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House of Lords

Wednesday, 6 November 2013.

3 pm

Prayers—read by the Lord Bishop of Norwich.

Introduction: Lord Allen of Kensington

3.08 pm

Sir Charles Lamb Allen, Knight, CBE, having been created Baron Allen of Kensington, of Kensington in the Royal Borough of Kensington and Chelsea,was introduced and took the oath, supported by Baroness Jay of Paddington and Lord Bragg, and signed an undertaking to abide by the Code of Conduct.

Syria: Refugees


3.13 pm

Asked by Lord Selkirk of Douglas

To ask Her Majesty’s Government whether they will pursue a dialogue with the governments of Jordan, Turkey, Lebanon and Iraq in order to ascertain the top priorities for those countries with regard to the present and future needs of refugees remaining in those countries who have fled the war in Syria.

Lord Wallace of Saltaire (LD): My Lords, the situation in Syria is worsening. There are more than 2 million refugees in neighbouring countries, which is creating a growing regional crisis. The UK’s total funding for Syria and the region is now £500 million, the largest total sum the UK has ever committed to a single humanitarian crisis. This reflects the scale, despair and brutality of the situation. The Prime Minister and the Foreign Secretary regularly raise the issue with their counterparts from Jordan, Turkey, Lebanon and Iraq, the four countries where refugees are now mainly to be found, and they will continue to do so.

Lord Selkirk of Douglas (Con): The Minister’s statement is extremely welcome. Does he accept that using aid in a country such as Jordan—for example, to improve water supplies and sanitation and to supplement the very hard-pressed health provision, education and other basic services—undoubtedly helps to reduce both tension and the increasing scope for friction between the refugees and the often vulnerable local communities who have so generously welcomed them?

Lord Wallace of Saltaire: My Lords, we do understand that. The sheer scale of the number of refugees now in Lebanon and Jordan in particular is such that it has the full potential to destabilise their societies and, therefore, their political systems. Of the £500 million that we have so far committed, £167 million is going to the neighbouring countries of Lebanon, Jordan, Turkey, and Iraq and, in addition to humanitarian aid, Britain is providing more than £15 million to support stability in Lebanon and Jordan, including support for their police and armed forces. The UK also recently announced an additional £12 million of support for Jordan, aimed at keeping essential public services running.

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Lord Bach (Lab): My Lords, in relation to Jordan and what the noble Lord has asked about, the Jordanian Government need particular help because a substantial number of refugees in Jordan are actually with host families rather than in refugee camps. This means that the Jordanian Government need more help because UNHCR aid is not as forthcoming as it would be in refugee camps. The Jordanian Government need more money in order that those refugees with host families are adequately looked after, particularly—here I repeat what the noble Lord who asked the Question said—with regard to drinking water and the price of it. What special help, beyond what the Minister has already stated, is to be given to Jordan itself because of the particular difficulties that that country has at the present time and because of what we owe to that country ourselves?

Lord Wallace of Saltaire: My Lords, I have already announced that the Government are giving specific aid to the Jordanians to support a number of activities. We are well aware that drinking water is a particular problem. As the noble Lord rightly points out, a number of refugees in Lebanon and Turkey, as well as in Jordan, are not in refugee camps but have been taken in by local families. That is a good thing in many ways but it does of course increase the strain on local communities.

Lord Ashdown of Norton-sub-Hamdon (LD): My Lords, I declare an interest as the president of UNICEF UK and in that capacity I thank the Government for their generosity, not just to UNICEF but also to many other charities in helping with the terrible suffering of children, who of course suffer most in these circumstances. The last case of polio in Syria was 14 years ago, in 1999, but this terrible disease is now taking hold, especially among the children of the refugee population. In past conflicts it has been possible to arrange agreements for immunisation between the warring parties. I wonder whether the Government have pursued this matter with both the Syrian Government, who seem perfectly prepared to do this, and the rebels. Are the Government pursuing this opportunity?

Lord Wallace of Saltaire: My Lords, as my noble friend will be aware, alongside the United Nations Security Council resolution on chemical weapons there was a United Nations Security Council presidential statement on humanitarian access. That has not yet been fully accepted by the Syrian regime. There are many difficulties for humanitarian agencies and their staff in getting visas to enter the country and, as he rightly said, there are also difficulties in some of the rebel-held areas.

Baroness O'Loan (CB): My Lords, as I prepare to go on Saturday to Jordan and the refugee camps, I ask the Minister, bearing in mind that there are in excess of 2.5 million Palestinian and Syrian refugees in Jordan alone and thanking the Government for the money and resources they are putting in, whether there is anything further that we can do in terms of influencing the European Union and United Nations to improve the situation, particularly of refugees seeking to get out of Syria and into Jordan.

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Lord Wallace of Saltaire: My Lords, the noble Baroness rightly points out that some of the refugees in Jordan are Palestinians who were living in the huge refugee camp in Damascus, which I have visited myself, and who have now been forced, for the second time, to move out to Jordan. The United Kingdom has lobbied very hard for other countries to step up to the mark. We have currently provided more bilateral assistance than any other member state of the European Union. At the last G20, we put pressure on other members to produce more funds and a further £1 billion was pledged. The Russians have contributed only a very tiny amount of humanitarian aid. The amount they have contributed in arms to assist the regime is a great deal larger.

Lord Wright of Richmond (CB): My Lords—

Lord Judd (Lab): My Lords—

Lord Jopling (Con): My Lords—

The Chancellor of the Duchy of Lancaster (Lord Hill of Oareford) (Con): My Lords, it is the turn of the Labour side.

Lord Judd: My Lords, the humanitarian challenge is formidable. Of course, it is not just a matter of relief; it is also a matter of long-term investment in children—their education and their health—because they are going to be displaced for a long time to come. What are the Government doing to face up to the immense regional political implications of what has happened in the sense that almost a third of the population in Jordan will soon be refugees? That is acutely destabilising, and it is the same story in Lebanon, with all kinds of dangers for the future in terms of extremism, political disruption and the rest. Can we promote international discussions about how to have a positive pre-emptive regional approach towards the long-term political issues?

Lord Wallace of Saltaire: My Lords, I think that it may be beyond the capabilities of the United Kingdom Government to resolve all the problems of the Middle East. We are, however, now involved in a range of multilateral discussions. Sadly, the Geneva II conference, which we hoped would take place in November, is unlikely to take place before towards the end of the year. As the noble Lord knows, tentative dialogues with the Iranians are under way, and the Middle East peace process between the Israelis and the Palestinians is, thank goodness, also again getting slowly under way. We are engaged on a large number of fronts but, as the noble Lord knows, the problems are extremely complex and long-standing.

Carbon Monoxide Detectors


3.22 pm

Asked by Baroness Finlay of Llandaff

To ask Her Majesty’s Government what plans they have to make the installation of carbon monoxide detectors compulsory in all new and rental properties.

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The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Stowell of Beeston) (Con): My Lords, this matter will be discussed during the Energy Bill debates later today but I can announce to the House now that my department will be undertaking a formal review of the rules and regulations relating to carbon monoxide alarms in rented homes. This will consider the technical questions of how best to ensure safety in the home, as well as regulatory mechanisms, given the overlapping regimes of building regulations, fire safety and housing standards.

Baroness Finlay of Llandaff (CB): I am, of course, delighted to hear that there will be a review but I hope that, in the light of the coroner’s Regulation 28 letter following yet another fatal carbon monoxide poisoning, the Government will also consider giving fire and rescue services a statutory role in carbon monoxide safety, regulation and enforcement, given their good track record on fire alarms. I also ask the Government to consider how carbon monoxide tracks in buildings. Some of the deaths have occurred among people who have been resident in properties or rooms where the boiler has not been situated, although the boiler has been the source of the carbon monoxide and the source of the deaths.

Baroness Stowell of Beeston: My Lords, I am grateful to the noble Baroness for raising this important matter. I pay tribute to her for everything that she has done to raise this issue over several years. She is right about the coroner’s Regulation 28 letter that we received following the tragic death of Mrs Kerr in Manchester. We are currently considering its recommendations, which include some of those that she has mentioned, and we will reply, as we are required to do. As to the noble Baroness’s second question, she is right to emphasise the risks to tenants in rented properties. In the wider review that I have just mentioned, we will be looking at the requirement for landlords to install carbon monoxide detectors.

Baroness Gardner of Parkes (Con): My Lords, there is currently an obligation for rental properties to have a gas safety certificate every year. If the compulsory installation of carbon monoxide monitors is to be introduced, would it not be practical for those monitors to be tested at the same time, as people would then know that it had been done? Further, is it not important to indicate on the carbon monoxide monitor how long it will work satisfactorily? I have found great variation in what people tell you when they come about the gas. One will say that the battery just needs changing but another will say that the sensor stops working after a certain number of years. I noticed that whoever installed the carbon monoxide monitor in my home wrote on it the date when it will definitely need replacing.

Baroness Stowell of Beeston: My noble friend raises an interesting point. One of the new steps that the department is proposing as part of its wider review to enhance the safety of people in rented property is to ensure that they are properly equipped to ask the right questions about alarms and their longevity. Annual safety checks are about appliances and flues. The most

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important thing is that appliances are operating properly because, if they do so, the chance of injury or death is that much more diminished.

Lord Sugar (Lab): My Lords, the noble Baroness will of course be aware that some of the regretful deaths that have been caused by carbon monoxide poisoning in people’s homes is due to a device driven by gas. Does the noble Baroness agree that the utility companies that supply gas should be under a legal obligation to ensure that the supply and installation in the homes of their clients are tested and that their premises are safe and, perhaps, retrospectively fit a CO device free of charge? Of course, they can easily afford to do so.

Baroness Stowell of Beeston: Appliances in rented properties are subject to an annual requirement for a gas safety check. As for the providers of gas pipes, since April this year the distribution network operators have been required by Ofgem to raise awareness and reduce the risk of carbon monoxide. So there is now a requirement on those companies as well as the annual safety check on the appliances which is part of existing regulations.

Lord Tope (LD): My Lords, I welcome the Minister’s answer today. Is she aware that in its response to the recent CLG Select Committee report the Government also agreed with the Electrical Safety Council’s view that all private rented sector properties should be subject to electrical safety tests at least every five years? Can she say how and when the Government will ensure that landlords do that, and that such checks include appliances and are carried out by registered electricians?

Baroness Stowell of Beeston: I will have to write to my noble friend on the specifics of his questions on electrical checks, but I would point him to the wider review which is taking place to enhance the safety of all people in rented accommodation. It will cover a wide range of issues and not just gas, carbon monoxide or electricity.

Baroness Masham of Ilton (CB): My Lords, are there enough warnings on gas stoves that are taken into tents when people are camping? There have been several fatalities.

Baroness Stowell of Beeston: My Lords, the noble Baroness raises an important point. The Department of Health has been working with the British Standards Institution to introduce warning labels on barbecues and barbecue fuels to warn people of the dangers of bringing barbecues indoors or into tents. I think that people are gradually starting to understand the risks and dangers of that.

Lord McKenzie of Luton (Lab): My Lords, the Minister’s announcement is welcome. She will be aware that we now have some 3.6 million households renting privately in a sector that has hitherto been largely unregulated. Mention has already been made of the landlord’s obligations under health and safety legislation. Is she aware of research from Shelter that shows that

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in 2011-12 there were some 85,000 complaints against rogue landlords, two-thirds of which related to serious life-threatening hazards such as dangerous gas and electrical installations? Given savage cuts to the HSE and local authority budgets, how can the Secretary of State’s new-found zeal for cracking down on rogue landlords be brought to bear to ensure compliance with these vital health and safety regulations?

Baroness Stowell of Beeston: The noble Lord seems to want it both ways—he wants me to say that we are going to do more but then questions whether we can do more. As I said, a couple of weeks ago we announced a range of measures to enhance the safety of tenants in all kinds of rented accommodation. Among a range of measures that we will be introducing is guidance for local authorities to help them prosecute rogue landlords and press for the maximum possible penalties. From next month the courts will be able to take account of a landlord’s assets and not just their income, as at present, when determining an appropriate fine.

Nuclear War: International Conference


3.30 pm

Asked by Baroness Miller of Chilthorne Domer

To ask Her Majesty’s Government whether they intend to attend the international conference in Mexico in February 2014 on the humanitarian impact of nuclear war.

Lord Wallace of Saltaire (LD): My Lords, we have not yet received an invitation to the conference in Mexico on the humanitarian impact of nuclear weapons and have not yet made a decision on whether the UK will attend. We continue to have concerns that the initiative would divert attention from the 2010 action plan agreed by states parties to the Nuclear Non-Proliferation Treaty.

Baroness Miller of Chilthorne Domer (LD): My Lords, I thank my noble friend for his reply, which is a little more positive than I had feared in that at least it is not a negative. Does he see a problem in that, on the one hand, last April the Prime Minister claimed that Britain had taken the lead in pushing for progress towards multilateral disarmament while, on the other hand, we have not taken part in the UN open-ended working group that was set up to try to overcome the 17-year impasse on the Conference on Disarmament, and yesterday, in the UN General Assembly, the UK voted against resolution L34 to take forward multilateral nuclear disarmament negotiations—which are exactly the sort of negotiations the Prime Minister called for last April? How does he think that the rest of the world is viewing us?

Lord Wallace of Saltaire: As regards attendance at a conference that is still four months away, British officials have had conversations in Mexico City, Geneva and New York about whether we may attend. It remains

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very much an open question. Perhaps I may simply say to the noble Baroness that there are a great many different, and in some ways conflicting, bodies in which disarmament is now being discussed. These include the Nuclear Security Summit which will meet again in 2014, the UN Disarmament Commission and the Conference on Disarmament. There have also been a number of discussions on nuclear-weapon-free zones. The question of where one puts the priority and where you think it is most worthwhile to push for development is difficult We hold that the NPT review conference of 2015 should remain one of our priorities. We also think that there is value in the P5 process, on which Britain has been one of the leaders, and in the P5-plus process in which the P5 members discuss these issues with India and Pakistan.

Lord Browne of Ladyton (Lab): My Lords, do the Government agree with the principal conclusion of the Oslo conference that no state and no international organisation has the capability to address the consequences of the explosion of a nuclear weapon and, much more worryingly, the view supported by experts that it might not be possible to develop such capacities? I hope that the Government disagree. If they do, where is the evidence that we have such capabilities?

