Energy Bill [Lords]

Public Bill Committee, 22 June 2004.

Standing Committee B

Energy Bill [Lords]

Clause 157 - Restrictions on winding-up orders

Anne McIntosh (Conservative, Vale of York)

Good morning, Mr. Sayeed, and welcome back to the Chair. I rise to ask the Minister for a couple of points of clarification. Will the proceedings for winding-up orders be the same in Scotland as they are in England? What will the position be for creditors of electricity companies?

Nigel Griffiths (Labour, Edinburgh South)

A warm welcome back to the Committee, Mr. Sayeed. The hon. Lady asked two questions about this block of five clauses—157 to 161. The aim is to prevent special administration from being frustrated by prior orders of various types being granted before the Secretary of State and Ofgem have been given an opportunity to seek an energy administration order, or by other steps being taken when an energy administration order has been made or an application is outstanding.

Proceedings in Scotland will be in accordance with Scottish rules and practice. Those are designed, I understand, to parallel proceedings in England, Wales and Northern Ireland. If that requires further clarification I am happy to write to members of the Committee, but I hope that explanation will suffice. Will the hon. Lady remind me of her second point?

Anne McIntosh (Conservative, Vale of York)

My second point relates to creditors of a company that had to be wound up. Would they be treated the same in England as in Scotland?

Nigel Griffiths (Labour, Edinburgh South)

The rules governing creditors when administrators, or their equivalent, go into a company will not be different from the existing rules applying to any company going into administration. I will need to get more clarification, but my understanding is that the position of creditors in these circumstances will be no different from that of those in other circumstances.

Anne McIntosh (Conservative, Vale of York)

Perhaps it would assist the Minister if I gave more clarification. We heard from the Liberal Democrats what the position of particular companies would be if they were granted special status under the Gas and Electricity Markets Authority and what the position of creditors would be. The regulatory impact

assessment includes special arrangements for administration and I assume that they apply to this clause. I seek clarification of whether the situation will be the same as an ordinary sequestration.

Nigel Griffiths (Labour, Edinburgh South)

I think the aim is to prevent a winding-up order from being sought by a person other than the Secretary of State to frustrate or interfere with a process, unless, as the Bill states, notice has been served on the Secretary of State and 14 days have passed since the last of the notices were served. The clause is designed so that, if an application for an energy administration order is received before a winding-up order is made, the court can consider that application instead of making winding-up orders.

The position of creditors in special administration is similar to that in normal administration, but there are differences for special administration, which are outlined and have the benefit of case or the appropriate law. The attempt here is not to add to the legal powers in a novel way, but to reflect what appertains to special administration as well as to administration, so that there are set procedures for how creditors will be dealt with. The primary purpose of special administration in this case is to keep the lights on. Creditors' rights should not otherwise be affected. I hope that I have satisfied hon. Members on that issue.

Question put and agreed to.

Clause 157 ordered to stand part of the Bill.

Clauses 158 and 159 ordered to stand part of the Bill.

Clause 160 - Restrictions on administrator appointments by creditors etc.

Anne McIntosh (Conservative, Vale of York)

I seek an assurance from the Minister that the Government—the state—will not be asked to act as a creditor in respect of administration under the clause.

Nigel Griffiths (Labour, Edinburgh South)

My understanding is that the Government will not be asked to stand creditor. I hope that the hon. Lady is satisfied with that reassurance.

Anne McIntosh (Conservative, Vale of York)

I am slightly concerned because the Minister says that the purpose of these clauses, particularly clause 160, is to keep the lights on. In that case, someone will have to make good the outstanding debts if the Government will not stand creditor in that regard.

Nigel Griffiths (Labour, Edinburgh South)

We are talking about companies. The positions of a creditor, particularly a secured creditor, and the directors of a company are set out clearly and have been for a number of years. There are responsibilities. An administrator will be responsible for ensuring that the company continues to run and that the lights are kept on, but they will deal with the

liabilities of the current or former directors and others, such as the shareholders of the company, as well. I am advising the hon. Lady that the liabilities or the costs of keeping the system going, which I am advised clauses 162 to 165 deal with, allow for a charge to be raised on the licence holders. That is explained in clause 162.

Anne McIntosh (Conservative, Vale of York)

I understand that it is unlikely that such companies would become insolvent because according to pages 91 and 92 of the regulatory impact assessment they are effectively monopolies or duopolies. My concern is that were such a company to become insolvent another company might not be able to leap into the breach. That is a particular worry in Scotland, which has only two such companies, and we heard earlier that there might be a move to merge them. The Government must have thought this through because it could wreck the whole Bill. What measures do they intend to take to keep the lights on?

Nigel Griffiths (Labour, Edinburgh South)

Clauses 162 to 165 give clear powers here. There is provision for the Government to provide grants, loans and loan guarantees—short-term funding mechanisms for companies to keep the network functioning.

Anne McIntosh (Conservative, Vale of York)

What assurance does the Committee have that those grants and loans would pass the stringent conditions of the EU state aid provisions? On similar occasions, short of insolvency, such grants and loans have been deemed to breach EU treaty rules and the competition provisions. The measures set out in the Bill would therefore mean absolutely nothing.

Nigel Griffiths (Labour, Edinburgh South)

The hon. Lady slipped in the critical phrase ''short of insolvency''. Previous state aid cases tended to focus on whether investment would be permitted and money raised. Obviously, such a matter would be considered by the Commission. The Government could undoubtedly persuade the Commission that in such circumstances the prime necessity would be to keep the lights burning, the heating systems working and the fuel flowing. I believe that the Commission would view matters in that light. It would not want to be held responsible for blocking any loan or grant that might be needed in the extreme case that the hon. Lady rightly describes. The clauses provide for extreme emergencies. I do not envisage the Commission doing anything to shut off the lights or fuel in Britain.

Anne McIntosh (Conservative, Vale of York)

I have made the point and the record will speak for itself. A similar situation pertains with British Energy, which is not a private company like the electricity companies. I understand that the Commission was not minded to allow some of the moneys that the Government wished to give British

Energy and would look cautiously at such requests. I also understand that the time scales relating to clause 160 are extremely tight.

Question put and agreed to.

Clause 160 ordered to stand part of the Bill.

Clauses 161 to 163 ordered to stand part of the Bill.

Clause 164 - Guarantees where energy administration order is made

Laurence Robertson (Conservative, Tewkesbury)

What I want to say follows on from the questions put by my hon. Friend the Member for Vale of York (Miss McIntosh). This strange clause states that the Secretary of State may guarantee various sums that are borrowed by the company when the energy administration order is in force. It seems odd that even after the Government have effectively taken over the company, it can continue to borrow sums, which the Government can guarantee. What is the position under European law in that respect? Will the Minister please clarify the effect of the clause?

