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Energy Efficiency

3 p.m.

Lord Ezra asked Her Majesty's Government:

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville): My Lords, the Minister for Energy and Industry has met the regulator, Callum McCarthy, to discuss various matters, including his intentions for promotion of energy efficiency. The powers to set standards for energy efficiency currently rest with the regulator himself. I am confident that, in considering what to do, he will take account of a range of views, including those of the Government. The Government's programme for reform of utility regulation will include a provision for statutory guidance to the regulator on environmental and social objectives to be taken into account in his decisions.

Lord Ezra: My Lords, is the Minister aware that at a recent meeting in another place the regulator indicated that energy efficiency was not on his list of priorities? Asked about that, he said that he had not yet received clear guidance from government. Is that not surprising in view of the fact that the Government issued their Green Paper on utility regulation last March? Even though the legislation has been delayed, it should have been possible for the Government to be clear about what the regulator should do. For example, can the standards of performance scheme that is operating so effectively in the electricity industry be extended to gas?

Lord Sainsbury of Turville: My Lords, I am aware that at a meeting of the Parliamentary Group for Energy Studies on 22nd February, the regulator listed his five priorities. When the Minister for Energy and Industry met the regulator, he encouraged him to make positive use of his powers in respect of setting energy efficiency standards of performance. As I said, the Government do not have powers to direct the regulator, who is independent. However, he said before the Public Accounts Committee that he is considering an extension of the electricity standards of performance scheme beyond 2000 and, for consistency, the possibility of a similar provision for gas.

Regarding the longer term, the Government's response to consultation on utility reform, A fair deal for consumers, sets out the principle that where the Government wish to implement energy efficiency measures which have significant financial implications

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for consumers or regulated companies they are to be decided by the Government and implemented through new specific legal provision.

Baroness Gardner of Parkes: My Lords, can the regulator do anything to offset the damaging heavy increases in electricity costs that will burden our manufacturing industries, particularly the chemical industry, and may well result in the loss of many jobs? In Germany, electricity costs in those same industries are heavily subsidised. The recent Budget will be very damaging.

Lord Sainsbury of Turville: My Lords, I do not believe that the regulator has those powers. With the new legislation, there will be more scope for the Government to set social as well as economic objectives. I do not believe that under present legislation the regulator has that right.

Lord Islwyn: My Lords, does the Minister agree that manufacturing industry needs a more level playing field in order to meet the threat from overseas competition?

Lord Sainsbury of Turville: My Lords, the whole purpose of the present legislation is to create a fair system of charging. Only the setting of further objectives for the regulator would enable him to take a view as to how manufacturing industry was affected.

The Earl of Lauderdale: My Lords, do the Government have views as to the future development of combined heat and power and also of tidal and wave energy?

Lord Sainsbury of Turville: My Lords, the Government have a target of 5,000 megawatts of combined heat and power capacity by the year 2000. About 4,000 megawatts is now installed. The Department of the Environment, Transport and the Regions develops policy on combined heat and power and promotes its wider growth. It will be starting a high level marketing campaign to promote combined heat and power to key industries. We are also developing a policy on renewables so as to meet the 10 per cent. target we have set ourselves.

Baroness Miller of Hendon: My Lords, in their Green Paper the Government referred to social objectives, environmental objectives, and energy efficiency objectives. Will the Minister tell the House on which of those objectives the Government place most weight? Gas-fired power stations beat coal-fired stations every time on two of those criteria; first, in terms of cost, and, secondly, in terms of reduced CO 2 emissions. In view of that, why have the Government imposed a moratorium on gas-fired stations?

Lord Sainsbury of Turville: My Lords, one of the fundamentals of energy policy is that it must meet a number of different objectives. There is no scheme that does not involve some kind of trade-off involving efficiency, social objectives and environmental

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objectives. Therefore, in the new legislation there will have to be a way of balancing outlays in any direction that the Government give to the regulators. So far as concerns gas-fired power stations, it is not true that on all those objectives they beat the marginal cost of running existing coal-fired stations. On a marginal cost basis, coal-fired stations are still in many cases cheaper to run.