Lord Wallace of Saltaire: My Lords, the valuable contribution that the Norwegians and others have been making on this whole question of the humanitarian and, incidentally, climatic consequences of the explosion of a nuclear weapon are very much something that the UK Government are taking seriously. We see this as a very useful expert contribution. Looking at how, if there were to be—heaven forfend—a nuclear explosion, we would cope as an international community with the consequences, is something that is very valuable to take forward.

Baroness Williams of Crosby (LD): Does my noble friend agree that there was very substantial political support for the United Nations resolution on working on methods of dealing with nuclear disarmament, and in particular that although half of the NATO members voted in favour of that resolution, the United Kingdom and the P5, with the exception of China, all voted against it? Perhaps I may remind him that the United Kingdom has established a substantial record—perhaps the leading record among the P5—for work on specific actions such as the verification principle that has given us a great reputation on this issue. We might put that at risk if we do not recognise the strength of the pressures from not only the United Nations but many of our allies in this respect.

Lord Wallace of Saltaire: My Lords, this is an extremely serious area of international security that we take very seriously. We are worried about some of these conferences where it is easier to pass resolutions than to accept that we need, for example, to control: the storage of fissile materials; the creation of additional fissile material; and the potential trade in fissile material. This is what the currently blocked fissile material cut-off treaty is about, and what the nuclear security summit next year will also be concerned with.

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Lord Hannay of Chiswick (CB): My Lords, will the Minister be able to say what attitude the US Government are taking to attending the Mexico conference? Could it possibly be that we are just waiting to see which way they jump? If so, is that the best way to approach this matter?

Lord Wallace of Saltaire: My Lords, the United States has also not yet taken a decision. My understanding is that the other members of the P5 are unlikely to attend. I suspect that the considerations of the US Administration may not be totally dissimilar from those that are concerning the British Government.

Lord Foulkes of Cumnock (Lab): My Lords, would the Government consider sponsoring a joint parliamentary delegation to attend the conference?

Lord Wallace of Saltaire: That thought had not occurred to me or, as far as I am aware, to anyone else. If the noble Lord would care to attend, we will consider his request.

Living Wage


3.36 pm

Asked by Baroness Royall of Blaisdon

To ask Her Majesty’s Government what steps they are taking to promote the adoption of the new rate of the living wage.

Viscount Younger of Leckie (Con): My Lords, the Government support the living wage and encourage businesses to pay it when it is affordable and not at the expense of jobs. We recognise that these are challenging times. We applaud companies that have chosen to pay higher wages. We too are concerned with low pay. That is why we have frozen council tax, cancelled the rise in fuel duty, and by 2014-15 will have taken 2.7 million people out of income tax altogether.

Baroness Royall of Blaisdon (Lab): My Lords, the living wage is good for the country in terms of wealth creation and saving money on welfare bills; it is good for business, as KPMG and the Resolution Foundation have observed; and it is clearly good for individuals who have been hit by the cost of living crisis, some of whom have had to resort to food banks. Do the Government have any understanding of the number of people regularly using food banks who are in full and part-time work? If not, what plans do the Government have to collect this information?

Viscount Younger of Leckie: We see that the right way forward—the only way forward—to achieve sustainable increases in living standards is through focusing on economic growth and employment. This is exactly what the Government are doing, with a particular focus on SMEs. As we know, 99% of all businesses are SMEs, with 14.4 million employees. With changes to the tax allowance, low-wage workers who have been squeezed through inflation and low earnings growth can take home much more of their income. We have taken 25 million people out of income tax; they have had a cut.

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Lord Naseby (Con): My Lords, does my noble friend agree that surely the first priority is to ensure that the minimum wage level is properly implemented across the whole United Kingdom; and that, secondly, the threshold at which anybody in this country pays tax should rise? It is to the credit of Her Majesty’s Government that the Chancellor has enabled that level to be raised in each of the last few budgets. On top of that, does my noble friend recognise that the dreadful situation that we inherited from the Labour Government—

Noble Lords: Oh!

Lord Naseby: Noble Lords can say what they like over there. We were told by one of their senior Ministers that the cupboard was bare. It is only my right honourable friend the Chancellor’s policies that have ensured we get the growth that we are beginning to get now. As I understand it from my noble friend—

Noble Lords: Question!

Lord Naseby: No, I am sorry; you have to listen to this. As I understand it, my noble friend is quite clear: the benefits of the growth that we establish will be for all sections of society.

Viscount Younger of Leckie: My noble friend has made some strong and passionate points and I agree with the gist. However, I should say that our key policy is to support the low-paid through the national minimum wage. It is set at a level that helps as many low-paid workers as possible, but without damaging their employment prospects. My right honourable friend Vince Cable has asked the Low Pay Commission to look at what economic conditions would be needed to allow the national minimum wage to rise in the future by more than current conditions allow, without having an adverse impact on jobs.

Baroness Wall of New Barnet (Lab): My Lords, I am sure that the noble Viscount is aware of the benefits that the living wage have already demonstrated. He referred specifically to SMEs in his response. I advise him that many SMEs, particularly those in the engineering and technical sectors, already pay well above the minimum wage. They feel that it is the right way forward because they benefit from the commitment of their employees.

Viscount Younger of Leckie: The noble Baroness makes a good point. Unlike the national minimum wage, which aims to maximise support for the low-paid without damaging their employment prospects, the living wage is derived from an assessment of households’ living standards. Although that is important, it focuses on household expenditure rather than the income and affordability of companies.

Lord Elystan-Morgan (CB): My Lords, does the Minister accept the recently published findings of the Resolution Foundation in relation to a minimum living wage? Its contention is that if a payment of £8.80 per hour in the London area or £7.65 per hour outside London were made to all public workers, there would be a net saving to the public purse of no less than £2 billion per annum? Do the Government accept those figures? Have they made their own calculations, and if not will they now do so and publish them?

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Viscount Younger of Leckie: I remind the House that the living wage is a voluntary rate of pay, above the national minimum wage, proposed by the Living Wage Foundation. It is very much up to employers and employees through their contracts to decide what the rate of pay should be. However, I note the noble Lord’s point.

Baroness Tyler of Enfield (LD): My Lords, does the Minister agree with the Mayor of London, Boris Johnson, who said only on Monday that more employers in the capital were recognising the benefits of the living wage for their workforces by specifically helping low-paid families to make ends meet, as well as promoting economic dividends for employers and boosting growth and productivity? Does the Minister share the mayor’s wish to spur more employers on to do the right thing?

Viscount Younger of Leckie: I certainly share that wish and the mayor has made his views clear. I said earlier that I also applaud what companies are doing, provided that they can afford it. But to help households manage the costs of their bills—I have said already that I recognise that there is a squeeze on them—this Government have already frozen council tax and cancelled the rise in the fuel duty escalator. We are encouraging competition and that consumers switch to get the best deals. Moreover, advice is available from citizens advice bureaux and the Money Advice Service.

Lord Tebbit (Con): My Lords, does my noble friend accept that the first priority of a business is to stay profitable and in business if it is to employ anyone at all? It would be a bit odd if the wages paid to a worker were based not on his value to the business, but on his various commitments and obligations. Surely that cannot be right.

Viscount Younger of Leckie: It is certainly true that businesses, particularly small and medium-sized ones, need to decide whether they should increase pay from the national minimum wage to the living wage, but it is very much up to them. Certainly there has been quite a lot of negative media coverage about the Labour Party’s policy, in that small and medium-sized businesses felt that they would not be able to take more people on if they decided to increase pay from the minimum wage to the living wage.

Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill

Order of Consideration Motion

3.44 pm

Moved by Lord Wallace of Saltaire

To move that the order of the House of 28 October be vacated, and that it be an instruction to the Committee of the Whole House to which the Transparency of Lobbying, Non-Party Campaigning

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and Trade Union Administration Bill has been committed that they consider the Bill in the following order:

Clauses 1 and 2, Schedule 1, Clause 3, Schedule 2, Clauses 4 to 25, Clauses 36 to 39, Clause 26, Schedule 3, Clauses 27 to 32, Schedule 4, Clauses 33 to 35, Clauses 40 to 44.

Lord Wallace of Saltaire (LD): My Lords, I beg to move the Motion standing in my name on the Order Paper.

Lord McFall of Alcluith (Lab): My Lords, by mismanaging the lobbying Bill, the Government are wrecking the work of the Parliamentary Commission on Banking Standards, which was set up to reform the culture in the banking industry, by bringing forward this Bill early—on 18 November. That is the unanimous view of all members of the banking commission, who have said that they need until the new year to study these government amendments for the simple reason that this is an entirely new Bill. This is a Bill that left the House of Commons 35 pages long. It is now more than 160 pages and the government amendments are four times the size of their original Bill. This morning I spoke to Andrew Tyrie MP, the chairman of the commission, who said that if the Government go ahead before due consideration to this increasingly complex and dense legislation, the Parliamentary Commission on Banking Standards will not be able to carry out the mandate that the Government gave it to reform the banking industry. The collective efforts over one year—almost 200 hours of public evidence and 10,000 questions —will be wasted. The Government will not only be betraying their promise when they established the commission, but will be seen and disowned by members of the commission for indulging in cynical, low, political-level, sharp practice. I ask the Government to think again and give due time to the Parliamentary Commission on Banking Standards by bringing this Bill back in the New Year when it is appropriate.

Lord Lawson of Blaby (Con): My Lords, as a fellow member of the banking standards commission, I agree with the conclusion reached by the noble Lord, Lord McFall, that the Leader of the House should think again about this important matter. I have great sympathy with him. I understand that the parliamentary timetable has been complicated by the late change of plan on the lobbying Bill and that presents him with a difficulty, but it would be wholly wrong to put Report of the banking Bill in as a stopgap. This is a massively important Bill. It is a completely different one from the Bill that emerged from the other place. It is hugely larger—about five times—and extremely complex. In Committee, a number of noble Lords asked for a particularly long gap between Committee and Report, and I was under the impression that the Government were extremely sympathetic to that. Now they are suddenly putting it forward as a stopgap.

That is the main reason for making this objection, but there is another one. The most reverend Primate the Archbishop of Canterbury cannot be in his place today because he is abroad, but he was an active member of the banking commission. I spoke to him by

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telephone this morning. He is most anxious to take part in Report and, as a member of the banking commission, he has strong and informed views on a number of the issues. The week that the Government have now chosen is the week of the annual Synod of the Church of England, over which he has to preside, which means that he cannot be present. I urge my noble friend to think again.

Lord Laming (CB): My Lords, the noble Lord, Lord Turnbull, is not yet able to get to the House so he has asked me to convey his concerns about the scheduling of this stage of the Bill. The colleagues who have spoken already, like the noble Lord, Lord Turnbull, have invested an immense amount of time and energy both on the banking commission and on this Bill. It is a most important Bill and there is a huge amount of work that remains to be done, not least, as previous speakers have already pointed out, about the way in which it has been changed—though changed, I may say, for the better.

The noble Lord, Lord Turnbull, is well respected in this House, not least because of his measured tones. He asked me to convey his feelings on this subject, but I fear that I may not be able to do it accurately while keeping within the bounds of acceptable parliamentary language. Suffice it to say that he is, to put it mildly, put out. I hope that the Government will feel that they are able to look again at this matter because there is still much to be done in a great deal of detail and it is vitally important.

The Lord Bishop of Norwich: My Lords, I rise from this Bench in the absence of my friend the most reverend Primate the Archbishop of Canterbury, who cannot be in his place, to follow up a little on what the noble Lord, Lord Lawson, said. I know that your Lordships have sometimes observed that when these Benches are full, the General Synod must be in session and the Bishops are absconding. We sometimes are, of course, but the week after next, the Synod will spend a great deal of time on the new proposals for the consecration of women as bishops, and we are hopeful of progress.

I know that the most reverend Primate the Archbishop of Canterbury would be glad not to miss consideration on Report of the Banking Reform Bill but will, on this occasion, have to give the General Synod priority. I am sure that your Lordships would not wish him to abscond, as some of us hope to live to see the day when there will be women with us on these Benches. I realise that there are diary clashes for us all, but it would be a great pity if the Archbishop could not play a very full part in our debate here. He would be too modest to say it himself, but I can say it for him: we would be the poorer without his contribution.

Lord Higgins (Con): My Lords, I think that it would be wrong to suppose that it is only those who have been serving with great diligence on the banking commission who are concerned about this matter. The size of amendments in relation to the size of the Bill is, I think, without precedent. It is a very important matter which should be properly debated on the Floor of the House.

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Baroness Royall of Blaisdon (Lab): My Lords, I regret the fact that the Chief Whip has taken the decision unilaterally to impose business on the House. I have to make clear that Her Majesty’s Opposition did not agree to the tabling of the banking Bill for consideration on 18 November. It is clear from the conversations that we have had with the members of the Joint Committee on banking reform that the huge number of amendments and truncated timescale run the risk of an important Bill not being taken seriously. The arguments made very cogently in the Chamber today demonstrate that.

We recognise that this House is a part-time House—that includes Front-Benchers—and welcome the expertise that comes from Members, including Bishops, of course; it means that Members of the House can keep their interests and remain part-time, so changes to the timetable have a profound effect on the work of the House.

I ask the noble Baroness the Chief Whip, in these unusual circumstances—that is to say, the fact that yesterday, the whole House agreed that there should be a pause in consideration of the Transparency of Lobbying Bill—why, for just one legislative day, the Government cannot schedule debates on some of the many reports that are languishing, waiting to be debated on the Floor of the House. I well understand the need to deliver the Government’s programme, but I do not understand the difference that one day will make. I look forward to the noble Baroness’s reply and add that I cannot agree to the change that has been proposed to the House, but the House will know that my door always remains open to constructive discussion about the forthcoming programme.

Baroness Anelay of St Johns (Con): My Lords, of course, I am always sorry to cause concern to Members of the House in the matter of scheduling of business. In this House, as the noble Baroness the Leader of the Opposition said, Members are not expected to attend full time. I have to observe that many do and have a tremendous sense of duty to the work they do in scrutinising legislation. It is not a part-time House; we sit full time, but Members clearly have other expertise, which may keep them elsewhere on occasion. It is because of that, in scheduling business in this House, that we always take care to try to give advance notice. Commonly, we give three and a half weeks notice, which is considerably different from the one week given in another place, where elected, paid politicians are obviously in a different position.