Nigel Griffiths (Labour, Edinburgh South)

The hon. Gentleman has summarised the aims of the clause. The Government expect that the energy administrator will, as a first recourse, look to commercial lenders to provide funding—short-term financing—to meet the objective of energy administration, which is to keep the network running despite the insolvency, or near insolvency, of the company. The clause will allow Secretary of State to guarantee sums borrowed by the protected energy company and provides for the payment of interest on those sums, as well as the discharge of related financial obligations for which she may see fit to accept the terms of the guarantee. That is to ensure that the energy administrator can look to commercial lenders.

The hon. Gentleman raises a fair point—state aid will need to be considered fully at the time—but the Government believe that it is fully approvable by the European Commission in accordance with the guidelines on state aid for rescuing and restructuring firms in difficulty. If the guarantee constituted state aid, we would, in the usual way, notify and obtain approval from the Commission, which would consider the arrangement in the circumstances of the specific case. We would expect the energy administrator to put a powerful case in such circumstances.

Laurence Robertson (Conservative, Tewkesbury)

I accept the good intentions of the clause, but the timing is difficult in the sense that the ruling on British Energy has not yet been made. However, if the ruling went against the Government's intentions in respect of British Energy, would that mean, by implication, that the clause is worthless? Is that really the position?

Nigel Griffiths (Labour, Edinburgh South)

No. British Energy is a specific case. The Commission considers these issues case by case and it would be wrong to compare a position taken in the past, or a pending position in a case, and say how it might affect the hypothetical cases that we are dealing with now. British Energy is an unrelated issue. The clause gives us a provision that will require approval from the Commission if the guarantee constitutes state aid, and the Commission will consider that with regard to the circumstances of the specific case.

Laurence Robertson (Conservative, Tewkesbury)

I am still not entirely clear what the difference between British Energy and these companies would be, and I am not entirely satisfied that the Minister has explained the difference, although it is an analogy at this stage. I cannot see why the European Commission would view each company differently. Surely the Government or the courts would grant an energy administration order if a company could not run itself financially. I do not see the difference between company A not being able to run itself financially and company B not being able to run itself financially; it seems to provide much the same reason for taking that company over. I wonder whether these clauses are compatible with European law, and it seems that the Government are saying that they do not know either. Are we not are in a bit of a mess?

Nigel Griffiths (Labour, Edinburgh South)

Not really. British Energy operates in a competitive market in which a special administration regime is for regulated natural monopolies, so the nature of the aid to British Energy, as in the case that the hon. Gentleman envisages, is different. The circumstances of the company are different. That is why there is a difference.

Andrew Stunell (Liberal Democrat, Hazel Grove)

On reading these clauses, I was under the impression that they applied also to regulated companies in the energy sector. Like the hon. Member for Tewkesbury (Mr. Robertson), I am mystified by the distinction that the Minister is drawing. He might want to reconsider that distinction, and perhaps write to members of the Committee separately. This is quite a technical issue, so perhaps he could take advice before informing the Committee further.

Nigel Griffiths (Labour, Edinburgh South)

If, on viewing Hansard, there appear to be issues that require clarification, I undertake to write to the Committee.

Question put and agreed to.

Clause 164 ordered to stand part of the Bill.

Clause 165 ordered to stand part of the Bill.

Clause 166 - Licence conditions to secure funding of energy administration

Anne McIntosh (Conservative, Vale of York)

May I invite the Minister to comment on his Government's response to the consultation document, ''Proposals for a special administration regime for energy network companies'', which contained Government conclusions from the replies to the DTI consultation document of 16 April 2003? To support my remarks, I draw from pages 68 and 69 of the excellent Library notes prepared on the Bill, which refer especially to the procedures that would be used to secure funding of energy administration, which is the subject of clause 166. The notes say that the Government response

''indicated that all but one respondent to that consultation''—

which closed just over a year ago on 20 June 2003—

''broadly welcomed the introduction of a special administration regime . . . Most respondents believed that legislation to introduce special administration was proportionate to the risks of the networks ceasing to operate as a result of normal insolvency procedures and would ensure that consumers would continue to receive supplies of energy in the unlikely event of a network company becoming insolvent. The preferred scheme should be along the lines of the schemes already in place for the water and railway sectors.''

I have some knowledge of the Railways and Transport Safety Bill as I had the honour to serve on the Standing Committee. We had a similar debate, not so much about how the funding would be raised, but about what would happen and what the role of the regulator would be in the event of one of the companies that had been awarded a franchise under the Bill becoming insolvent. I am disappointed that this part of the Bill is silent about the role of the regulator. Was it the specific intention of the Minister and his Department not to elaborate on that?

I shall quote the Government's response about favouring an ex ante scheme. On the question of funding for special administration, the response states that the

''costs of special administration would be borne in the first instance by creditors and members, but that provisions will be made for any excess funding required to keep the network running. The Government considers that this funding should come from the industry and therefore ultimately from consumers, as the beneficiaries, rather than taxpayers but that provision for an interim Government loan or loan guarantee will be necessary in the absence of an ex-ante fund.''

In the light of my earlier probing questions to the Minister, that response establishes on the record—although it is not included in the explanatory notes or the Bill—that the Government intend to secure funding for administration.

Nigel Griffiths (Labour, Edinburgh South)

What that response does is to give provision for the Government to secure funding; it does not state an intention.

Anne McIntosh (Conservative, Vale of York)

Well, it establishes the legal basis for the Government to act. Given the huge investments that companies are being asked to make to carry out their responsibilities as utility companies, what authorisation does the Minister's Department have under clause 166? Has funding been allocated as a specific budget line or is it part of a reserve allocated to the Department?

The Library note clearly states:

''Energy administration may be ended either by rescue of the company as a going concern, or by means of transfer, as set out in the Bill. This may be to one company or by separation into several going concerns. The Bill also makes provision for the Secretary of State, with the permission of the Treasury''—

this appears in the Library note, not the Bill or the explanatory notes; the Committee ought to know the precise fiscal implications of clause 166—

''to give a grant or loan, or loan guarantees to a company in energy administration where this will help achieve the objectives of administration. In the latter case, a statement must be made to Parliament as soon as practicable after the guarantee is made, and annually thereafter until the liability is discharged.''

It would be immensely helpful, therefore, if the Minister would set out what the specific procedure is, why it is not included in the Bill, and what budgetary allocation the Treasury has made.

I return to the remarks made by my hon. Friend the Member for Tewkesbury, in response to which the Minister tried to differentiate the situation with British Energy. He is in a minority of one. The Library note clearly draws a parallel with the

''financial difficulties experienced by the nuclear generator British Energy in 2002'',

in which

''company restructuring was attempted with the aim of its becoming solvent. The Government prepared contingency plans to ensure nuclear safety and security of supply''.

There is a direct parallel and I cannot understand why the Minister does not see it. Why can he not be up front with the Committee? We are representatives for the public and we need to know the fiscal implications and the procedure. It would be immensely helpful if the Minister spelled that out and explained why it is not in the Bill.