Baroness Maddock: My Lords, does the Minister agree that there is great concern about the lack of progress in energy efficiency improvements in the private rented sector? It is particularly worrying since many of the people living in those properties are on low incomes. Will the Minister give assurances that this area will be given high priority by the Government in their discussions with the regulator?

Lord Sainsbury of Turville: My Lords, the EESOPs which the regulator presently applies cover areas such as home insulation. It is something we are extremely keen on.

Lord Berkeley: My Lords, will my noble friend give some indication as to when the Government's policy on renewables might be published?

Lord Sainsbury of Turville: My Lords, I cannot give a date. I shall be happy to write to the noble Lord with our best indication.


Lord Carter: My Lords, at a convenient moment after 3.30 p.m. my noble friend Lady Hayman will, with the leave of the House, repeat a Statement that is to be made in another place on NHS modernisation.

Health Bill [H.L.]

3.7 p.m.

Report received.

Clause 2 [Primary Care Trusts]:

The Parliamentary Under-Secretary of State, Department of Health (Baroness Hayman) moved Amendment No. 1:

Page 1, line 15, at end insert ("with a view, in particular, to their--
(a) providing or arranging for the provision of services under this Part of this Act,
(b) exercising functions in relation to the provision of general medical services under Part II of this Act, and
(c) providing services in accordance with section 28C arrangements.").

The noble Baroness said: My Lords, at Second Reading and in Committee we debated at some length the proposition that the Bill should provide a clearer indication as to what primary care trusts will be established to do. The idea received widespread support, including from the Delegated Powers and Deregulation

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Committee. There was also some debate as to what would constitute an appropriate level of detail. The noble Lords, Lord Walton and Lord Skelmersdale, and the noble Baroness, Lady Gardner, reminded us of the problems inherent in setting out detailed lists. In the light of our debates, I offered to attempt to bring forward a suitably broad amendment that would address the concerns of the House.

The Government's approach in drafting this amendment has not been to set out a long and detailed list of functions and objectives. That approach is fraught with risks of omission and very real difficulties in relation to defining precisely what various specific objectives might mean as a matter of law, and risks of imposing through primary legislation too rigid a framework for the operation of PCTs which cannot be adapted in the light of the fact that, over time, specific objectives may well change.

Instead, therefore, Amendment No. 1 sets out the broad activities that primary care trusts will be established to undertake. I hope that noble Lords will feel that in so doing we have managed to come up with a provision that is less skeletal than the amendment tabled in Committee by my noble friend Lord Harris of Haringey and perhaps also less skeletal than the amendment that is currently before the House in the names of the noble Lord, Lord Clement-Jones, the noble Baroness, Lady Thomas of Walliswood, and the noble Earl, Lord Howe.

To paraphrase Amendment No. 1, it means that primary care trusts may commission or provide hospital and community health services and develop primary care by exercising some functions in relation to general medical services. We want primary care trusts, in particular, to be able to deploy cash-limited funds to improve general practice infrastructure and support practice staff costs; and provide personal medical and dental services under the National Health Service (Primary Care) Act 1997--for example, by employing GPs in the way that community trusts already do under that Act. I am assured that, as a matter of law, this will give us a comprehensive list of what a primary care trust will be.

The amendment provides that the Secretary of State will establish primary care trusts with a view, "in particular", to their undertaking these broad functions. Those words are important for two reasons. First, the listed functions give a clear indication of the main purposes for which primary care trusts will be established, but the list does not set out to be exhaustive. It permits the Secretary of State to establish a primary care trust with a view to exercising other health functions. This fits with existing arrangements whereby health authority functions under Part I are, in the main, not directly conferred by a statute but delegated by the directions of the Secretary of State. Primary care trust functions will be largely delegated from health authorities. Setting out a long list of primary care trust functions would run contrary to this basic structure of delegation which has been a feature of NHS legislation since 1946.