As the noble Baroness said, yesterday, a deal was struck on the Floor of the House to delay part of the Committee stage of the lobbying Bill. An inevitable consequence of that was that I would have to make some changes to future business; there were two Committee days for the lobbying Bill which had to be vacated. I looked at all the available legislative business. This House is justly proud of the scrutiny that it gives to legislation. Of course, I looked at the availability of the opposition Front Bench spokesmen for that business; I always do. What I advertised today meets what I always try to do in looking at the availability of opposition Front Bench spokesmen and making good use of government time. I had other options available to me, it is true, but each of those options would either have been a worse use of time for the House, less

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convenient for the opposition Front Bench or, indeed, both. So I have decided that the only proper use was to schedule the Financial Services (Banking Reform) Bill.

I appreciate that those noble Lords who formed part of the commission—obviously, it no longer exists—play a very full and effective part. Committee finished on October 23, so we have not jumped in here. It is now two weeks later. In the normal run of things, Report could have been scheduled for today, but we wanted to avoid doing it within the normal time of two weeks. Taking it forward to 18November gives almost a month after the end of Committee. It is not unusual to schedule after two weeks; it is quite unusual for it to have been left as long as it has after Committee. I have proposed today that Report should begin nearly a full month after the end of Committee.

There have been references to the Bill’s being longer. It is indeed longer, but that is due to the Government’s having accepted the commission’s proposals. It is because the Government have been responding positively that the Bill has grown to meet the recommendations. Reference has also been made to colleagues’ availability, and I note particularly what the right reverend Prelate said. Far be it for me to wish to take the most reverend Primate the Archbishop of Canterbury away from discussion of important matters at his next weekly meeting of the Church, particularly if it is on the matter of women bishops. By the way, I do not hold the right reverend Prelate to any idea that that meeting will pass a resolution in favour of women bishops. I look on and wait with interest.

On a serious point, I know that the most reverend Primate attended two out of three days. He did as much as he possibly could to attend two days of Committee. He decided not to speak until late one night, when he was of great assistance in speaking briefly but importantly. Members of the House will know what I mean when I say that I did so “to assist the staff”, if I may put it that way, at 10.30 pm. It was a generous thing to do. I know that he listened assiduously and I am sure that he has read Hansard.

This is not in any way a matter of trying to put people out on any of the Benches. I assure the House absolutely of that. I know that my noble friends Lord Deighton and Lord Newby have been, and continue to be, very involved in discussions off the Floor of the House with those taking part in the Bill. Those started in Committee; they continued after Committee. They continue now, and I feel that those have been very constructive discussions.

I do my best in the way of scheduling. There are other legislative options. The noble Baroness, the Leader of the Opposition, asks why we do not have more debates. This House scrutinises legislation. I have offered a considerable number of days to the Committee Office—indeed, last week I was thanked for so doing. Two days of government time have been given over to committee dates this Session. That was what the Committee Office asked for in the first place, and we have fulfilled that commitment. Last week, the Committee Office was not able to take up the full offer of the time that we gave them, but we had extremely good debates last Wednesday.

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This House needs to do what it does best, to use time efficiently and effectively for scrutiny of legislation. There is other legislation available which could be scrutinised on that day. I say to the Leader of the Opposition that my door is open to the opposition Chief Whip if he wishes to discuss the availability of his Front-Bench spokesperson, to look again at those dates for legislation to be scheduled.

Motion agreed.

Defence: Aircraft Carriers and UK Shipbuilding


3.59 pm

The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever) (Con): My Lords, with the leave of the House, I shall repeat a Statement made in another place by my right honourable friend the Secretary of State for Defence. The Statement is as follows.

“With permission, Mr Speaker, I would like to make a Statement on the future shipbuilding programme for the Royal Navy, and in particular the aircraft carrier project. As the House will know, the previous Government entered into a contract with the Aircraft Carrier Alliance, an industrial consortium led by BAE Systems, to build two 65,000-tonne aircraft carriers—the largest ships in the Royal Navy’s history.

In SDSR 2010, the incoming Government, faced with the challenge of dealing with a £38 billion black hole in the MoD budget, were advised that under the terms of the contract it would cost more to cancel the carriers than to build them. The Public Accounts Committee subsequently described that contract as “not fit for purpose” and identified in particular the misalignment of interests between the MoD and the contractors, manifested in a sharing arrangement for cost overruns that sees, at best, 90p of every £1 of additional cost paid by the taxpayer and only 10p paid by the contractor as the root cause of the problem.

I agree with the PAC’s analysis. In 2012 I instructed my department to begin negotiations to restructure the contract to better protect the interests of the taxpayer and to ensure the delivery of the carriers to a clear time schedule and at a realistic and deliverable cost. Following 18 months of complex negotiations with industry, I am pleased to inform the House that we have now reached heads of terms with the alliance that will address directly the concerns articulated by the PAC and others.

Under the revised agreement, the total capital cost to the Ministry of Defence of procuring the carriers will be £6.2 billion, a figure arrived at after a detailed analysis of costs already incurred and future costs and risks over the remaining seven years to the end of the project. Crucially, under the new agreement, any variation above or below that price will be shared on a 50:50 basis between government and industry until all the contractor’s profit is lost, meaning that interests are now properly aligned, driving the behaviour change needed to see this contract effectively delivered.

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The increase in the cost of this project does not come as a surprise. When I announced in May last year that I had balanced the defence budget, I did so having already made prudent provision in the equipment plan for a cost increase in the carrier programme above the £5.46 billion cost reported in the major projects review 2012, in recognition of the inevitability of cost-drift in a contract that was so lopsided and poorly constructed.

I also made provision for the cost of nugatory design work on the “cats and traps” system for the carrier variant operation and for reinstating the ski-jump needed for STOVL operations. At the time of the reversion announcement, I said that these costs could be as much as £100 million. I am pleased to tell the House that they currently stand at £62 million, with the expectation that the final figure will be lower still.

Given the commercially sensitive nature of the negotiations with the Aircraft Carrier Alliance, I was not able publicly to reveal those additional provisions in our budget, since to do so would have undermined our negotiating position with industry. However, the MoD informed the National Audit Office of the provisions, and it is on that basis that it reviewed and reported on our 10-year equipment plan in January this year. I am therefore able to confirm to the House that the revised cost of the carriers remains within the additional provision made in May 2012 in the equipment plan, and that as a result of this prudent approach the defence budget remains in balance with the full cost of the carriers provided for, and that the centrally held contingency of more than £4 billion in the equipment plan that I announced remains, 18 months after it was announced, unused and intact.

In addition to renegotiating the target price and the terms of the contract, we have agreed with the Aircraft Carrier Alliance to make changes to the governance of the project to better reflect the collaborative approach to project management that the new cost-sharing arrangements will induce, and to improve the delivery of the programme. The project remains on schedule, with sea trials of HMS Queen Elizabeth in 2017 and flying trials with the F35 commencing in 2018.

Overall, this new arrangement with industry will result in savings of hundreds of millions of pounds to taxpayers, and I pay tribute to the team of MoD officials, led by the Chief of Defence Matériel, who have worked hard over a long period of time to deliver this result.

In reviewing the carrier project, we have also reviewed the wider warship-building programme, within the context of the so-called terms of business agreement, or TOBA, between the MoD and BAE Systems, signed in 2009 by the previous Government. As the House will know, we remain committed to the construction of the Type 26 global combat ship to replace our current Type 23 frigates, but the main investment approval for the Type 26 programme will not be made until the design is more mature, towards the end of next year. There is, therefore, a challenge in sustaining a skilled shipbuilding workforce in the United Kingdom between the completion of construction of the blocks for the second carrier and the beginning of construction of the Type 26 in 2016.

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Under the terms of the TOBA, without a shipbuilding order to fill that gap, the MoD would be required to pay BAE Systems for shipyards and workers to stand idle, producing nothing, while their skill levels faded. Such a course would add significant risk to the effective delivery of the Type 26 programme, which assumes a skilled workforce and a working shipyard to deliver it. Therefore, to make best use of the labour force and the dockyard assets for which we would anyway be paying, I can announce today that we have signed an agreement in principle with BAE Systems to order three offshore patrol vessels for the Royal Navy, based on a more capable variant of the River Class and including a landing deck able to take a Merlin helicopter.

Subject to main gate approval in the coming months, these vessels will be constructed on the Clyde from late 2014, with the first vessel expected to come into service in 2017. The marginal cost of these ships, over and above the payments the MoD would have to make anyway to keep the yards idle, is less than £100 million, which will be funded from budget held within the equipment plan to support industrial restructuring. The order is good news for the Clyde, sustaining around 1,000 jobs as the carrier construction work reaches completion, securing the skills base there and ensuring the ability to build the Type 26 frigates in due course, while turning the MoD’s liabilities under the TOBA into valuable capability for the Royal Navy.

Turning to the final part of this Statement, the House will be aware that this morning BAE Systems has announced plans to rationalise its shipbuilding business as the surge of work associated with the carriers comes to an end. Regrettably, that will mean 835 job losses across Filton, the Clyde and Rosyth, and the closure of the company’s shipbuilding yard in Portsmouth. The loss of such a significant number of jobs is, of course, regrettable, but was always going to be inevitable as the workload associated with the carrier build comes to an end. I pay tribute to the men and women on the Clyde and in Portsmouth who have contributed so much to the construction of the Royal Navy’s warships, including, of course, the Queen Elizabeth class carriers. BAE Systems has assured me that every effort will be made to redeploy employees and that compulsory redundancies will be kept to a minimum. The company is now engaged in detailed discussions with the unions representing the workforce in Portsmouth and on the Clyde.

I know that the loss of shipbuilding capability will be a harsh blow to Portsmouth, and the Government and the city council, together with Southampton, are in discussion about a package to support the regeneration of employment opportunities in the area. As part of these discussions, I can announce that Admiral Rob Stevens, former chief executive of the British Marine Federation, will chair a new maritime forum to advise the Solent LEP on its maritime vision.

Despite the end of shipbuilding activity, Portsmouth will remain one of two home ports for the Navy’s surface fleet and will continue to undertake the vital support and maintenance work that sustains our most complex warships, including the Type 45 destroyers and, of course, the aircraft carriers. Indeed, with both carriers based in Portsmouth, the tonnage of naval

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vessels based in the port will be at its highest level since the early 1960s, sustaining some 11,000 jobs in total in the dockyards and related activities. To support this level of activity, I can announce today an investment of more than £100 million over the next three years in new infrastructure in Portsmouth to ensure that the carriers can be properly maintained and supported.

The chair of the Public Accounts Committee has previously described the carrier programme as,

“one of the most potent examples of what can go wrong with big projects in the public sector”.

That is the legacy that this Government inherited: a carrier contract that was “not fit for purpose” and a TOBA that would have required the MoD to pay BAE Systems to do nothing while our shipbuilding skills base faded away. These announcements today put that legacy behind us; secure the future of British warship building; set the aircraft carrier project on a new path, with clear alignment between industry and the MoD; and deliver important new capability in the form of OPVs for the Royal Navy. I commend this Statement to the House”.

My Lords, that concludes the Statement.

4.11 pm

Lord Rosser (Lab): My Lords, I thank the Minister for repeating the Statement made in the other place by the Secretary of State for Defence.

It is a Statement not entirely devoid of party political points. The first part of it—presumably, therefore, the more important part of it, in the Secretary of State’s eyes—continues the argument over the alleged £38 billion black hole and the cost of the aircraft carriers. It is only towards the end of the Statement that the Secretary of State refers to decisions that will result in hard-working people losing their jobs, with the consequent impact on families and local economies, which in the eyes of most will be the significant part of the Statement, along with its associated implications for the United Kingdom shipbuilding industry.

I would like to take this opportunity to express our appreciation of the work and contribution made by all those in our shipbuilding industry. My understanding is that there have already been extensive discussions between BAE Systems and the trade unions representing the workforce, seeking to work together to address the difficult situation that has arisen. All too often that is not the approach adopted when reductions in the size of a workforce have to be considered.

The news of the job losses will obviously be a major blow. Clearly, the loss of the capacity at Portsmouth to build ships will be keenly felt, although a repair and maintenance capability is being retained in the city. It is vital that we keep the skills needed to sustain our United Kingdom shipbuilding capacity, and the announcement of the decision to build three offshore patrol vessels in the gap between the completion of the major work on the two aircraft carriers and the build-up of work on the Type 26 destroyers is welcome. The retention of our shipbuilding capability is vital to our country, the defence of the United Kingdom and the long-term future of the UK shipbuilding industry.

The Statement indicated that the two aircraft carriers will be based at Portsmouth, leading to the largest level of tonnage of naval vessels at that location for a

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great many years. Does that mean that a decision has been made that both aircraft carriers will also be fully operational? The Statement refers to the revised agreement for the carriers and states that,

“any variation above or below that price will be shared on a 50:50 basis between government and industry until all the contractor’s profit is lost”.

By how much more does the current cost of £6.2 billion have to increase before all the contractor’s profit is lost and the Government presumably pay for 100% of any further cost increase? Can the Minister give an assurance that there have been no adjustments to the defence equipment programme in order to continue with the construction of the two carriers and retain the more than £4 billion centrally held contingency sum in the equipment plan?

Since the Secretary of State appeared to consider the alleged financial black hole and the cost of the aircraft carriers to be the issue of most importance, I will respond. As far as the alleged £38 billion is concerned, which is the Secretary of State's unverified figure, it assumes that everything which was then on the shopping list for the many years ahead was actually proceeded with, and it is dependent on the budget growth assumptions made. The 2009 National Audit Office report concluded that the size of the gap was highly sensitive to the budget growth assumptions used and that if the defence budget remained constant in real terms, the gap would be £6 billion over the 10-year period.

On the issue of whether the contract could have been cancelled by the present Government had they wanted to, the National Audit Office report said:

“The Department … considered cancellation, which was feasible and offered significant medium-term savings. It concluded that this would have been unaffordable in the short term”.

That statement does not fully square with the Secretary of State's bald assertion that he had been advised that under the terms of the contract, it would cost more to cancel the carriers than to build them. The Government proceeded with the carriers because they felt that it was in the national interest.

The NAO report also said that the contract was negotiated by the then defence commercial director, with the terms of the contract typical of those in other large defence contracts. Whether any contractor would have been prepared to take on such a major contract of the kind involving the construction of the state-of-the-art carriers on any other basis than the cost overruns being divided 90% to the Government and 10% to the contractor, is a debatable point. It is a different situation now that we are well into construction and final costs for these state-of-the-art carriers are rather more certain.