Nigel Griffiths (Labour, Edinburgh South)

I shall answer the hon. Lady's questions in order. The regulator would be expected to act in the same way towards a company in energy administration as towards other companies. I understand that that has been set out in case law with Winsor v. Bloom. The regulator must take account of the ability of the licence company to fund its activities. Clause 166 is about how a shortfall in funds after special administrations can be raised from other licensed companies; it is not about funding during special administration. The clause provides for Government funding to be recouped via charges on the industry.

If the hon. Lady contacts Library staff, she will find that the fact that a Library note uses analogies or comparative cases does not mean that it is implying that the situations are identical. I thought that I made that point clear earlier. The case that she raised is not identical to one that we envisage arising, because there are issues about whether there is a natural monopoly. There are competing companies, and other issues could well mean that any future administration of a company in this area was different and treated differently by the Commission, in particular, in giving

permission for the Government to provide assistance. That is what this clause and previous ones deal with.

Anne McIntosh (Conservative, Vale of York)

I am sure that the Minister does not mean to be as obtuse as he appears to be, but the Railways and Transport Safety Bill, which was enacted in 2003, specifically set out the role of the regulator. The Minister's background, like mine, is in Scots law. Most of our law is codified and the position would be set out. That is our tradition, and the Government have a tradition of setting the position out in other Bills. I cannot speak about the Water Act 2003, because I am not so familiar with that, but the position for the rail sector is clear. He has not satisfied me on that point, and I repeat that the record will speak for itself.

I specifically referred to a situation that the Minister seems to be ignoring. He says that there is no monopoly. We know that there is a duopoly in Scotland, and there is clear potential for a monopoly to emerge should the two companies operating in this sector in Scotland merge. Perhaps our definitions of a monopoly are not the same, but if the two companies merged, I would consider that to be a monopoly, and presumably he could not disagree. I would have thought that these remarks carried most force with reference to Scotland.

I was interested to hear the Minister say that clause 166 calls on other licence companies to make up the shortfall relating to the costs of another utility company going into administration. That would be an amazing precedent to set. I am not sure what provision other companies, which have done nothing wrong and have not contributed to the insolvent company becoming so, can be expected to make out of the blue. That seems extraordinary. However, we have made the points, and I am sure that there will be an opportunity to return to them on Report or once the Bill is implemented.

Andrew Stunell (Liberal Democrat, Hazel Grove)

It is good to serve under your chairmanship again, Mr. Sayeed. As the Minister tried to explain the distinction for the first, second and third times, I became increasingly mystified. He has just had a fourth go. It appears in his mind to have something to do with whether the company is in a monopoly or strongly regulated environment, or in a competitive environment. That seemed to be the distinction that he drew between British Energy and other companies that might be subject to the clauses. However, British Energy is not the only nuclear generating company and it is certainly not the only generating company, so it is evidently in some sort of competitive environment.

As the hon. Member for Vale of York pointed out, in Scotland, one might quickly see a situation in which there was a monopoly or a constrained duopoly. If the Minister's argument is that British Energy is in the competitive field and the others are not, the situation can swing in either direction. The more one looks at it, the more it is apparent that there is no difference between the situation that affects British Energy and the market in which it operates, and the situation affecting putative companies that might get into difficulty in the future.

I thought that I had offered the Minister the opportunity to write to the Committee so as more fully to explain his case. The more I hear him try, however, the more I think he needs to take time out to explain it to us. Is he saying that the difference between British Energy and other companies has nothing to do with its competitive or market situation, but has more to do with the fact that it is a nuclear producer and the others are not, or is he saying something completely different? The European Commission has not yet given a judgment on the British Energy situation—a point that was recorded when it published its interim result a couple of days ago. This is very much work in progress, both as regards British Energy and the applicability of these clauses to future companies. These are quite important issues and I do not believe that the Minister has done justice to them so far this morning.

Question put and agreed to.

Clause 166 ordered to stand part of the Bill.

Clauses 167 and 168 ordered to stand part of the Bill.

Clause 169 - Appeals to the Competition Commission

Andrew Stunell (Liberal Democrat, Hazel Grove)

I beg to move amendment No. 222, in

clause 169, page 128, leave out line 12 and insert—

'( ) a person who is a party to the document designated under subsection (2)(b) to which the decision relates;

( ) any other person whose interests are materially affected by it; or'.

We now come to appeals against decisions made by the Gas and Electricity Markets Authority. The amendment relates to those people who are competent to become involved in an appeal. That is restricted under subsection (3) to

''a person whose interests are materially affected''

by the decision. On the face of it, that seems a sensible provision. The difficulty is that the test of material effect is complex to administer as far as the code parties are concerned. The Bill does not say whether materiality is to be assessed in absolute terms, in relation to profits or in relation to something else.

We fully accept that an important part of any appeal process is that it should be dealt with speedily and efficiently. Under our amendment, any person who was a party to the document would be in position to appeal without the need to demonstrate material effect. That would reduce the time involved, because it avoids the need to assess that question as far as the code parties are concerned, and the Competition Commission could progress an appeal without delay.

The Minister may argue that opening this up to anybody who is a signatory or party to the document might encourage frivolous appeals. However, the Competition Commission is empowered to award costs in the case of appeals brought by any electricity and gas licensee, which would clearly deter frivolous appeals. Nor can an appeal simply be launched to delay the implementation of an unpopular decision because the Competition Commission has the

discretion on whether the decision should be suspended during the appeal process. In other words, frivolous, vexatious or delaying appeals will simply be overridden.

A similar amendment was discussed in the other place, and the Minister said that it should be discounted because the majority of the industry wanted a quick process and therefore would not favour it. However, having been asked, although it wants a quick process, most of the industry supports the amendment. It thinks that the hassle and the potential for confusion in having to show material effect, especially as the Bill is silent on how it should be judged, would produce more delay and trouble than the amendment.

The amendment would simplify the process and avoid the problem of dual jurisdiction, in which a code party that is found by the commission not to be materially affected by an Ofgem decision nevertheless can challenge it under judicial review on the lower test of a sufficient interest. The proposal would improve the Bill and I hope that the Minister will support it.

Nigel Griffiths (Labour, Edinburgh South)

I shall explain why I will not support the Lib Dem-Tory coalition amendment. The hon. Gentleman has tabled amendments that were tabled by the Conservatives in the other place and put a Lib Dem stamp them. He raises two issues. First, he claims that the materially affected test will be too complex to administer. I reject that claim. Participants will have to show only that they are affected by a decision and it will be for the commission to judge whether they meet the test. The commission is confident in its ability to do so.

Secondly, the hon. Gentleman, who used various adjectives and adverbs to describe the material test, said that it will be complicated and prevent the system from working speedily and efficiently. The provisions and the time scales in the process have been drawn up in consultation with the Competition Commission. I am informed that it is satisfied that it can reach a decision on whether to grant leave to appeal, including determining whether the materially affected test is met within two weeks of an application being made.