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Secondly, the amendment does not mean that each primary care trust must perform all the listed functions. For example, matters such as whether a primary care trust will be able to provide services as opposed to merely commissioning them will be left to secondary legislation--in this case the establishment order and directions--as will any restrictions on what primary care trusts can commission and provide. Such flexibility is vital, and I believe that that was accepted by the noble Earl, Lord Howe, at Committee stage when he said that he understood the arguments with regard to flexibility. We want primary care trusts to develop in imaginative new ways; we do not want to lock the service, through primary legislation, into rigid ways of working. I believe that the way services are commissioned and provided should be allowed to evolve in the light of changing needs and developments in clinical practice and technology.

It may be helpful if at this stage I give the Government's response to the amendment standing in the name of the noble Lord, Lord Clement-Jones, which I believe has much the same general purpose as Amendment No. 1. However, there is a difference in that it refers to the responsibility of a primary care trust for promoting and improving the health of the local community. I understand why the noble Lord has framed his amendment in that way and I am sure that, as a general objective, it is not one from which we would want to demur, but perhaps I may explain why the Government have not gone down that particular route.

The functions listed in the amendment all concern the provision of services under the 1977 Act. The fundamental duty of the Secretary of State under that Act, as set out in Section 1, is to promote a comprehensive health service designed to secure improvement in the physical and mental health of people and in the prevention, diagnosis and treatment of illness. The Secretary of State's power to direct health authorities and primary care trusts to exercise his functions is limited to functions relating to the health service. There is, therefore, a definite link between primary care trust functions and the overall objectives of the health service.

Primary legislation does not explicitly require health authorities to exercise functions for these purposes. Such a requirement would be entirely superfluous as a matter of law. We have adopted a similar approach for primary care trusts in the Bill for exactly the same reason. That should not be taken to mean that primary care trusts will not play a critically important role in promoting the health of their local populations. We believe that they will.

Amendment No. 3 also refers to the responsibility of a primary care trust to work within the context of the health improvement programme. I confirm that that is indeed the Government's intention. However, the Bill already makes provision for that and there is no need to replicate this on the face of the Bill.

Clause 21(3), on page 16 of the Bill, places a duty on the primary care trusts, NHS trusts and local authorities to participate in the preparation, or review, of plans.

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Clause 21(7)(b), at the top of page 17, provides that in exercising their functions primary care trusts must have regard to any plan in relation to which they have participated. I should point out that the powers of direction over primary care trusts contained in Clause 7 are also relevant here. Both the Secretary of State and health authorities will be able to give specific directions to primary care trusts to ensure that they play their part in achieving national priorities and in developing and delivering the local health improvement programme.

There is a reference in Amendment No. 3 to a PCT being a body corporate. Paragraph 3 of Schedule 5A--Schedule 1 to the Bill--already provides that every primary care trust shall be a body corporate and I believe that there is no need to repeat that in Clause 2.

I hope that the House will forgive me for explaining in some detail the thinking behind the amendment. I recognise that this is a matter of particular interest. We have tried to take on board the clear view expressed in Committee that there should be a statement of purpose on the face of the Bill and set out reasons why we believe that such a statement should be couched in the terms proposed in the government amendment rather than in those proposed in the alternative formulation. I beg to move.

3.15 p.m.

Lord Skelmersdale: My Lords, as one of those who on Second Reading and in Committee asked the Government to define their terms in relation to primary healthcare trusts, I am delighted to see this amendment on the Marshalled List. It may be that I am slightly slow or slightly deafer than usual this afternoon. I should be grateful if the noble Baroness would explain to what Section 28C, referred to in paragraph (c) of Amendment No. 1, applies. Clearly the reference must be to the 1977 Act, but I am not sure what the relevance is to the duties and intentions of the PCTs.

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