There has been a lot of conjecture about the role that the politics of the Scottish referendum may have played in the decision to keep shipbuilding on the Clyde. It would be helpful if the Minister could confirm that the decisions today were taken on the basis of what is in Britain's best interests, maintaining the future of our shipbuilding industry and our country's defence. Could the noble Lord also outline what safeguards are in place if Scotland does vote to leave

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the United Kingdom? None of us wants to see that but we need to know what plans he has for all eventualities. We must retain a sovereign shipbuilding capability.

Whatever difficulties we experience, this country is a proud maritime nation. We have a proud and dedicated Navy, serviced by a proud and dedicated workforce. We must maintain that across the United Kingdom and retain the ability to build the warships we will need to defend our nation, protect our interests across the world and keep us secure.

4.17 pm

Lord Astor of Hever: My Lords, I also pay tribute to the employees of BAE Systems and their families. I congratulate them on the excellent warships that have been built. The job losses are obviously bad news and our thoughts are, as the noble Lord said, with those affected and their families. It comes as we pass the peak of naval shipbuilding on the carriers. We have worked closely with the company to manage the impact of the losses.

Our priority is to do all we can to secure jobs for people in Portsmouth and on the Clyde. We will set out how we intend to do this once the company has set out its plans. We are in very close touch with BIS to discuss the opportunities. As the Statement said, BAE Systems has assured us that it will look first to deploy members of the staff affected to other areas of its business.

The noble Lord touched on the £38 billion black hole, and we can debate this. The Secretary of State, in the Statement in the other place, has offered to write to the shadow Secretary of State. I am very happy to write to the noble Lord, or send a copy of the same letter to the noble Lord, setting out the position on the £38 billion black hole—the difference between the available budget and the commitments that were entered into.

The noble Lord asked about BAE Systems and the trade unions. I can confirm that serious discussions are taking place at the moment. He asked if both carriers will be fully operational. That will be for the SDSR in 2015 to decide. My own personal view is that I would very much like to see both carriers operational, as the Secretary of State said in the other place, so that when one carrier goes in for refit the other is available and can use the crew from the other. However, that is not for this coalition to make a decision on. The noble Lord asked if I could give a guarantee that there will be no further rises. I cannot give that guarantee. As the Statement said, any increase will be shared on a 50:50 basis.

The noble Lord welcomed the OPVs. They will be used for fishery protection, counterpiracy and, among other things, protection of the overseas territories.

The noble Lord asked me about Scotland. I can say, first, that decisions were taken in Britain’s—the United Kingdom’s—best interests. There is no politics in this: it is absolutely in Britain’s best interests. He asked about safeguards if Scotland leaves the United Kingdom. We are not planning on that happening.

Final decisions on the build location have not yet been made on the Type 26 and it would be speculation at this point. Should Scotland decide to separate from

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the United Kingdom we are sure that companies there would continue to make strong bids for UK defence contracts. However, they would then be competing for business in an international market and would be eligible to bid only for contracts that were open for competition from outside the UK. They would no longer be eligible to bid for these contracts that are subject to exemptions from EU procurement rules to protect essential national security interests and are therefore placed or competed within the United Kingdom. I can also say that, with the exception of the world wars, we have not built a warship outside of the United Kingdom and we do not intend to start now.

The UK has a number of commercial yards involved in the building of military warships which have been involved in the building of these carriers. It is recognised that these yards would need additional investment to enable them to participate in the building of the Type 26.

I hope that I have covered all the noble Lord’s questions but if I have not, I will certainly write to him.

4.22 pm

Lord West of Spithead (Lab): My Lords, I am saddened but not surprised by the tone of this announcement. My main reason for that is that there is not a single mention of strategic or operational requirements. My noble friend Lord Rosser mentioned that the Statement said that the Government looked at this and asked whether it would cost more to cancel the carriers than to build them. I would absolutely hope that the reason we build something like a carrier is that we need them for our nation’s security, which we do. There is no reflection of that anywhere in the Statement, or of the sovereign requirement for a shipbuilding capability. We do not build ships for admirals to play with in the bath; there is actually a requirement for them. That is why we do it. Was there any discussion in the National Security Council, of any length—I would like to know how long, if the Minister can tell me—about the strategic requirement for a sovereign shipbuilding capability within this country? It is widely understood that the 19 escorts, which is all we have, are too few in number. Therefore, we will hopefully at some stage start to build more. Is one building stream in Scotland enough to cover that? I do not think that it is. Has this been debated and looked at? It certainly was not touched upon in this paper.

Lord Astor of Hever: My Lords, we must face up to the fact that the coalition Government inherited a much smaller Navy from the noble Lord’s Government. On the operational requirements, the First Sea Lord came to see me this morning and has offered to brief Peers on how he sees these carriers being used. I quite agree with the noble Lord, Lord West, that we need the carriers. They are built to be used.

Lord Palmer of Childs Hill (LD): My Lords, when the cost of building two new aircraft carriers is set to rise by £800 million to £6.2 billion, Harry Truman’s adage, “The buck stops here”, is bound to be inverted. We have heard this in recent exchanges. The coalition Government blame the previous Labour Government;

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indeed, the contracts in my view and that of many experts, were flawed because the contractor only has to pick up 10% of the overrun. The Ministry of Defence and the Secretary of State must be complimented on negotiating for the overrun costs to be spread at 50/50 between both. However, I note in the repetition of the Secretary of State’s speech that the arrangement is to go on until the contractor’s profit is lost overall. I think we need some more meat regarding how that profit is to be calculated, because there are many ways of calculating what a profit is and not much was said about that in the Statement.

Once we get rid of the blame element we must ask, as the noble Lord, Lord West, asked, whether we need the carriers. We have exchanged views on this before. There are people who say that in an era of conflict marked by counterinsurgency, terrorism and cyberwarfare, carriers are not quite the necessity that they have been in the past. My first question to the Minister is whether the saga of carriers supports the GOCO—government-owned contractor-operated—arrangements we are suggesting should go into procurement. The Chief of the Defence Staff gave an interview on 3 November in which he said he wants the Armed Forces to be available in international crises such as striking firemen, foot and mouth, and intervention in terrorist heartlands. How do the carriers and the F-35Bs fit into that scenario?

Finally, turning to the three offshore patrol vessels, we are told that the marginal costs will be less than £100 million; what guarantees are there?

Lord Astor of Hever: My Lords, we do need these carriers, as I said to the noble Lord. On the question about GOCO, as the Statement said, the chair of the Public Accounts Committee has described the carrier programme as one of the most potent examples of what can go wrong with big projects in the public sector. We need to change this and we feel that a change of procurement is necessary. We will all have a chance to discuss this when the Bill comes to this House later this year. As for the operational use of the carriers, they are very flexible ships, they have full strike capability and they can also be used for humanitarian aid and the use of Special Forces. My noble friend asked what guarantee there is on the OPVs. The deal secured today is for a fixed price.

Lord Martin of Springburn (CB): My Lords, I have no need to tell the Minister that closures and redundancies are soul-destroying, not only for the workers, but for their families and the communities they live in. On the specific point of redundancies, can I have an assurance that those who have been taken on as apprentices will be entitled to complete their apprenticeships with the company?

Lord Astor of Hever: My Lords, I cannot answer the noble Lord’s question about apprentices—it was not in my brief—but we have been assured by the company that it will do everything in its power to find alternative work for those made redundant, both on the Clyde and in Portsmouth. As the Statement said, we are investing a lot of money in Portsmouth and we

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hope that there will be jobs in the support bases for some of those being made redundant. This is an area that the Government, BAE Systems and the trade unions are all talking about very seriously.

Lord Reid of Cardowan (Lab): My Lords, I welcome the three offshore patrol vessels. This is exactly what was envisaged when the carrier contract was first negotiated, in order to ensure the continuity of a strategic asset for this country. Thereafter, I cannot be so generous. May I correct the misapprehension that has been put about that the carrier cost doubled? The original cost was more than £4 billion when the contract was signed. There was an additional £1.8 billion because, quite correctly, the Government decided, when the recession hit us, that it should be delayed for two years. So when the coalition Government came in, the cost was actually £5.9 billion. That has now risen to £6.2 billion, part of which was due to the Government’s mistaken belief, under the last Secretary of State, that they could somehow fit “cats and traps” over the weekend by some welder doing a “homer” and getting it cheaply. Of course, it cost £60 million.

Secondly, and finally, the Statement is curiously bereft of any strategic sense of what this country needs. The contract was signed to give continuity and retention of skills so that this country would have not only jobs but a major industrial and defence strategic asset. All I have to say is, if the Government believe that they can constitute a future strategic basis purely on the basis of the intrinsic contractual cost of any given contract, I fear for the long term. If the Government continue in that way we may well end up sending our carriers—if they are built—to repair in Korea. You can win the minutes in all of these things and disastrously lose the hours. I hope that the tenor of this Statement is not one that permeates the whole of the Government’s thinking on strategic defence issues.

Lord Astor of Hever: My Lords, that is not the case at all. We have secured a great many jobs upon the Clyde, and the future of the British shipbuilding industry is very secure. As regards the costs, we could debate this all afternoon, but the delays added considerably to the cost of the carriers. The decision to have the “cats and traps” was not made over the weekend; we gave a great deal of consideration to it, but then made the decision to revert to the stowable version, which the previous Government had decided on.

Lord Burnett (LD): My Lords, I welcome the fact that the fleet is set to grow, with not just aircraft carriers but Type 26 frigates and offshore patrol vessels, which is good news, but also with the four submarines that are the successors to Trident and which I strongly support. The naval service will need in excess of 1,000 additional trained personnel to man these vessels. Will my noble friend assure the House that the Government understand this and that steps will be taken to increase the strength of the Royal Navy to cope with these demands? Will he write to me about the consequences of this Statement for Appledore Shipbuilders in north Devon, which is in my former constituency?

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Lord Astor of Hever: My Lords, I welcome my noble friend’s support for the fleet and for Vanguard’s successor. As regards manpower, the Royal Navy attaches a great deal of importance to this, in particular to get the right people with the right skills. The Navy will need an extra 2,000 people for its expanding fleet over the next five to 10 years. We are very grateful to the United States Navy and the US Marine Corps, which have been especially helpful in training our people preparing for the carriers; whether they are training pilots, deck crew, or on air direction or engineering, they have been very helpful. Finally, my noble friend asked about Appledore, on which I will write to him.

Lord Dannatt (CB): My Lords, the last question was on the increase in the size of the fleet in manpower terms that would be required if both carriers come into service and the three OPVs are fully manned. I welcome that and I do not want to get into that argument at all. However, the previous Government and the present Government took major decisions which affected equipment and manpower in the Armed Forces, and priority in big handful terms has been given to equipment. Therefore where savings have had to be found they have had to be found in manpower. Most of those savings have been found within our land forces—noble Lords will recognise that I would say that, wouldn’t I?

I know that the Minister cannot give a guarantee or even half a guarantee in answering this question, but will he ensure that if there is to be an increase in the fleet in manpower terms, which I welcome, it will not be at the cost of further reductions in our land forces, given that our Army is striving very hard to meet the 20% reduction in its regular size by 2020? Will he also ensure that in future discussions with the Treasury, argument is made most fiercely for an uplift in the defence budget in order to pay for the extra people, and that it is not another opportunity cost of one service against another? We cannot do that and remain credible on the world stage.

Lord Astor of Hever: My Lords, the noble Lord makes a very good point; the increase in numbers goes right the way across the Royal Navy—submarines, aircraft carriers and all the other ships—but we will not reduce the size of the Army just to provide extra personnel for the Royal Navy.

Baroness Liddell of Coatdyke (Lab): My Lords, political point-scoring is, I suppose, inevitable in a forum like this, but it is unedifying when hundreds of people are losing their jobs and there are families who will be in real distress this evening. Will the Minister tell us what discussions there have been with the Scottish Government about what assistance will be given to the workforce on the Clyde who will lose jobs despite the new vessels? I welcome the decision to subscribe to these new vessels on the Clyde, but the Minister should take it into account that all of us in Scotland are also heartbroken about the decision to end shipbuilding in Portsmouth. It is a historic dockyard and it is tragic that we are coming to this decision to end shipbuilding there. Does the Minister agree with me that it is absurd that this debate should be taking

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place at a time when we have the diversion of separating Scotland from the rest of the United Kingdom, which will finish shipbuilding on the Clyde?

Lord Astor of Hever: My Lords, personally, I hope that that will not happen. On the noble Baroness’s point about it being very political, I obviously deplore that, but it is inevitable. As far as redundancies are concerned, the Government, BAE Systems, and the trade unions are all, as I said, working as hard as they can to find new jobs for those personnel.

Lord Lee of Trafford (LD): My Lords, when I was a Defence Minister in the 1980s, I remember being told by officials that we could build all the naval requirements in the Vickers yard at Barrow alone. In other words, we have had overcapacity, sadly, in our naval yards for years, and it still applies. I have three specific questions. First, the Statement does not indicate the cost of the three offshore patrol vessels; it is a rather shrouded figure. Will the Minister give the cost of the three OPVs? Secondly, following the point raised by the noble Lord, Lord West, and given that there is a £4 billion retention in the contingency reserve, would it not have made sense to build one more Daring class Type 45 destroyer, as we are desperately short of escort vessels? Thirdly, my noble friend the Minister touched on the humanitarian possibilities of the new carriers. Will he give an indication of the medical facilities aboard the new carriers, in particular the number of new operating theatres that will be available for potential humanitarian and evacuation relief?

Lord Astor of Hever: My Lords, we have provisionally agreed a firm price of £348 million with BAE Systems for the supply of three OPVs, inclusive of initial spares and support. The cost of building these vessels and their initial support is entirely contained within provision set aside to meet the Ministry of Defence’s obligation for redundancy and rationalisation costs.

My noble friend Lord Lee of Trafford asked about the humanitarian position; I can confirm that the carriers would be able to assist in evacuation. They each have an operating theatre and a huge flight deck that would take 10 Chinooks while four Chinooks could operate concurrently. I hope that that answers my noble friend’s question.

Lord Judd (Lab): My Lords, in the 1960s and 1970s I had the privilege of representing in the other place part of the community of Portsmouth, including the naval base and dockyard. I remind the House that it is impossible to record adequately what this country owes Portsmouth. It has been in the front line in the defence of the realm for many, many decades. It is, after all, the home of HMS “Victory”, and that in itself says something about it.