I cannot accept the amendment, as its effect would be that any persons who are not materially affected by a decision could appeal against it. Our aim is to streamline the matter, as my noble Friend Lord Whitty made clear in the House of Lords. I urge the Committee to resist the amendment.

Andrew Stunell (Liberal Democrat, Hazel Grove)

I thank the Minister for his remarks, although not for trying to poison my amendment by attributing it to the Conservative party.

The Minister's reply is disappointing. He ignored the substantial point that those people whom GEMA rules are not materially affected, but who dispute it, must go through a process that might ultimately lead to judicial review and to a far greater delay and inconvenience to the industry and to other licence holders than if this simple amendment were accepted.

As I wish to reserve my right to return to the proposal, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Anne McIntosh (Conservative, Vale of York)

Will the Minister be good enough to explain how the term ''materially affected'' in subsection (3)(a) will be interpreted? Will it be given a broad or a narrow interpretation? The Government are committed, under subsection (2), to consult on the codes to be designated. Can he tell us in what form, and with whom, that consultation will take place?

We are delighted that the Liberal Democrats have chosen to take on the Conservative mantle from the Lords, albeit under a slightly qualified guise. However, it is disappointing that Lord Whitty was unable to accept the thrust of the original Lords amendment, which—I put it to this Minister—was clearer in terms of defining which parties would be ''materially affected'' and which had a sufficient material interest. I understand that the deadlines are extremely tight, as appellants will have 15 days in which to lodge an appeal, and the Competition Commission has given a further 20 days in which to submit its observations. Can the Minister confirm that those are the timetables? I understand that there will be a cost implication to the appeals procedure, so can he spell out what that will be?

Nigel Griffiths (Labour, Edinburgh South)

I am happy to do that. The hon. Lady asks how wide or narrow will be the definition accepted by the Competition Commission. As with the courts, it is not for us to determine how wide or narrow will be the definition accepted by a judicial or quasi-judicial body. It will obviously want to act in an appropriate way and knows that any failing involving going too wide will be subject to other proceedings such as judicial review. As the Minister who had considerable responsibility for setting up the Competition Commission, I am heartened by the fact that such incidences have not, to my knowledge, taken place. That is a vote of confidence in the commission.

I listened to what the hon. Lady said about the consultation on codes, and there will be written consultation. The procedures have been clearly set out by Parliament, with targets, and I expect us to be able to meet those targets to give people adequate time to respond to consultation. All those bodies that are involved in the industry—companies, regulators and non-governmental organisations—have carefully followed the Bill's course, both here and in the other place. I would have thought that they are well up to speed and anticipate what the codes will contain. Indeed, they have probably helped to inform the drafting of the codes, and we are grateful for that.

The hon. Lady asked another helpful question about the cost implications, which are important to consider. I am advised that the current estimate is £75,000 for each Competition Commission case. We

have allowed provisions under clause 173 for the industry to recover costs. I hope that those answers satisfy her.

Anne McIntosh (Conservative, Vale of York)

I am grateful to the Minister for those answers. I should like to place on record my understanding that—because the Liberal Democrat amendment and the revised text of the Bill specifically leave out those with sufficient interest—rather than having an appeal, the Government have made themselves a hostage to fortune by allowing the possibility of a flood of appeals to judicial review, rather than to the Competition Commission. If one tots up the number of cases that might be brought to the commission in one year, the Minister said that it would cost £75,000 per case, but the costs of judicial review would be substantially higher. On an average annual basis, the Government's regulatory impact assessment figures show that it would be equivalent to £5.7 million to £11.5 million per year. That seems an extraordinarily high figure; the Minister might now regret not having accepted the Lords amendment. The figures will speak for themselves.

Question put and agreed to.

Clause 169 ordered to stand part of the Bill.

Clause 170 ordered to stand part of the Bill.

Schedule 22 agreed to.

Clause 171 - Determination of appeals

Andrew Stunell (Liberal Democrat, Hazel Grove)

I beg to move amendment No. 220, in

clause 171, page 129, line 29, at end insert—

'( ) In applying the test in subsection (4)(c), the Competition Commission must consider whether it agrees with the conclusion that GEMA reached in weighing up the matters or purposes and must allow the appeal if—

(a) it does not agree; and

(b) it considers that its conclusion is clearly and substantially better than that reached by GEMA'.

The amendment relates to subsection (4)(c), which was inserted by the Government during debate in the House of Lords, and is intended to explore and to provide an opportunity for the Minister to tell the Committee more about how subsection (4)(c) is to be interpreted. It is obviously important that any appeal system goes beyond simply looking at procedural matters and considering whether a decision made by Ofgem was in itself perverse and wrong on the case's merits. In response to that realisation, the Government tabled an amendment in the House of Lords. However, it is written in an open-ended way and this amendment simply sets out some conditions that might apply to subsection (4)(c), such as if the Competition Commission does not just disagree with GEMA's findings, but

''considers that its conclusion is clearly and substantially better than that reached by GEMA''.

I should like to give the Minister the opportunity to explain more fully to the Committee the import of subsection (4)(c). I shall listen carefully to his response.

Nigel Griffiths (Labour, Edinburgh South)

I have reassuring words for the hon. Gentleman. Because he has based his amendment on a Labour amendment, he is on much safer ground, and shows that his previous lapse of judgment has been rectified. I welcome the opportunity provided by the amendment to clarify the clause's effect on the nature of the appeals process: it is not quite encapsulated by the amendment and I am grateful for the opportunity to set out in detail why.

The clause provides for an appeal by way of a review of Ofgem's decision on its merits. It falls short of providing for a full rehearing or investigation of all the issues by the Competition Commission, which will review Ofgem's decision against the objectives of the code in question and its statutory duties. In doing so, it can consider how Ofgem weighed the matters before it. It will also review whether the decision was correct in fact and in law. The clause provides that the appeal can be allowed if the Competition Commission is satisfied that a decision was wrong. In saying that, we mean that the commission should adopt the same approach as the Court of Appeal when hearing an appeal against a decision of a lower court. We believe that the clause, as drafted, gives legislative effect to that intention and is preferable to providing that an appeal should be allowed when the Competition Commission decides

''its conclusion is clearly and substantially better than that reached by GEMA'',

as proposed by the amendment.

When will the Competition Commission be able to say that a decision is wrong? It is clearly Ofgem's job to set its policy in order to reach its decisions, and these provisions do not alter that. However, in circumstances in which Ofgem chooses from a number of possible options to implement its policy, the Competition Commission will be able to review those options. If in relation to the exercise of discretion by Ofgem the Competition Commission considers that an alternative approach is permissible, it must ask itself two questions before it can hold that Ofgem had erred. First, is the other permissible approach better? Secondly, does the difference between its view and Ofgem's fall outside the boundaries of reasonable disagreement? The commission can say that Ofgem's decision was wrong only if it satisfies both those criteria.

