruments had to say about the relationship between the coming into force of Article 3 of the Act and the commencement of Section 160 of the Anti-social Behaviour, Crime and Policing Act 2014. The department commented that it would make the relationship more explicit in the final version of the Explanatory Memorandum when the order was made. Should the Explanatory Memorandum I have in front of me make the relationship more explicit, or is that an Explanatory Memorandum that is still to come?

I hope the noble Lord will forgive me; I missed his last question because I was seeking clarification on something. If he would like to repeat it, that would be very helpful, or I could write to him.

I simply asked about the issue that was raised in the 23rd report of the Joint Committee on Statutory Instruments of the intended relationship between the coming into force of Article 3 of the Extradition Act and the commencement of Section 160 of the Anti-social Behaviour, Crime and Policing Act, which are all covered in the order and in the Explanatory Memorandum. In responding to that issue, the Home Office said that the department would make the relationship more explicit in the final version of the Explanatory Memorandum when the order is made. I was not entirely clear whether the Explanatory Memorandum that I have in front of me is the one in which the relationship should be made more explicit, or whether another Explanatory Memorandum will be provided that will make it explicit and meet the observation made by the Joint Committee on Statutory Instruments.

I thank the noble Lord very much for repeating that. To answer the last question first, there will be another one.

The noble Lord asked about territories that had been identified for which a disproportionate period of time may have elapsed. None has yet been identified. He asked about St Helena and Tristan da Cunha. He is absolutely right that there has always been sea around them. There was hundreds of years ago and there still is; that has not changed. In fact, I am sure that I read somewhere about a bridge being built to St Helena. We are approaching this with a sense of reasonableness in terms of delay. There have been no cases from St Helena between 2003 and 2015, but I suppose that a reasonableness test may be applied to getting documents to us or to them.

The noble Lord asked about the date of the second part of the internal review. We are expecting that in the first Session of the new Parliament. I think that answers all his questions.

Motion agreed.

Committee adjourned at 5.19 pm.