I put it to the Minister that it is not just a matter of going through the normal routine of ministerial Statements, assuring everybody that there will be consultations and that the city council has been consulted, and so on. This nation owes a tremendous loyalty and tribute to the people of Portsmouth, and it should be a priority of all the Government and those they are associated with to make sure that a closely knit community such as this does not carry a disproportionate burden as a result of the policies that are being followed.

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Referring to what my noble friend Lord West said, surely the first priority in defence is to establish what the threat is and what contribution we want to make towards international security. Having established that, what is necessary to do that? As Libya illustrated very well, every conceivable analysis of the future suggests that we are going to need flexibility and free-standing platforms from which operations can take place, and the carriers are absolutely indispensible to that future. Will the Minister please accept that he will have widespread support in this House if, having made what I believe to be the absolutely right decision to go ahead with the carriers as a priority in defence policy, that is pursued with every possible commitment?

Lord Astor of Hever: First, I quite agree with the noble Lord that we owe a long-term debt of loyalty to Portsmouth. Portsmouth will maintain its proud maritime heritage as the home of the Royal Navy surface fleet and the centre of BAE Systems’ ship support and maintenance business. The long-term future of Portsmouth as a naval base for the Royal Navy’s most complex warships will be in undertaking vital support work for the fleet. This will include support and maintenance for the new carriers and the Type 45 destroyers—the most advanced warships ever built for the Royal Navy. I can add that Portsmouth and Southampton are also taking part in the second wave of the City Deals programme and have been working closely with the Government to agree an ambitious deal for the area which will boost growth and jobs in the local economy. We expect to be able to conclude that deal shortly. I am grateful for the noble Lord’s support for the carriers, and I will certainly do everything possible to ensure that that work continues successfully.

Energy Bill

Report (3rd Day)

4.42 pm

Relevant documents: 5th, 6th, 9th and 11th Reports from the Delegated Powers Committee.

Clause 122: Designation of statement

Amendment 92A

Moved by Lord Whitty

92A: Clause 122, page 92, line 11, at end insert “including the strategy and objectives to be designated in relation to fuel poverty under section 136 of this Act”

Lord Whitty (Lab): My Lords, we now come to an issue which concerns the final impact of the whole superstructure of energy policy on the lives of millions of people, because we are dealing here with the issue of fuel poverty.

I shall speak also to Amendment 92B. These two amendments seek to insert a reference to fuel poverty into the section of the report which deals with the statement of policy for energy. When we think about it, it is very odd that that reference is not already there. Energy policy has economic objectives and security and environmental aspects, but also a very important social aspect that should appear in the statement. My first two amendments in this group address that issue.

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Amendment 104C is, in a sense, more substantive, along with the amendments in the name of my noble friend Lord O’Neill. They relate to the one clause in the Bill that really deals with fuel poverty—Clause 136. However, it is also important that we ensure that fuel poverty features in any statement of policy on energy in the future.

Before I go any further, I should declare a small interest in that I am the chair of a small charity which conducts research into fuel poverty and energy efficiency.

It is actually a bit depressing that right up to Clause 136 we cover almost every aspect of the energy market and do not mention fuel poverty at any point. Fuel poverty is the inability of millions of our fellow citizens to heat their own homes to a minimum standard of comfort. It is also true, I regret to say, that Clause 136 was introduced by the Government at only a very late stage in the Commons procedure, almost the last stage, and received virtually no consideration. The policy statement which backed it up following the Commons procedure—the blue document which the Government issued—set out aspects of their fuel poverty strategy.

The Government have come to this a bit late, in any case. The first period of this Government was a pretty disgraceful one, when they cut back on efforts to help bring millions of households out of fuel poverty. The Warm Front programme, which was taxpayer-funded and treated the homes of 200,000 low-income households every year, was first cut and then abolished, although parallel schemes still exist in Scotland, Wales and Northern Ireland. The Government also cut back on the decent homes expenditure for improving the stock in the social housing sector. They also made clear at a pretty early stage that the aim to eliminate and eventually abolish fuel poverty was being abandoned. This aim, set out originally in the Warm Homes and Energy Conservation Act, had been pursued by the previous Government with growing difficulty over the past few years as global oil and gas prices rose. Not until this Bill and the document to which I have already referred was that abandonment formally acknowledged.

The Government also closed the CERT scheme—previously known as EEC—which placed an obligation on the supply companies to provide energy efficiency improvements and was skewed towards the fuel poor. Admittedly, the Government have replaced that with the ECO provision, which is reflected in this Bill and the earlier legislation, but the ECO is supposed to do a multitude of things. It is supposed to replace Warm Front and CERT, but actually the feedback we get—and I am sure the Government get—from the ground is that it is not achieving anywhere near its targets. The feedback from the supply companies, the installation companies, the insulation companies, consumer groups, fuel poverty campaigners and the Government’s own fuel poverty advisory group is that what is supposed to be conducted under the ECO is less in volume and more expensive per item than under the previous system.

I am not blaming everybody in the Government. I am not even blaming every DECC Minister, because I know DECC has fought quite hard on this front from time to time. I know that it was Her Majesty’s Treasury

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that forced Chris Huhne to abandon Warm Front. I also know that there are attacks on Ed Davey and the DECC position which are now expressed in terms of removing green taxes, but one of the items that is described as a green tax is actually an allocation to help the fuel poor and to tackle the problems of fuel poverty. There is talk that the Government believe that that should come no longer from consumer bills, but from general taxation. But the first thing the Government did was to abolish the scheme which was paid for by general taxation. Can the Minister let us know what she thinks is now the prospect of HM Treasury agreeing to a new major scheme funded by taxation to address fuel poverty?

Of course, the Government do have some money. A little remarked fact about the latest developments over the past few years on energy prices is that one of the beneficiaries has been HM Treasury, with VAT on energy prices and on a lot of the so-called green taxes and, of course, with the VAT consequences of introducing the carbon floor price. The estimate is that upwards of £4 billion is going out of higher energy prices into the coffers of the Treasury and not one penny of that has yet been allocated to addressing the acute problems of fuel poverty.

I accept also that the Government have done one other thing: they have introduced a warm homes discount to override the tariff so that there is a cut in the energy bills of the fuel poor. However, that is not a solution. It is a welcome cushion for those people but it does not tackle the basic problem. The Government have not only dropped or seriously curtailed all previous energy-efficiency programmes, but also, during the course of this Bill, rejected propositions from myself and others that we should try to get a structure of tariffs which help the fuel poor.

In Committee, they rejected my proposition of a standing charge and removal of discrimination against people who pay by prepaid meter, which hits the fuel poor particularly, or having any structure of tariffs which favours the low-paid and the fuel poor. All were rejected by the Government in Committee and in another place. It is also true that one of the effects of the Prime Minister’s intervention in this—the so-called simplification of tariffs, aspects of which I approve of—has led to a number of supply companies dropping their specialised tariffs directed to the special needs of pensioners, who form a substantial proportion of the fuel poor.

I accept that it is not entirely DECC’s fault but the net effect of all this is to aggravate a seriously dreadful problem in our society. From about 2005, rising energy costs have made it very difficult to make a dent in fuel poverty. I know that Chris Huhne came to government in the first instance wanting to look at a new strategy. Indeed, it is no secret, because someone told the press that at one point he approached me as a former Minister in this area to conduct an assessment. I was flattered and surprised, and slightly tempted, by the proposition. But eventually I found out that DECC was under pressure to redefine fuel poverty so that it was not such a problem or such a requirement on government energy policy. I rejected the approach on that basis, as did others, because it was clear that

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whatever happened and however you defined fuel poverty, it is a big number which is going up under present world conditions.

I am glad that Professor John Hills took on this task. He has produced a very solid document in terms of strategy for tackling energy fuel poverty, very little of which appears in the Government’s blue book. He produced a new definition of fuel poverty, which has some merits and addresses some of the problems of the previous definition, but in my view is not adequate. It has knocked a few million off the total figure of fuel poverty but it is still, as I said at the time, a big number which is growing. The gap facing the fuel poor to keep their families warm is growing all the time.

This whole Bill is about how we run, regulate and provide for energy supply to our population and to our businesses. All we have is the pretty feeble Clause 136 as a hook on which to hang an as yet undefined and weak fuel poverty strategy. The first two amendments in the group try to make sure that fuel poverty is up there with the other objectives of energy policy in the Government’s statement of policy. I cannot see how they can possibly object to that reference. The third amendment relates to the strategy. It attempts to turn a very woolly clause into one which has targets—and clarity of those targets—that relate to the improvement and efficiency of the dwellings of the fuel poor, as well as to the reduction and eventual elimination of fuel poverty in this country. If the strategy does not have ambitions and targets, it will not receive the priority and future consideration in energy policy that fuel poverty deserves.

I accept that the Government probably need to do more work on that strategy, and that is why my amendment does not specify exactly what those targets should be, but it does require the Government to set out those targets for 2020 and 2030. My noble friend Lord O’Neill is more specific on that in his amendments in this group. Either way, to give any confidence to the millions of people who are in fuel poverty out there, and the many more who are aware of the problem—who are sympathetic and demanding action—the Government need to accept that the policy and the strategy they come up with should actually mean something.

We need to refer to fuel poverty clearly in the policy statement. I hope, therefore, that the Government can accept the first two of my amendments without any great difficulty. I also hope that they will accept either my third amendment or that of my noble friend Lord O’Neill, or at least commit themselves to coming forward at Third Reading with something very like it which gives a structure and a framework for fuel poverty. As we know, fuel poverty is a terrible curse on our country. It causes people to skimp on food, and to not buy necessities for their children. It causes serious lung and heart conditions in thousands of our citizens at an estimated cost of £1.3 billion a year to the National Health Service. It causes whole families to live in discomfort, in anxiety, in the cold, and in distress. It is shocking that this Bill and the energy policy of the Government do not give greater prominence to the need to tackle this curse.

These amendments, if the Government can accept them, would go some way to deal with this. The Government need to accept the first two amendments

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as they are, because they do not of themselves present an obligation but they indicate a commitment to tackle this issue. I hope that the Government will also accept something like my third amendment, so that we can start making it clear to the rest of Government and to the population out there that this Government do care about fuel poverty, are prepared to do something about it, and will do so as rapidly as they can in the context of the big reform of the energy markets. I beg to move.

Lord ONeill of Clackmannan (Lab): I am pleased to follow my noble friend. In addressing his amendments he covered, in part, some of the points I will raise in relation to my own. It is fair to say that the four amendments I tabled seek to add a bit of muscle and detail to the Government’s commitment. I will talk about this more in my later remarks, but the rather late insertion of concerns about fuel poverty into the Bill mean that it is rather late in the day for some of the amendments that we put forward, which are of a probing character. Therefore, one would hope that the spirit of these amendments will be carried into secondary legislation: that is, statutory instruments, of which many are likely to be forthcoming.

The existing legislation, namely the Warm Homes and Energy Conservation Act 2000, was steered through this House by the noble Baroness, Lady Maddock, who I regret is unable to be here today. All credit should be given to her for her efforts in that area, although I was always a little bit dubious about plucking a date out of the air. I know that the date was the subject of some arm-wrestling between the then Labour Government and the Back-Benchers. However, the fact is that it was an attempt. At the time there was a degree of optimism because, as noble Lords will recall, energy prices, particularly gas prices, were falling. We could see households moving out of what was known at the time as fuel poverty in quite considerable numbers. Not only were gas prices falling and thus people’s disadvantage in the energy market diminishing, there was also a sense that the general economic prosperity of the time meant that the situation of the poor would become easier and, as the Americans say, all the boats would rise together. Unfortunately, all the boats did not rise but the price of energy subsequently did, and the poor were left stranded in their inadequately insulated and poorly built homes.

5 pm

Amendment 104D deals with housing conditions in two steps. Priority would be given to the homes that are hardest to heat, and where the household income is less than 60% of median income after housing costs. That is the Government’s own definition of poverty. The objective is for those householders to be helped by 2020. Over the succeeding 10 years, the remaining housing stock would be brought up to level B of the energy efficiency ratings. Rating B is the level that a new house is currently expected to meet when it is constructed. This is an ambitious target that would take some 17 years to meet. We are told that 70% of fuel-poor households are living in E, F and G-rated buildings, so we are talking about improving something like 1.7 million homes over the next six years, from 2014 to 2020.

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It is certainly the case that houses with SAP ratings of E, F and G are where most of the fuel poor live. Moreover, only 7% of them have, for example, a condensing boiler. It is not just a question of insulating the houses; it is equally important to have more efficient means of heating water and providing central heating for these families. We know also that some 6 million households are not connected to the gas grid. These households are the ones where the fuel poverty gap, where it exists, is likely to be twice as wide as it is in households with gas boilers and central heating. Much the same can be said for a number of houses solid-walled accommodation.

The point of using the SAP rating is that it is probably the most up to date definition of disadvantage in respect of fuel costs. If you live in a house with an E, F or G SAP rating, it is likely that your home is very expensive to heat. The concept of low income, high cost is the basis of the Hills report, which defines fuel poverty and the fuel poverty gap. My noble friend has already referred to the fact that, according to the Hills report, we have seen a reduction in the number of households in fuel poverty from 4.5 million to 2.4 million. My colleague suggested, perhaps somewhat cynically, that this was an easy way of massaging the statistics. Frankly, there is a bit more to it than that, in so far as we now have a method of calculation that is not as vulnerable to fluctuations in price, which was the kind of problem that we had in the early part of the last decade. When gas prices were falling, the problems seemed to be decreasing, but in fact we know that the people who were living in these homes were not really very much warmer because most of the heat that they were paying for was still going out of the window or under the doors or not being properly contained within the building itself.

It is not unreasonable to use the SAP rating as the basis to do this, because one of the things about heritable property is that you cannot hide it. One of the things about local government taxes is that people do not really like rates, as we used to call them, and they do not like revaluation because you cannot hide property. The fact is that these homes, which are inadequately constructed, will not disappear because the price of gas goes down, as they seemed to do in the early part of the past decade.

This amendment is suggested as a means of tackling the issue of fuel poverty. Most of the fuel poor live in the most poorly insulated houses that are the hardest to heat. If we were to treat them in a step-by-step manner, we could be serious about tackling this problem. We need to get far more from the Government than the quite understandable expressions of concern about this social problem. We need a programme that will indicate how they propose to address this. They have had the Hills report for many months. In the summer we had the acceptance of the report and its incorporation within this legislation. I would have thought that five months later we should have the beginnings of some kind of programme or plan to address the issue.