The Competition Commission will therefore look at the substance of the decision not just the process by which it was reached. It should be clearly understood that no matter on which Ofgem has discretion to review a code modification would fall outside the scope of the commission's power of review. The commission will not however hold a rehearing requiring it to rework all the analysis. That would add substantially to the length of the process and introduce an unacceptable level of regulatory uncertainty and delay in this instance.

We are therefore providing a tailored appeals mechanism. It is different from a judicial review, which does not allow a review of the merits of a decision. It is also different from a full rehearing of a case such as is possible within the scope of the provisions in the electronic communications sector. It is a tailored mechanism, and I am confident that it will suit the purpose for which it is designed. I hope that after that legal and technical explanation the hon. Member for Hazel Grove (Mr. Stunell) will withdraw his amendment.

Andrew Stunell (Liberal Democrat, Hazel Grove)

I thank the Minister for that full and comprehensive explanation of the intentions behind subsection (4)(c). There may be a few rough edges to consider such as that the Competition Commission can act only where a difference of view is beyond the boundaries of reasonable disagreement. Clearly there is scope for a good deal of discussion about that. In view of the Minister's helpful response, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 171 ordered to stand part of the Bill.

Clauses 172 to 174 ordered to stand part of the Bill.

Clause 175 - Meaning of electricity supply

Anne McIntosh (Conservative, Vale of York)

I welcome the clause. I refer the Minister to our earlier discussion about the review of the renewables obligation in its entirety in 2005. Obviously the implementation of the review of the climate change levy will be subject to a ministerial decision. He will be aware that the climate change levy was sold to the industry as having the advantage of incurring a reduction to national insurance contributions by the employer of 1 per cent and that the Government then chose to increase the employers' contribution by 1 per cent. Maths is not my strongest point, but I hope that he will follow me when I say that that will have negated—

Jonathan Sayeed (Conservative, Mid Bedfordshire)

Order. I am perplexed as to how this is germane to clause 175. I hope that the hon. Lady will demonstrate that it is germane.

Anne McIntosh (Conservative, Vale of York)

Indeed. Some renewables obligations benefit from a reduction to the climate change levy, but not all. What are the implications for renewables obligations that benefit from exemption from the climate change levy? How does that compare with producers of renewables that are not exempt? Does the Minister accept that the reduction is negated? Will the Minister also explain what the initial start-up cost to obtain a licence will be? Page 112 of the regulatory impact assessment states:

''There would be initial start-up costs to obtain a licence and to plan, and prepare, for the Renewables Obligation and Climate Change Levy.''

I broadly welcome the thrust of the clause, which is to correct an anomaly in the definition of supply. Electricity supply is defined as being by means of a distribution system and therefore excludes the conveyance of electricity to customers whose supply does not pass through a distribution network. The Minister may have had the benefit of seeing to what extent the security of supply provisions of the European constitution will relate to electricity supply. I gather that those provisions are covered by one of the preliminary articles—I think article 3—and I wonder how the new wording of the European constitution will affect this clause, which sets out the meaning of electricity supply.

Nigel Griffiths (Labour, Edinburgh South)

I welcome the hon. Lady's welcome for the clause. However, thereafter, she lost me and the rest of the Committee. As I scrambled in my notes for something on national insurance, she moved on to security of supply.

Anne McIntosh (Conservative, Vale of York)

The Minister will be aware that the renewables obligations that benefit from exemption from the climate change levy will have a competitive advantage over those that do not. The Government negated the 1 per cent. national insurance contribution exemption by increasing the level by 1 per cent.—perhaps that escaped his attention.

Nigel Griffiths (Labour, Edinburgh South)

I am sure that members of the Committee found that explanation most helpful, but I did not. I understand that the start-up costs are the same for any supplier. Most, if not all, will already have a licence, but if the hon. Lady requires further clarification, I would be happy to provide that.

The hon. Lady is right that the clause corrects the anomaly that the Electricity Act 1989 does not include electricity conveyed over the transmission network; it covers the supply of electricity conveyed by a distribution system. The aim of the clause is to ensure that the conveyance of electricity to customers whose supply of electricity does not pass through the distribution network will be legally supplied. The clause amends the definition of supply to include electricity conveyed over the transmission network. I hope that we can return to her initial welcome for the clause and that there is unanimous support for it standing part of the Bill.

Anne McIntosh (Conservative, Vale of York)

The omission in the Minister's remarks relates to the part of the EU constitution dealing with security of supply. Has the energy chapter been dropped completely? Is there no reference to it in article 3 or any other article? That will have implications for clause 175, but the Minister was silent on that. I understand that the text of the constitution will not be available in English until September, but presumably he will be aware of the negotiations. The Prime Minister assured the House yesterday that there is no reference to an energy chapter. However, our understanding is that there is a specific reference in article 3 at the beginning of the constitution.

Nigel Griffiths (Labour, Edinburgh South)

I am happy to read the constitution in French and to write to the Committee on the matter in English.

Question put and agreed to.

Clause 175 ordered to stand part of the Bill.

Clause 176 - Meaning of ''high voltage line''

Andrew Stunell (Liberal Democrat, Hazel Grove)

Has the Minister received any representations about the differentiation between the definition of high voltage lines in Scotland and that in England and Wales? In the discussions that I have had with parts of the industry, a little concern has been expressed that a distinction has been drawn that means that the grid in Scotland is a different animal from that in England and Wales. Has he received representations, and on what basis was the distinction arrived at?

Nigel Griffiths (Labour, Edinburgh South)

I welcome the opportunity to clarify that point. Section 64 of the Electricity Act 1989 states that

'''high voltage' means . . . in relation to Scotland, an electric line of a nominal voltage not less than 132 kilovolts''.

Clause 176 is slightly different, because it refers to high voltage in Scotland as

''a nominal voltage of 132 kilovolts or more''.

That formulation is clearer, but there is no real change in the definition.

The 1989 Act defines high voltage in relation to England and Wales as

''an electric line of a nominal voltage exceeding 132 kilovolts''.

Clause 176 does not specifically mention England and Wales, but they come under subsection (1)(b) and the words ''in any other case''. No change has been made in the definition of high voltage. The clause defines high and low voltage in relation to offshore lines in the same terms as the definition for onshore lines in Scotland.

I hope that that explanation reassures the hon. Member for Hazel Grove (Mr. Stunell) and those who made representations to him, but I am happy to try to answer any further questions that he has on the issue.

Question put and agreed to.

Clause 176 ordered to stand part of the Bill.

Clause 177 - Prepayment meters

Michael Weir (Scottish National Party, Angus)

I beg to move amendment No. 34, in

clause 177, page 133, line 26, at end insert—

'(1A) The cost of gas supplied through a pay meter shall be supplied at no more than the average unit cost for gas supplied to customers by other means of payment.'.

Jonathan Sayeed (Conservative, Mid Bedfordshire)

With this it will be convenient to discuss amendment No. 35, in

clause 177, page 134, line 16, at end insert—

'(2A) The cost of electricity supplied through a pay meter shall be supplied at no more than the average unit cost for electricity supplied to customers by other means of payment.'.

Michael Weir (Scottish National Party, Angus)

The amendments represent an attempt to air an issue that causes me concern in relation to the cost of energy. Amendment No. 34 deals with gas, and amendment No. 35 is a mirror amendment, dealing with electricity. It has been said many times that cost savings can be sought through cheaper gas and electricity deals, but many such deals are not available to those sections of the population that buy energy through prepayment meters. Since the introduction of the new electricity trading arrangements in England and Wales, there have been various claims about the reduction in the cost of electricity to consumers, and similar claims have been made about gas. However, there are at least arguments as to whether domestic consumers have benefited to the same extent as the industry from lower electricity prices.

I draw the Committee's attention to page 44 of the Library notes, which state:

''The tariff paid by domestic electricity consumers depends, in part, on the method of payment used. Broadly speaking there are three distinct options: standard credit, direct debit and prepayment. Standard credit is, in effect, the default method of payment for most electricity consumers. Choosing to pay by direct debit confers a discount, while prepayment involves a surcharge.''

Therein lies the rub. Those who can afford to pay by direct debit can make significant savings on their electricity and gas bills, either by changing suppliers or by taking advantage of deals offered by their existing supplier. Those on the standard method have the option of doing so but those on prepayment meters have no realistic chance of achieving lower energy costs as they are penalised because they pre-pay for electricity.

I draw hon. Members' attention to Energy Review, a recent publication from Energy Action Scotland, which mentions the impact of lower energy prices on fuel poverty. It accepts that the number of households in fuel poverty has fallen, mainly due to lowering the costs of energy and states:

''Focusing on the impact of fuel price on fuel poverty, the price of electricity fell by 1.9 per cent. and gas by 1.2 per cent. from 2002 and 2003. Further savings were made by switching suppliers: average saving for electricity (direct debit) was £22 and for gas £27. It is expected that prices will rise in the period to 2010, but energy will still be cheaper in real terms than 10 years ago. The report states that changes in prices highlight the importance of sustained improvements in energy efficiency.''

That is all true.

I raised the matter on Second Reading with the then Energy Minister who, when asked about the benefits to the consumer from BETTA—the British electricity trading and transmission arrangements—mentioned the possibility of making savings by switching suppliers. That is right up to a point, but how easy is it for someone on a prepayment meter to swap suppliers? The bulk of those on prepayment meters are people on low incomes who have had difficulty paying for energy supplies in the past. I shall be blunt: it would be difficult, if not impossible, to switch to another energy

supplier who is prepared to give those people a better deal. They would certainly find it impossible to switch to any attractive deals on offer that are dependent on payment by direct debit. I suspect that many of them do not have bank accounts. That is important because in the north of Scotland, for example, the average proportion of fuel-poor households is 4 percentage points above the Scottish national average and in some areas, particularly the islands, it is considerably above that. It is a serious problem.

Those who are already energy poor are likely to benefit least from a drop in energy prices. As the Library notes bluntly put it, ''Prepayment involves a surcharge.'' It is fair to say that in some areas, although not in all, there is a premium on the standing charge rather than on the electricity itself; that is a separate matter that needs to be tackled. Utility companies say that they are required to have prepayment meters because otherwise some customers would never pay, which is the same argument that they use about disconnections. They also say that there is a considerable problem of fraud in respect of meters, and many are considering new ways of using them—rechargeable keys, for example, rather than coins or tokens. It would naive to deny that there are problems, but those customers who struggle to pay for their energy through meters get a bad deal simply because they are poor. Those who are more able to pay benefit disproportionately from the available measures.

My amendment is an attempt to pass on some of the benefits of lower energy prices to consumers who are on prepayment meters. It would be impossible to frame an amendment that would give them the same deal that is available to those most able to benefit, so it has been drafted to give them an average benefit: that is, the electricity and gas companies will be required to look at all the deals that they are offering to other customers and calculate an average price which would then be charged to those with prepayment meters. That would bring down the price of energy to those on the meters and, in a modest way, contribute to reducing fuel poverty.

The Minister may say that the amendments could be better drafted, and that this is not the right place for them. However, the issue must be addressed and more thought must be given to how we can ensure that those in this situation can benefit from lower energy prices.

Richard Page (Conservative, South West Hertfordshire)

This is a caring amendment, and I welcome the thinking behind it. I see it as an opportunity for equality of treatment of various individuals. The hon. Gentleman's remarks brought back memories of my grandmother, who has long gone from this mortal coil, putting the shilling in her gas meter in south Wales to keep the gas going as there was no electricity in those days. As you will appreciate, Mr. Sayeed, I am so much older than everybody else in this Room, so my relatives are also that much older. I remember the panic when the shilling dropped and the gas went out, and we all had a fumble in the dark. I did not, because I had no money, and I was too young to fumble in the dark.

It would be immensely helpful if, in giving the Minister the line to take in speaking to the amendment—he obviously has no independent thoughts of his own, because he is just reading out what is put in front of him—the officials could put ''Accept'' or ''Resist'' in very large letters upside down so that we can read what the his line will be. We could adjust all our arguments accordingly, either to reinforce his enthusiasm to accept or to argue vehemently why he should not resist.

The hon. Member for Angus (Mr. Weir) mentioned that the amendments have a minor problem in the phrase

''the average unit cost for electricity supplied to customers by other means of payment.''

As we know, different suppliers give a variety of payment incentives, according to their costs of collection. Costs of collection is a considerable sum, which is why a number of organisations have come together for joint collection costs of gas and electricity, and I can foresee that happening to other consumer commodities.

As the hon. Gentleman said, costs through a prepayment meter hit the poorest members of society. He did not pull any punches when he said that they were often poor payers—people who would not be given credit or who did not have a bank account. Equally, a number of elderly people have great worries about going into debt, and if they put their money in the meter, they know that they are not going to be hit with a huge bill at the end of the three-month period. I accept that, for a substantial section of society, we need prepayment meters. The poorest members of society get hit with increased costs because they are poorer, which makes them even poorer, and they get into greater difficulties and trouble.

I am thinking particularly of hire purchase. If one has independent means, one does not need hire purchase, but for people who sign up to such agreements, the loadings are always greater. A person in that position does not go out and buy a brand new Rolls-Royce; they go out and buy a battered 10-year-old used car. The hire purchase rates are so much greater on the older car than on the brand new one. Therefore that person has so many extra costs to meet out of their disposable income that they become even poorer. Some interesting studies have been carried out in the United States about how people get dragged even deeper into debt with increased costs and lower standards of living, purely because they are hit by those extra costs.