I understand that these amendments are not perfect, but they enjoy the backing of a wide range of community, faith and campaigning groups that have been engaged in addressing this issue for many years. These groups

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are not expecting the Government to embrace these amendments tonight, but what they are looking for are clear indications that we are getting beyond the definition of the problem and moving towards a clear commitment to solving it. In this process we want to see clear reports, and also proper cognisance of our responsibilities under the 2008 Climate Change Act. We realise when we hear talk of green taxes, changes in ECO and the possibility of direct taxation being the means of funding some of these programmes, that we need to get assurances that we will not throw the environmental baby out with the bathwater.

We also have to recognise that we have come a long way. When I first came to Westminster more than 30 years ago, fuel poverty was not a given. It was an item of dispute and debate. The conversation around the Hills report suggested that the problem of fuel poverty was largely one of definition. Of course it was a rough and ready definition that was dreamt up by a young researcher in the 1970s who was doing work on poverty in Kensington. He was a man called Malcolm Wicks who went on to become a very distinguished Energy Minister in another place. Much of his work was given over to looking at how we could address this problem. Nearly 40 years after Malcolm wrote his first report—in which he quite starkly laid down the choice of “eat or heat” for the elderly of Kensington—we should be dealing with this in a far more organised and programmatic way than has been shown in the rather well intended but often ill directed scattergun approach that successive Governments have had.

I like to think that my amendments provide some milestones on a route that could be taken towards resolving this. I shall not press them, because they are in many respects of a probing character, and I know that on Report we should be a bit further advanced than that, but I should like some indication from the Minister of the Government’s thinking on the specifics of handling this problem. The excuses that we had in Committee on other matters about awaiting statutory instruments coming out of the air—coming out of the heavens—are not good enough. We know what the problem is.

We know that there are means whereby its resolution can be easily identified—not always easily resolved but easily identified. Let us use the inadequacy of our housing stock and the manner in which we are currently grading that inadequacy, as the means whereby we set out priorities which, over a period of 17 years, could probably eliminate the best part of 70% to 80% of fuel poverty in this country by a definition which, I think, is now accepted as being clearer, more robust and more statistically sound than Malcolm Wicks’s figure out of the air. If we could do that, we would do a great deal to enhance the memory of a colleague of many of us for whom we had great respect. One of his life’s causes was the resolution of that problem. I am not saying that we should do it for Malcolm Wicks; I am saying that we should do it for the people who will be cold and miserable in what will probably be a serious winter. Their health will be endangered and they may not see another winter after this because of the houses in which they live.

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Lord Howell of Guildford (Con): My Lords, I apologise for seeming to arrive into this very important Bill and debate at a late stage, but the plain fact is that on the afternoons when the Bill has been taken before, I always had to chair a Select Committee elsewhere, and I could not be in two places at once. I also declare interests as president of the Energy Industries Council, chairman of the Windsor Energy Group and an adviser to the Mitsubishi Electric company. I am very glad to have a chance to enter the debate at this stage and to follow the noble Lord, Lord O’Neill, whose persuasive eloquence I remember from distant days in the House of Commons. It does not seem to have deserted him now.

Of all the impacts of high prices—due to what I believe to be over-rapid application of decarbonisation strategies and the scramble, which we have been told the Bill is about, somehow to persuade new investment to replace all the plant that is being closed, but only by offering eye-wateringly high prices—the most painful and deplorable, and the one that fills me with the greatest concern, is the impact on low-income families and, in particular, the elderly and vulnerable in this climate, which can sometimes be very cold and cruel.

I am not against the amendments in spirit; behind all of them is a noble intention. Anything that can ameliorate the present situation—people always use the phrase, “We are where we are now”—for the elderly and low-income families and ease the ugly prospects which face people as cold winters descend on us is commendable. Although I think that the Government’s measures, also in the same spirit, have gone some way to meet the problem, it is perfectly natural that, in a very noble way, additional amendments to do still more should be moved. That is perfectly reasonable.

However, I urge your Lordships to understand that all this is only patch and mend. It is far from getting anywhere near the roots of the problem or taking the effective action that could be taken to ease some of the threats of fuel poverty, which is alleged to be exceptionally high in this country. It is patch and mend. Clause 136, which is paraded as a strategy, is not a strategy. It is the Secretary of State’s patch-and-mend list of hopes and intentions. The warm home discount and other excellent efforts like the cold winter payments which operate between November and March—people seem to have forgotten that April can be very cold for many elderly people—are good moves in themselves, but they are not anything like a strategy.

5.15 pm

The real strategic cause of the suffering over which we do have some control is, as I have already suggested, the over-rapid decarbonisation programme—not that I believe that decarbonisation is the right objective, but its handling has been deplorable under both Governments. Certainly its handling was deplorable under the previous Government, and I am not particularly thrilled by the present Government’s continuation of some of these efforts. It is turning out to be incredibly expensive—much more expensive than the original experts insisted that it would be. It is challenging us at a time when wholesale prices for primary hydrocarbons have risen as well. So on top of everything, we are dealing with far greater expense and far higher prices than many of the experts and expert reports anticipated.

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The truth is that in Britain but also in Europe as a whole, we are a pursuing a policy of expensive power. It may be for good reasons—if power is made expensive and bills are high people will move more quickly towards taking out these excellent schemes and towards energy efficiency—but that is what we are doing. Some of us believe that that is the wrong way to deal with global warming, the wrong way to reduce CO2, the wrong way to ensure the prosperity of people and the wrong way to help the elderly in their suffering. The best green route, and the best way of justifying the green route, would be through cheap power, not expensive power.

I am frankly astonished at the ruthlessness—perhaps I should modify that and say the lack of compassion—that some folk show in their zeal in pursuing a policy of expensive power and high prices. I cannot understand why that was done. I shall make a party point now. The leader of the Labour Party, an extremely able man, was, as Secretary of State for Energy and Climate Change, the architect of these higher-price taxes—the green taxes which I shall come to in detail in a moment. Now he has gone the other way; he has seen the effect and is calling for a price freeze. It reminded me of the legend of the sorcerer’s apprentice. He unleashed the brooms and the buckets in his green policies, and now he cannot stop them and is calling for a freeze, which is probably going to be ineffective.

So this is regression on a grand scale. The poor and the vulnerable are, through various means, having to pay for a substantial transfer of funds from the consumer to various causes, to encourage investment in new, greener capacity to replace all the mothballed coal-fired stations and so on. As your Lordships may see, this is a three-pronged assault on the poor.

Recently there has been talk not only of freezing prices but of rolling back green levies. However, one must understand that that is not the only aspect. First, one of the reasons that the energy companies kept indicating, when they were being given a going-over by the Select Committee in the other place the other day, for raising their charges and having to make a substantial profit—I think 5% is the figure they all cited—is the need to finance extra plant to replace the plant closed down because it was deemed to be higher-carbon or unsuitable in accordance with EU regulations. We can accept that reason or not accept it. However, even before we get to the green levies, that is the first charge that arrives on the budget of the poor—on the budget of everyone, of course, but for the poor it is 15% or more of their disposable income. That is layer one of the challenge on prices.

Then, of course, there are the levies themselves, which fall into two parts, as we all know. One part is to finance and subsidise the new very high-cost renewables and the draw-droppingly expensive electricity from wind farms, which, as we know, is half as much again as the amount being offered to EDF for Hinkley Point C for the next 35 years, which in turn is half as much again as we are paying now, which is considerably more than we used to. The other half, oddly enough, is for good social and compassionate reasons: it is to redress the effects of the first two levies. The effect of the social programmes and the compensation is to

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offset the effects of the levies that finance the subsidies on the investment required because the pace of decarbonisation is just too fast and mishandled, and to offset the effect of the prices being charged by energy companies. It is an odd situation where the total cost is designed to offset some of the total costs that other measures have just pushed up.

More insulation is of course an excellent thing. There has been talk about woolly jumpers and that may help the younger folk, but all I can say for oldies —I think I can speak for them now; I used not to be able to, but I can now—is that cold limbs in a cold room or a cold house or flat really are extremely unpleasant and may lead to a very grim outcome. There are chilling estimates of how many will die of cold this winter in the UK, which make me personally quite ashamed.

The whole decarbonisation programme behind all this inflation of prices is paved with good intentions, as is the insulation programme. I lived in a house that had additional insulation. It had a thinner attic layer of carbon fibre over it and an additional three or four inches was added over the beams. I cannot say that it affected the bills very much but it may have held the warmth in the house for a little while. However, first you have to heat the house up before you can contain the heat within it, and that costs money. Those are the good intentions, and we all know what destination good intentions pave the way to. A cold house and an inability to meet these high bills is, frankly, hell for elderlies and families.

There is another issue here that we have not discussed because it is in other parts of the Bill: the so-called massacre—which is what the European Commissioner calls the effect of high energy prices in Europe, compared with other parts of the world—of industry and jobs, which means more distress in many more families. I do not vigorously oppose these amendments; I just warn that neither they nor Clause 36 are any cure at all for the real problem, which we should have the honesty to face and address in a sensible and balanced way.

Lord Teverson (LD): My Lords, I do not disagree at all with everything that my noble friend Lord Howell has just said, but it is worth noting that heating in most households in this country is by gas or, for people like me who are off the mains, by oil. None of the green taxes applies to either gas or oil.

Lord Deben (Con): My Lords, I think that, when we are making these decisions, we ought to be particularly careful about the figures that we use. We must also understand why we are decarbonising at this rate. We are doing so because the economic advice from the best economists that we have is that it is the cheapest way to decarbonise. If we were to put it off, the cost would be considerably greater, so we should do it at this pace. We can disagree with this, but to do so would be to disagree with the best advice that we have been able to get. I must say, on behalf of the climate change committee, that, if I thought that there was a cheaper, more cost-effective way of doing it, I would do that. I am proposing this and have been pressing it because it is, by all the evidence, the best thing to do.

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I think that we also ought to get the figures right. The average cost of decarbonisation for payers of the dual tariff—about 80% of users—is £60 per year at the moment. I am not suggesting that £60 is an unimportant matter, but when the average payment for fuel bills is £1,300, I think that we have to be careful about overemphasising the influence of the one thing upon the other. By 2020, the amount will be £100—and the figure will rise accordingly between now and then. I do not know what the average fuel bill will be in 2020, but the idea that £100 will be the major reason why the fuel bills will be high is not true.

We must take these figures seriously. This is one of the problems that we are facing. People are using figures that are clutched from the air. I have been watching Twitter and I find that people—sometimes, I am afraid, from my own party—are busy putting out tweets saying that if we had had a decarbonisation target after 2020 it would have increased our bills by £125 per year. This is totally untrue. The figure is £20, and the climate change committee has spent a great deal of time trying to get the best and most accurate figure possible. If the TaxPayers’ Alliance or others want to pick a figure out of the air, it is not for us to quote it. We are faced with a real issue here.

If, despite evidence mounting all the time—today we have been told of the highest increase in surface temperatures that we know of for a very long time—you still do not believe that climate change is immediate and dangerous and say that it is something that can be put, if I may use the phrase, on the back burner, then of course you can always say that this is not the moment to do this. However, I must say to my noble friend that in that case it will never be the moment to do it, because that is always true at any given moment. However, if you see that climate change is the most serious material threat to our society, as happily this Government do—and it is a common view across the House—the £60 being charged for the insurance against it seems a reasonable amount.

There is an argument, although it is not for the climate change committee to make it, that we might change where the money comes from. However, I do not think that there is an argument to say that we should not be spending the money. Therefore I think that we ought to be very careful when we are having these discussions that we do not talk in a way that distorts the argument, either by the size of the price that we claim or by forgetting that most people’s heating does not come from electricity—it comes from gas and other sources—and therefore they are not paying this. Neither ought we to forget that other countries are doing more than we are. Germany is doing more than we are and much of Europe is doing at least as much, as we can see by looking at the Danes. The rest of the world is moving in this direction in a very serious manner; whether it is today’s announcement from Mexico or the changes in China, we can see that this is happening all around the world. It is not that Britain is doing better than others or is out of step, but that we are doing what the world is doing, because the world recognises the threat. That means that we have to be very considerate about the condition and situation of vulnerable people.

6 Nov 2013 : Column 249

I am not sure that these are the right amendments, but I have listened very carefully to what has been said about introducing this measure into the Bill in a more pronounced way. I think that the Government have probably got it about right, but I have listened with some care. However, it does not help the argument to use the poor as an argument against fighting climate change, because the people who will suffer most from climate change are the poor throughout the world—not just here but in Bangladesh, the Pacific, India and elsewhere. I find this argument about the poor really very upsetting.

5.30 pm

Lord Howell of Guildford: I do not want to upset the usual eloquence of my noble friend but he did refer to me. Given that he believes these burdens are necessary, ought he not explain a bit more clearly how this really does lead, in this country, to fighting climate change? He says we must be careful with figures—that applies as much to some of his figures as to others that are bandied around—but it appears that the pace of CO2 growth generated by mankind is so large in other parts of the world that our only contribution can be by example. I would love to hear from him a rather more persuasive message as to why we should bear the pain we are bearing at the pace we are bearing it, although the destination is right, in the contribution we are making to controlling climate change and violence in the future, which I accept is very likely and is a great danger. But has he got the pace right?

Lord Deben: I can see the Whip looking at me with some care so I will be very quick. First, we have a moral duty because much of the climate change that is happening at the moment has actually been caused by us because we were the first in the Industrial Revolution. Secondly, if we want other, much less well-off people to follow, we have to set an example. Thirdly, 11% of the emissions in the world are made by organisations that are headquartered or sold on the London Stock Exchange, so we must realise how big our reach is.

Fourthly, because we have led the world—although we do not now—other countries are now doing significantly more than we are. The President of South Korea is here on a visit today. She comes from a country that has a programme of very considerable remit which will end up with it being carbon-neutral by 2050. China is moving from a carbon-intensity target towards a carbon-reduction target for the mid-2020s. It has already been shown that by leading the world, the world is changing. But if we stand aside and say, “After you, Claude”, nothing will actually happen. That is why we have to do it. We do it for the poor. To use the poor as an argument against doing things on climate change seems close—although I am not saying this about my noble friend—to reprehensible.

Lord Jenkin of Roding (Con): My Lords, I shall be extremely brief because I sense the House would like to come to a conclusion on the amendments.

I listened to the noble Lord, Lord Whitty, with some astonishment. It was as though we had not even had a debate about fuel poverty in Grand Committee.