I shall be interested to hear how the Minister replies. This is a golden opportunity for him to prove that the Labour party has not forgotten its roots and is concerned about the poorer members of society, and that not all its beliefs have been abandoned. If the Government can load electricity prices in the way that they have loaded prices for renewables for all the good and justifiable reasons, surely they can do exactly the same for the poor people of this country.

Brian White (Labour, North East Milton Keynes)

Is the hon. Gentleman aware of the effect of the Utilities Act 2000, which was to reduce electricity prices for everyone, but particularly for the poorer people?

Richard Page (Conservative, South West Hertfordshire)

I am aware of the way in which electricity prices have operated over the last few years, but what has been created in pulling down prices has sown the seeds for increased electricity prices in future. It was a short-term gain that will be at a long-term cost. So often politics works on exactly that basis. Things must be got right for today's election and no one worries about the situation tomorrow. We are looking at relative costs for the wealthy or the reasonably well-off, who can afford bank accounts and to pay by direct debit, and the poor who cannot. What will this Labour Minister do about it?

Nigel Griffiths (Labour, Edinburgh South)

As the Minister with responsibility for tackling fuel poverty, I welcome the opportunity to discuss the issue. Indeed, it was an issue that first came to my attention when I was a member of the electricity consultative committee in Edinburgh 22 years ago. I have watched the welcome developments in this area. I am grateful that the hon. Member for Angus has welcomed the fact that we have reduced the number of households who suffer fuel poverty by 2 million in the past seven years. I would also be the first to agree with him that we must do more.

George Bush discovered Christianity at the age of 40 and the hon. Member for South-West Hertfordshire (Mr. Page) seems to have discovered fuel poverty after a similar length of time. People may doubt the sincerity of both of them.

Richard Page (Conservative, South West Hertfordshire)

The Minister must try to avoid stereotypes. Members on both sides of the Committee come from a variety of backgrounds and have a variety of achievements. My training and background fully qualify me to make any remark I care to about the poor and about my concern for them.

Nigel Griffiths (Labour, Edinburgh South)

The hon. Gentleman made only two mistakes. First, he had a jibe at me about reading from notes. I do not care to be provoked on these things. Secondly, many of us on Government Benches, and other hon. Members, have a long history of fighting rip-offs of poor people by electricity companies. His contribution was less rip-off and more Rip Van Winkle in going back to his late lamented grandmother.

In dealing with the substance of this important amendment, I shall address not the textual problems that the hon. Member for Angus highlighted, but the principle and effect of the amendments. He particularly highlighted the impact of fuel poverty in north Scotland, and we must all strive to narrow that gap. However, I am sure that he will know that fuel poverty in north Scotland is due to a combination of low income and high fuel consumption, which is necessary because of the climate. It is not necessarily related to pre-payment meters. I have not seen figures that demonstrate a higher use of pre-payment meters.

If he has them, I would be pleased to hear them, but I am not sure that they are available—that is not a comment against him if he does not have them.

Around the country, there are concerns about the treatment of the large number of second homes. The Government have moved in the past year to consider the council tax provision for second homes, especially those owned by more prosperous people. I am advised that there is a trend of people in second homes opting for pre-payment meters because their consumption is smaller and therefore, despite the fact that they pay a slightly higher price, their fuel bills work out cheaper.

As Minister with responsibility for fuel poverty, I point out that about 50 per cent. of those who are fuel poor are senior citizens. Only 5 per cent. of senior citizens have pre-payment meters. Therefore, the thrust of the Government's action with the utilities is wider than the issue of pre-payment meters.

Those substantial points lead me to resist the amendment. There are questions about opting for the average price of electricity and whether that will force prices up. However, I hope that the hon. Member for Angus will see that there are arguments against the amendment and other ways of tackling the problem. He will have seen a dramatic drop during his life of what I call the cut-off culture by the utilities—the abuses of the past are no longer tolerated. The pre-payment meter issue is not best tackled by his amendment.

Michael Weir (Scottish National Party, Angus)

I hear what the Minister is saying, but I am not convinced. My point about north Scotland was purely illustrative. The problem affects not only the north of Scotland—it is a problem for many urban areas, and rural areas are also affected.

I do not think that second homes are the issue. Many second homes have pre-payment meters because they are let out—that is for administrative reasons. Unless the Government are prepared to take a stand, no change will be made. The issue affects many people, and I shall press the amendment to a division.

Question put, That the amendment be made:—

The Committee divided: Ayes 3, Noes 12.

Anne McIntosh (Conservative, Vale of York)

I was almost moved by the Minister's remarks on fuel poverty and his rather stinging attack, which I thought was unwarranted, on my hon. Friend the Member for South-West Hertfordshire. I therefore hesitate to commend to the Minister the pleas that have been made on behalf of vulnerable customers by the National Consumer Council. I know that there has been a spate of cases in parts of the UK in which the provisions of the Data Protection Act 1998 were blamed for preventing social services from sharing information with the electricity company concerned. In one particular tragic case that led to the death of two pensioners. Has the Minister seen the rather lengthy, although poignant and pertinent, submission by the NCC? Is he minded to return with a clarification of that area, perhaps on Report? If he does not, perhaps we will return to the matter.

Brian White (Labour, North East Milton Keynes)

The hon. Lady mentioned the Data Protection Act. Is she aware that in many of the cases in which data protection is cited, the problem is that the administrative procedures used by the companies concerned do not take account of the Act? The Act allows people to pass on information, provided that companies' administrative procedures are in order.

Anne McIntosh (Conservative, Vale of York)

I am grateful to the hon. Gentleman for his remarks. Whether the 1998 Act is being cited spuriously, or incorrect administrative procedures are in place, it is incumbent on all of us to reach out to people who are in that vulnerable position. In my surgeries, I have been in the situation where we had to feed the meter, in some rather cold public buildings. I am not claiming the same degree of vulnerability, but we are all mindful of the scenario to which my hon. Friend the Member for South-West Hertfordshire referred.

Hon. Members on both sides of the Committee recognise that the administrative procedures are insufficiently clear. I therefore make a personal plea to the Minister to clarify those procedures. Should there be uniform procedures, or should best practice be adopted? The safety net situation should be clarified, because the NCC believes that that is necessary. Moreover, clarification is needed of the role of the social services departments and their liaison and communications procedures with the electricity companies, as well as of the procedures within the electricity companies. I agree with the hon. Member for Milton Keynes, North-East (Brian White) that citing the Data Protection Act 1998 may be a spurious defence—I do not believe that that was an intended consequence of the Act—but it would be helpful to include in the Bill what the standard best practice should be.