6 Nov 2013 : Column 250

I reread that debate and his first words were that he thanked the Minister for having brought fuel poverty into the Bill. You would not have guessed that from what he said this afternoon.

I have much more sympathy with the points made by the noble Lord, Lord O’Neill, but he, too, had his words of congratulation in Grand Committee. He said:

“The amendment goes some way to mitigate concerns that have arisen about that. It sticks in my craw to say this but the Government must be praised for obtaining support for the measure from Derek Licorice, the chair of the Fuel Poverty Advisory Group, and Jenny Saunders of the NEA”.—[Official Report, 11/7/13; col. GC 135.]

One must recognise Clause 136 is a considerable step forward. In Committee, I said that it was very worthwhile. Of course, the meat of this is going to be in subordinate regulations. We shall obviously want to watch that very carefully indeed. I totally understand the argument that my noble friend on the Front Bench advanced for not putting all the detail into the Bill, but wanting it in the regulations.

The impression I was given by the noble Lord, Lord Whitty, was that the Government were not doing anything for the fuel poor. In fact, he has had a copy of the letter that was sent to all of us from my noble friend on the Front Bench setting out the details of fuel poverty spending. The total resources spent in 2010-11 at 2012 prices—these are common prices all the way through—on fuel poverty spending was £821 million. The current year has gone up, at constant prices, to £841 million and the next year the estimate is £845 million. That does not take account of the fuel allowance, which is paid under the social security arrangements. These are arrangements under the carbon emissions target, under the energy company obligation, the warm homes discount and so on, which are specifically aimed at the poor. So I rather resent that.

I have one question for my noble friend. John Hills’s report made the hugely important point—indeed, it has been referred to earlier in the debate—that it is our uninsulated homes, particularly for poor people, which are the biggest single cause of cold homes and fuel poverty. He quite rightly says—and this has been widely welcomed—that we must change the definition to take account of that. What I hope to hear from my noble friend is what is now happening to our main programme, the Green Deal, which is supposed to be the main instrument for increasing the amount of insulation of homes. One has heard gloomy tales that so far very few people have been able to take advantage of that. What is happening on that? We must know. To my mind that is the most important thing we can do to reduce fuel poverty.

The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con): My Lords, I start by thanking all noble Lords for a very full and informed debate. I thank my noble friend Lord Jenkin for reminding the House of the warm welcome from the opposite Benches for us taking forward this measure. It is really important that we all agree that something must be done. What has been done in the past has not been enough. We need to be working far more constructively together to get

6 Nov 2013 : Column 251

solutions, particularly for those who are most vulnerable and least able to respond. I also thank my noble friend Lord Deben. He is absolutely right: any measures that we take here will have an impact somewhere else in the world. It is really important that we are mindful that this Bill is in part there to help decarbonisation. The bigger picture is to play our role in helping other countries, which can look at how we are putting those measures in place.

I also thank the noble Lords, Lord Whitty and Lord O’Neill, for their amendments, because they enable me to clarify a little further points that I made in Committee so that they feel reassured that this Government really take seriously the issue of fuel poverty. We take the issue no less seriously than the previous Government did, but the measures that were put in place were not working well enough. We need to make sure, therefore, that what we are doing gives better results.

Noble Lords have rightly highlighted the seriousness of fuel poverty; it is because of this that we are committed to tackling this. This is why we made the amendments in Committee which will set a new target and put in place a new strategy for tackling the serious issues around fuel poverty. This framework will allow us to maintain a concern for fuel poverty beyond the current date of 2016. That concern needs to be set out in legislation. However, the right balance must be struck between what is set out in primary legislation, what is subsequently laid out in secondary legislation and what is included in the strategy, to maintain an appropriate use of parliamentary time and level of government accountability.

I turn to Amendments 104C, 104D, 104E, 104F and 104G, which would put a specific target for fuel poverty in the Bill, and limit the changes that can be made to the target as well as proposing a review of that target every two years. We proposed setting the target through secondary legislation as we felt that this struck the right balance between the certainty of legislative targets and the need for flexibility in the future. The flexibility will, for instance, be important to reflect changes in the way energy efficiency is measured over time. The setting of the target, and any changes to it, will be subject to full parliamentary debate and the importance of that debate is why we have proposed that these are subject to affirmative resolution by both Houses.

We know from Professor Hills’s independent review that the way in which we understand the problem, as well as the best ways of tackling it, can change over time. Primary legislation is not the appropriate vehicle, given the importance of a nuanced, flexible approach to tackling fuel poverty.

I agree with noble Lords that we must be ambitious if we are to be successful in tackling fuel poverty, and the strategy must be a comprehensive one. However, it is neither sensible nor appropriate to put this level of detail into primary legislation. We will bring forward proposals on both the fuel poverty target as well as the strategy in due course, both for public consultation and, subsequently, for a full debate by both Houses.

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In the mean time we will continue to deliver policies to tackle one of the main causes of fuel poverty, which, as noble Lords have already mentioned, is living in cold, draughty homes. The energy company obligation is set to deliver permanent energy savings in 230,000 households by the end of the year, including for the hardest-to-treat homes. We anticipate the ECO affordable warmth and carbon saving communities obligations should generate investment in home thermal efficiency improvements equivalent to around £540 million per year. As a result of the ECO, we should see more than 60,000 boilers—which were mentioned by the noble Lord, Lord O’Neill—being installed in fuel-poor homes, as 60,000 have been installed since the policy was launched in January.

Lord O'Neill of Clackmannan: Before the noble Baroness leaves this point, I accept the procedural point she makes, that it is difficult to put detail of the character of which we were talking in the Bill. However, we are entitled, some five months after the initial welcome that we gave to the incorporation of the Hills principle, to some greater detail than a simple rehash of what we are doing this year. We want an indication of what will happen in subsequent years, in advance of the consultative document being produced. At the moment, from what the Minister said, the Government do not seem to have a clue what they are doing in that respect.

Baroness Verma: My Lords, that is very harsh of the noble Lord. I am trying to lay out clearly the direction that the Government are taking. The measures that we are taking are crucial to addressing concerns which he raised. I have addressed the issue he raised about boilers. Of course we are taking measures now but we need to make sure that, although there is ambition on all sides of the House to do more, we get it right in the long term.

Amendments 92A and 92B specify that the strategy and policy statement and the Gas and Electricity Markets Authority’s duty in relation to the statement must include the strategy and objectives on fuel poverty. The Government take the need to address fuel poverty seriously, and are already bringing forward proposals to do so. These amendments are therefore unnecessary. The contents of the SPS will be subject to consultation and parliamentary approval. Placing a particular priority in the Bill would pre-empt this consultation and the ability of the Secretary of State to start with a clean sheet in considering the full range of energy policy.

5.45 pm

I will try to touch on issues that were raised by the noble Lords, Lord Whitty and Lord O’Neill. Before setting a position on where we need to take these proposals we need to fully understand the proposals, the cost of the proposals, how they will work and what period they will work over. It may be very easy in opposition to say, “We want this now”, but we have already had 13 years of proposals that have not worked. We need proposals that have some meat—some body—and work. That is why it is really important that we do not get rushed into things because it makes a good political headline tomorrow. It is in the interest of all

6 Nov 2013 : Column 253

those who are suffering in inefficient homes, with the cost of energy going up, that we have a clear, proper strategy that works and that addresses those with low incomes but high costs around energy. I hope that noble Lords will be reassured that I, particularly, take these issues very seriously. I look forward to working with noble Lords to ensure that we put forward something that is not political but is a remedy to help the most vulnerable in our country. I hope that, on that note, the noble Lord will withdraw his amendment.

Lord Whitty: I thank all noble Lords who have taken part in this debate. It proved to be rather more wide-ranging than I had anticipated, largely thanks to the first intervention by the noble Lord, Lord Howell. I agreed with some of it, but he provoked a debate we have already had several times in the course of the Bill. I disagree with his central point and I think we need to take advice from the noble Lord, Lord Deben. It serves nobody’s interest to trade off the interests of the fuel poor against the objectives of reducing carbon in our energy. We have to tackle both as far as we can: it is not a trade-off. Indeed, many of the measures we are talking about to help the fuel poor, in particular improving the energy efficiency of homes, also help to reduce total demand for energy and reduce carbon. There is no conflict: they are synergetic, if that is the word, in many respects. It was a bit of an unfortunate diversion, but at least it livened up the debate.

The noble Lord, Lord Jenkin, and the Minister, to some extent, accused me of a volte-face. Certainly when the Government—between proceedings in the Commons and the Lords—came up with Clause 136, there was a sigh of relief, which I shared, that fuel poverty was being addressed in this huge reorganisation of the electricity market and energy policy generally. I have no doubt that other noble Lords on this side shared the relief that fuel poverty was at least appearing in the Bill. The problem is that it appeared at a rather late stage and that, as I said and maintain, it is a rather thin clause. It refers to the Government “setting out an objective” at some date “for addressing” fuel poverty—it does not even say “reducing fuel poverty”. We therefore want a little more meat on the bone. Some of it can no doubt be done by secondary regulation, but it would be better, frankly, if the Government were open to strengthening Clause 136.

The issue immediately before us is slightly different. Amendments 92A and 92B suggest that we should clearly signal within the statement of energy policy that fuel poverty is one aspect. Indeed, the programme, the policy and the strategy that the Government intend to bring forward under Clause 136 should be seen as part of that. It needs specific mention because it was not there for most of the Bill’s existence, it does not appear in most of the Bill, it was not there at all for the whole of the Commons procedure on the Bill and it needs to be clear now. This is our last opportunity in consideration of the Bill to make sure that fuel poverty is a major dimension of overall energy policy.

That is a fairly simply thing for the Government to accept. I am sorry that the Minister thinks that it is superfluous or otiose, as it is very important. If the objective of fuel poverty is not in the minds of not only DECC Ministers but those who are concerned

6 Nov 2013 : Column 254

with social policy and health policy, those in the Treasury and those who determine the priorities of this Government when we come to energy policy, we are in some difficulty.

Baroness Verma: My Lords, I make it very clear to the noble Lord that the amendments that we have tabled give a clear timetable for bringing forward proposals for a new target and a strategy to achieve it. Therefore noble Lords can have great certainty that we will put in place a comprehensive framework within a fixed time of the Act coming into force.

Lord Whitty: My Lords, I accept the Government’s good faith—and certainly the Minister’s—in this respect. Certainly, Clause 136 gives the Government the opportunity and the requirement to do that. However, my point on these first two amendments is that we cannot ghettoise fuel poverty into one clause of the Bill and one aspect of government thinking. All approaches to tariffs, investment and the source of energy, as well as to measures to improve the energy efficiency of homes and other direct measures to help the fuel poor, need to be seen in the totality of energy policy as part of the Government’s obligation. That is why Amendment 98A proposes that a reference to fuel poverty should be written clearly into the policy statement. It is nothing more than that, but it is very important that that is reflected. I would have thought that the Government could have accepted it, but given that the Government are clearly not prepared to accept it I wish to test the opinion of the House.

5.52 pm

Division on Amendment 92A

Contents 172; Not-Contents 233.

Amendment 92A disagreed.

Division No.  1


Adams of Craigielea, B.

Alton of Liverpool, L.

Anderson of Swansea, L.

Andrews, B.

Armstrong of Hill Top, B.

Bach, L.

Bakewell, B.

Bassam of Brighton, L. [Teller]

Beecham, L.

Berkeley of Knighton, L.

Bichard, L.

Billingham, B.

Blackstone, B.

Boateng, L.

Boothroyd, B.

Borrie, L.

Brennan, L.

Brooke of Alverthorpe, L.

Brookman, L.

Browne of Ladyton, L.

Campbell-Savours, L.

Christopher, L.

Clancarty, E.

Clark of Windermere, L.

Clarke of Hampstead, L.

Clinton-Davis, L.

Corston, B.

Crawley, B.

Davidson of Glen Clova, L.

Davies of Coity, L.

Davies of Oldham, L.

Dean of Thornton-le-Fylde, B.

Desai, L.

Donaghy, B.

Drake, B.

Dubs, L.

Elder, L.

Elystan-Morgan, L.

Erroll, E.

Evans of Parkside, L.

Evans of Watford, L.

Falkland, V.

Farrington of Ribbleton, B.

Faulkner of Worcester, L.

Ford, B.

Foster of Bishop Auckland, L.

Foulkes of Cumnock, L.

Gale, B.

Gibson of Market Rasen, B.

Giddens, L.

Glasman, L.

Gordon of Strathblane, L.

6 Nov 2013 : Column 255

Gould of Potternewton, B.

Grantchester, L.

Grenfell, L.

Griffiths of Burry Port, L.

Grocott, L.

Hanworth, V.

Harries of Pentregarth, L.

Harris of Haringey, L.

Hart of Chilton, L.

Haskel, L.

Hayman, B.

Hayter of Kentish Town, B.

Healy of Primrose Hill, B.

Henig, B.

Hilton of Eggardon, B.

Hollick, L.

Howells of St Davids, B.

Howie of Troon, L.

Hoyle, L.

Hughes of Stretford, B.

Hughes of Woodside, L.

Hunt of Kings Heath, L.

Irvine of Lairg, L.

Jay of Paddington, B.

Jones of Whitchurch, B.

Jones, L.

Judd, L.

Kennedy of Cradley, B.

Kennedy of Southwark, L.

Kerr of Kinlochard, L.

Kilclooney, L.

Kinnock of Holyhead, B.

Kinnock, L.

Kirkhill, L.

Knight of Weymouth, L.

Lawrence of Clarendon, B.

Lea of Crondall, L.

Leitch, L.

Liddell of Coatdyke, B.

Liddle, L.

Lipsey, L.

Lister of Burtersett, B.

Low of Dalston, L.

McAvoy, L.

McConnell of Glenscorrodale, L.

McDonagh, B.

McFall of Alcluith, L.

McIntosh of Hudnall, B.

MacKenzie of Culkein, L.

McKenzie of Luton, L.

Mallalieu, B.

Mandelson, L.

Mar, C.

Masham of Ilton, B.

Massey of Darwen, B.

Maxton, L.

May of Oxford, L.

Meacher, B.

Mendelsohn, L.

Monks, L.

Montgomery of Alamein, V.

Moonie, L.

Morgan of Ely, B.

Morris of Aberavon, L.

Morris of Handsworth, L.

Moser, L.

Nye, B.

O'Neill of Clackmannan, L.

Palmer, L.

Patel of Blackburn, L.

Patel, L.

Pendry, L.

Pitkeathley, B.

Prescott, L.

Prosser, B.

Quin, B.

Radice, L.

Rea, L.

Reid of Cardowan, L.

Rendell of Babergh, B.

Richard, L.

Robertson of Port Ellen, L.

Rooker, L.

Rosser, L.

Rowlands, L.

Royall of Blaisdon, B.

Sawyer, L.

Scotland of Asthal, B.

Sherlock, B.

Simon, V.

Singh of Wimbledon, L.

Smith of Basildon, B.

Smith of Finsbury, L.

Snape, L.

Soley, L.

Stevenson of Balmacara, L.

Stoddart of Swindon, L.

Stone of Blackheath, L.

Symons of Vernham Dean, B.

Taylor of Blackburn, L.

Taylor of Bolton, B.

Temple-Morris, L.

Tomlinson, L.

Touhig, L.

Tunnicliffe, L. [Teller]

Turnberg, L.

Turnbull, L.

Uddin, B.

Walpole, L.

Warner, L.

Watson of Invergowrie, L.

Wheeler, B.

Whitaker, B.

Whitty, L.

Wigley, L.

Wilkins, B.

Wills, L.

Winston, L.

Wood of Anfield, L.

Worthington, B.


Aberdare, L.

Addington, L.

Ahmad of Wimbledon, L.

Alderdice, L.

Anelay of St Johns, B. [Teller]

Ashdown of Norton-sub-Hamdon, L.

Astor of Hever, L.

Attlee, E.

Bakewell of Hardington Mandeville, B.

Balfe, L.

Barker, B.

Bates, L.

Berridge, B.

Bew, L.

Black of Brentwood, L.

Blencathra, L.

Bonham-Carter of Yarnbury, B.

Bourne of Aberystwyth, L.

Bowness, L.

Brabazon of Tara, L.

Bradshaw, L.

Bridgeman, V.

Brougham and Vaux, L.

Burnett, L.

Butler of Brockwell, L.

6 Nov 2013 : Column 256

Butler-Sloss, B.

Caithness, E.

Cameron of Dillington, L.

Campbell of Surbiton, B.

Carrington of Fulham, L.

Cavendish of Furness, L.

Clement-Jones, L.

Colville of Culross, V.

Colwyn, L.

Condon, L.

Cotter, L.

Courtown, E.

Cox, B.

Craig of Radley, L.

Craigavon, V.

Crickhowell, L.

Cumberlege, B.

Dannatt, L.

De Mauley, L.

Deben, L.

Deech, B.

Deighton, L.

Denham, L.

Dholakia, L.

Dixon-Smith, L.

Dobbs, L.

Doocey, B.

Dykes, L.

Eaton, B.

Eccles, V.

Eden of Winton, L.

Elton, L.

Falkner of Margravine, B.

Faulks, L.

Fellowes of West Stafford, L.

Fink, L.

Flather, B.

Fookes, B.

Forsyth of Drumlean, L.

Fowler, L.

Framlingham, L.

Freeman, L.

Freud, L.

Garden of Frognal, B.

Gardiner of Kimble, L.

Gardner of Parkes, B.

Garel-Jones, L.

Geddes, L.

German, L.

Glasgow, E.

Glenarthur, L.

Glentoran, L.

Goodlad, L.

Green of Hurstpierpoint, L.

Greenway, L.

Grender, B.

Griffiths of Fforestfach, L.

Hamilton of Epsom, L.

Hamwee, B.

Hanham, B.

Hannay of Chiswick, L.

Harris of Richmond, B.

Henley, L.

Heyhoe Flint, B.

Hill of Oareford, L.

Hodgson of Abinger, B.

Hodgson of Astley Abbotts, L.

Holmes of Richmond, L.

Home, E.

Hooper, B.

Horam, L.

Howard of Lympne, L.

Howarth of Breckland, B.

Howe of Aberavon, L.

Howe of Idlicote, B.

Howe, E.

Howell of Guildford, L.

Humphreys, B.

Hunt of Wirral, L.

Hurd of Westwell, L.

Hussein-Ece, B.

James of Blackheath, L.

Jay of Ewelme, L.

Jenkin of Kennington, B.

Jenkin of Roding, L.

Jolly, B.

Jones of Cheltenham, L.

Jopling, L.

Kalms, L.

King of Bridgwater, L.

Kirkham, L.

Kirkwood of Kirkhope, L.

Knight of Collingtree, B.

Kramer, B.

Lamont of Lerwick, L.

Lang of Monkton, L.

Lawson of Blaby, L.

Lee of Trafford, L.

Leigh of Hurley, L.

Lester of Herne Hill, L.

Lexden, L.

Lingfield, L.

Listowel, E.

Lothian, M.

Lucas, L.

Lyell, L.

Lytton, E.

MacGregor of Pulham Market, L.

Mackay of Clashfern, L.

Maclennan of Rogart, L.

McNally, L.

Magan of Castletown, L.

Mancroft, L.

Manzoor, B.

Mar and Kellie, E.

Marks of Henley-on-Thames, L.

Mawson, L.

Mayhew of Twysden, L.

Miller of Chilthorne Domer, B.

Montrose, D.

Moore of Lower Marsh, L.

Morris of Bolton, B.

Naseby, L.

Nash, L.

Neville-Jones, B.

Neville-Rolfe, B.

Newby, L. [Teller]

Newlove, B.

Nicholson of Winterbourne, B.

Northbrook, L.

Norton of Louth, L.

O'Cathain, B.

Oppenheim-Barnes, B.

Oxburgh, L.

Paddick, L.

Palmer of Childs Hill, L.

Palumbo of Southwark, L.

Parminter, B.

Patten, L.

Pearson of Rannoch, L.

Perry of Southwark, B.

Popat, L.

Purvis of Tweed, L.

Randerson, B.

Rawlings, B.

Razzall, L.

Redesdale, L.

Ribeiro, L.

Ridley, V.

Roberts of Llandudno, L.

Rodgers of Quarry Bank, L.

6 Nov 2013 : Column 257

Rogan, L.

Roper, L.

Sandwich, E.

Seccombe, B.

Selborne, E.

Selkirk of Douglas, L.

Selsdon, L.

Shackleton of Belgravia, B.

Sharkey, L.

Sharp of Guildford, B.

Shaw of Northstead, L.

Sheikh, L.

Shephard of Northwold, B.

Sherbourne of Didsbury, L.

Shrewsbury, E.

Shutt of Greetland, L.

Skelmersdale, L.

Smith of Clifton, L.

Spicer, L.

Stedman-Scott, B.

Steel of Aikwood, L.

Stephen, L.

Stewartby, L.

Stoneham of Droxford, L.

Storey, L.

Stowell of Beeston, B.

Strasburger, L.

Strathclyde, L.

Suttie, B.

Taverne, L.

Taylor of Goss Moor, L.

Taylor of Holbeach, L.

Tebbit, L.

Teverson, L.

Thomas of Gresford, L.

Thomas of Winchester, B.

Tope, L.

Trefgarne, L.

Trimble, L.

Tugendhat, L.

Tyler of Enfield, B.

Ullswater, V.

Verma, B.

Wakeham, L.

Wallace of Saltaire, L.

Wallace of Tankerness, L.

Walmsley, B.

Walton of Detchant, L.

Wasserman, L.

Wei, L.

Wheatcroft, B.

Wilcox, B.

Williams of Trafford, B.

Willoughby de Broke, L.

Wilson of Tillyorn, L.

Wrigglesworth, L.

Younger of Leckie, V.

6.05 pm

Clause 123: Duties in relation to statement

Amendment 92B not moved.

Amendment 93

Moved by Lord Judd

93: Clause 123, page 92, line 39, at end insert—

“( ) The Authority must demonstrate that it has complied with its general environmental duties as stipulated in national and international legislation.”

Lord Judd: My Lords, I shall also take the opportunity to speak to Amendments 94, 95 and 96. I declare an interest as a vice-president of the Campaign for National Parks, a patron of the Friends of the Lake District, and a member and supporter of the Campaign to Protect Rural England and other environmental agencies. In the context of this amendment, I pay special tribute to the John Muir Trust, which has done outstanding work in this area and with which I have been incredibly fortunate to co-operate in the preparation of what I want to say.

We must never forget that we are custodians of this planet for future generations. Our responsibility to safeguard the environment, especially those parts of it that our generation has not so far severely damaged, must always be at the forefront of our minds and policy-making. We must never fall victim to misguided, damaging and unnecessary short-term measures, whatever our commitment to what is regarded as essential growth. I fear that some government policies that are intended to protect the environment are instead driving action that is damaging it. In particular I think of the deployment of energy infrastructure on our most precious and wild landscapes.

My amendments are certainly not intended to challenge the Government’s climate change goals and their efforts to move to a green energy system. As I made clear in

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Committee, I fully support these but I remain firmly of the view that, in certain respects, we are losing sight of the purpose behind them. We cannot safeguard the environment for future generations by targets alone. Here and now—right now—we must give equal regard to upholding and enhancing existing hard won protections for the UK’s natural environment—its landscape, ecosystems, habitats and biodiversity. Energy is not an end in itself; we need it to have a society worth living in, but sadly we seem to be in an era of public policy -making where protections for landscapes and the environment are seen as an obstacle to growth and to keeping the lights on. It should not—and indeed need not—be a case of having to make a choice. The present Government pledged to be the greenest ever but, in reality, safeguards for the environment are being systematically weakened.

The Bill, in its current form, is no exception. Energy infrastructure has huge impacts on the environment. These amendments seek to prevent the Bill eroding environmental safeguards and to ensure that they are meaningful and effective. The first amendment would ensure that the strategy and policy statement places a responsibility on Ofgem to demonstrate compliance—and I emphasise those words—with its general environmental duties. This includes duties to have regard to the purposes of national parks, areas of outstanding natural beauty and the Norfolk and Suffolk Broads.

When I put forward a similar amendment in Committee, the Minister sought to reassure me that the strategy and policy statement would not override Ofgem’s existing duties to contribute to sustainable development, and that those duties would still apply. In the Minister’s view, therefore, the amendment was unnecessary. I understand her point and I also appreciate that she may wish to avoid a detailed amendment listing all the various duties. However—noble Lords must forgive me if I did not make this clear at an earlier stage—that is really not the issue. The point is that, while there are indeed existing legislative duties that would not change, there is currently no explicit requirement in the Energy Bill for Ofgem—again I underline these words—to demonstrate compliance with them. The amendment would also require the authority to demonstrate compliance with its obligations under the conservation of wild birds and habitats directives, which is crucial given the perilous state of the UK’s biodiversity.

The second amendment, also to Clause 123, would insert on page 92 after line 39:

“The Secretary of State shall issue guidance on social and environmental policies to which the Authority shall have regard in carrying out its functions”.

The purpose of the amendment is to ensure that the Government issue social and environmental guidance to Ofgem. At the moment, Clause 129(1) repeals, and does not replace, sections in the Gas Act and the Electricity Act that provide that the Secretary of State shall issue guidance on social and environmental matters to which the authority, Ofgem, shall have regard when carrying out its functions. In the Explanatory Notes, the Government argued:

“The strategy and policy statement will replace existing guidance for the regulator on social and environmental matters”.

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However, surely replacing existing guidance on social and environmental matters means precisely that: replacing it—that is, providing new guidance and not removing all reference to it, which is what has apparently happened.

Specifically, Clause 123(1) requires Ofgem to,

“have regard to the strategy priorities set out in the strategy and policy statement when carrying out regulatory functions”.

As I understand it, these include functions to which the principal objective duty is applied. This duty is to be found in the Gas Act 1986, with equivalent provisions in the Electricity Act 1989. These provisions make it clear that the principal objective is to protect the interests of existing and future customers of gas and electricity and, wherever appropriate, to promote competition.

Therefore, Ofgem’s commercial responsibilities are clearly defined. However, because there is no explicit requirement in the Bill for the Secretary of State to set out social and environmental guidance to Ofgem, such as exists at present, the priority given to social and environmental factors in public policy will be significantly weakened.

The repeal of the Electricity Act and Gas Act clauses will result in another significant change that will weaken environmental protection. Currently, these clauses ensure that any guidance on social and environmental matters issued by the Secretary of State is on an equal footing with the principal objective duties: namely, the protection of customers and the promotion of competition. However, once they are repealed, any guidance that the Secretary of State deems it appropriate to issue in future will be subordinate to the principal objective duties in a way that is not the case at present.

I am afraid that the Minister’s responses in Committee failed to reassure me that there will be equivalent social and environmental protection if Clause 129 is passed into legislation. In fact, to be honest, they further convinced me that it is the Government’s intention to subordinate environmental considerations to the commercial imperative.

The Government may well feel that there is no need for this amendment as Ofgem’s existing duties to,

“have regard to the effect on the environment of activity connected with the conveyance of gas through pipes or with the generation, transmission, distribution or supply of electricity”,

remain intact because Section 3A(5) in the Electricity Act and Section 4AA(5) in the Gas Act are not being repealed. However, surely without guidance from the Secretary of State on the meaning of “have regard to” and the policies to be followed, compliance with the duties is left to the discretion of the regulator. Surely the interpretation of this duty is not a matter to be left to the regulator; it is for the Government to determine the social and environmental factors that should be considered by the regulator and the value that should be placed on them. The amendment would ensure that provision for the Secretary of State to issue social and environmental guidance to Ofgem remained in primary legislation in accordance with what, I submit, was the original intent as set out in the guidance to the Bill.

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6.15 pm

The third amendment in this group is to Clause 125. It proposes that the words,

“and in accordance with any guidance issued under this section”,

should be inserted at the end of line 36 on page 94. The fourth amendment seeks to insert, also on page 94 after line 36:

“The Secretary of State must issue guidance about arrangements for wider public engagement including consultation on social and environmental matters”.

Again, I refer to the original DECC background note to the Bill. This states that the Government intended that there would be a wide public consultation in drafting the strategy and policy statement. Indeed, it emphasised:

“Consultation will be important given the effect of this instrument, to ensure the priorities and outcomes are well-chosen and do not have unintended effects”.

Obviously, I wholeheartedly support the aspiration for wide public consultation on the strategy and policy statement. However, in the absence of a clear prompt in the Bill, I am, frankly, doubtful that this will happen effectively. In order to avoid unintended effects, it will be vital to ensure that a broad range of stakeholders, including technical experts, consumer groups, land managers, planners and NGOs concerned with environmental issues are involved.