Nigel Griffiths (Labour, Edinburgh South)

The clause gives Ofgem a general power to consult on and, in due course, propose regulations to extend the range of debt that could be collected from a prepayment meter. I have not had a chance to study the National Consumer Council paper, but I hope that my assurance that Ofgem will

consult before proposing regulations means that the views of distinguished organisations such as the NCC, and those of hon. Members, will be taken into account.

My hon. Friend the Member for Milton Keynes, North-East rightly pointed out the data protection issues, which Ofgem is addressing following discussions with the Department for Constitutional Affairs. It has clarified the application of data protection, which I discussed briefly with Richard Thomas, who is taking a practical approach to the matter, as the Act intended; we do not want people to prevent information from being exchanged for overly bureaucratic reasons. We do not want another tragedy such as the one involving two old people, and I understand that the utility has given assurances in that respect. However, we will never know whether that case centred on a data protection issue and whether anything could have been done about that.

I repeat my assurance that the clause gives Ofgem the general power to consult on the proposed regulations, which will allow informed opinion such as that of the NCC and hon. Members to be taken into account. Such regulations would be subject to the approval of the Secretary of State and due parliamentary process. I hope that that is reassuring enough for hon. Members to support the clause.

Anne McIntosh (Conservative, Vale of York)

I am disappointed by the terms of the Minister's general assurance. I plead with him to look kindly on a form of words that would have the support of the NCC and Citizens Advice, and perhaps that of some of his hon. Friends. There are deficiencies in the present procedures, and an appropriate amendment on Report would be an opportunity to close that loophole.

Question put and agreed to.

Clause 177 ordered to stand part of the Bill.

Clauses 178 and 179 ordered to stand part of the Bill.

Clause 180 - Assistance for areas with high distribution costs

Michael Weir (Scottish National Party, Angus)

I beg to move amendment No. 36, in

clause 180, page 136, line 30, at beginning insert—

'( ) There shall be an over-riding principle that no area of the United Kingdom shall be subject to higher distribution charges than any other.'.

This a small, but vital, amendment. It will be no surprise to the Committee that this is a matter of great concern to the north of Scotland, and I declare an interest as a consumer in that area. The amendment might also have an impact on many other remote areas in the UK. It may seem odd that a Scottish nationalist should table such an amendment, but if BETTA comes into being, there will be a UK-wide electricity generation and distribution system, and we are nothing if not pragmatic.

The regulatory impact assessment, which hon. Members will have read, gives a good review of the background of the hydro benefit. The original aim was to restrict the otherwise huge difference in the costs of distribution. In northern Scotland the cost is vastly greater than in any other area. The Monopolies and Mergers Commission concluded in 1995 that the principle of hydro benefit was

''in the public interest because it protects consumers, and especially those in rural areas, in respect of the prices charged for electricity.''

Unfortunately, Ofgem concluded last year that those licence conditions should be removed in order to comply fully with European law. That echoes the Committee's earlier discussions, since part 3 of the Electricity Act 1989 requires the regulator to comply with European law, irrespective of its duties and principal obligation to protect consumers' interests.

I should give credit where it is due, and acknowledge that the Government have reacted to the worries that were raised about the matter in Scotland and inserted this clause in the Bill in the other place. If they had not done so, we would have had the problem of high distribution charges being imposed, which would be very serious for northern Scotland. For example, as detailed in the regulatory impact assessment, some 13 per cent. of households in Scotland meet the Scottish Executive's definition of fuel poverty but, as I mentioned earlier, the incidence of fuel poverty in the 16 local authorities that lie wholly or partly within the hydro area is approximately 4 per cent. above the Scottish average, and in some areas it is much greater than that.

I am concerned, however, that the amendment does not enshrine in the Bill the principle that distribution charges should always be equalised across all parts of the UK—the so-called postage stamp principle. Perhaps, with the way the Post Office is going, we should look for another name, but that is a different issue.

In the highlands and islands of Scotland, distribution is costed at £225 per customer, compared to the area with the next highest cost of £131 per customer. However, the benefit is not enshrined for all time, but only for a limited period. We shall return to that point on the next group of amendments. The Bill enables the Secretary of State to put that system into force, but it does not prescribe that he must do so. Given the importance of the issue, particularly in the north of Scotland, there is too much uncertainty in the clause. The amendment would ensure that the principle of postage stamp distribution was enshrined in the Bill so that it was no longer discretionary, but mandatory, to protect those in northern Scotland against hugely higher costs.

Nigel Griffiths (Labour, Edinburgh South)

The amendment is unwelcome because it would make some customers pay considerably more for their electricity than at present. The effect of price equalisation throughout the country is that some energy users are currently obliged to subsidise others. The alternative approach—the hydro benefit replacement scheme in clause 180—reflects the fact that distribution costs in northern Scotland are a

special case, being much higher than those incurred in any other region of Britain. We believe that it is a proportionate response to the situation facing consumers in the north of Scotland, particularly as its effects on the prices paid by consumers elsewhere are likely to be minimal.

There are also a couple of technical difficulties with the amendment. The clause enables the Secretary of State to make a single order with respect to the area with the highest distribution costs. That is incompatible with the amendment's vision of price equalisation, implying that the Secretary of State should exercise a much broader power than that accommodated for in clause 180. Another effect of the amendment would be to connect the distribution price methodology in Northern Ireland—where responsibility for energy is devolved, and where there is a separate energy market—with the future British market.

Richard Page (Conservative, South West Hertfordshire)

I have read the explanatory notes to the clause with great interest, and the Minister has made various statements, and it is fairly obvious that people in the south, for example, or other areas nearer generation will have to subsidise those further away. Has he got any handle on what the costs will be and what the difference will be in what people have to pay? England already gives more support to Scotland through the Barnett formula, because it is further away and so on. That must feed through into various costs being lower for Scottish people.

Jonathan Sayeed (Conservative, Mid Bedfordshire)

Order. This is a long intervention.

Richard Page (Conservative, South West Hertfordshire)

It is exceedingly long, for which I apologise, but I am trying to give the Minister a bit of time to answer, so I hope that you will suffer it in this case, Mr. Sayeed.

The Minister also talked about the distributor with the highest area costs, but the explanatory notes talk about

''costs that are significantly higher than''

those in

''other areas''.

Are we talking about just one area, or could a number of areas benefit from an order?

Nigel Griffiths (Labour, Edinburgh South)

I am advised that the distributed cost, if it were spread, would be about £1 a year. That relates to only one area, if we considered the north in isolation. It is up to the hon. Gentleman to decide whether he can sell a price increase to his constituents on that basis. We believe that there are other ways to tackle the issue which do not appear in any way to penalise anyone for being in an area where electricity is less costly to produce. However, we recognise the steps that have already been taken to try to minimise the difference in electricity prices throughout the country, taking account of the infrastructure required to supply electricity in rural areas with a dispersed population. I am sure that more steps could be taken to improve the balance even further, but this proposal is not one of them.

Michael Weir (Scottish National Party, Angus)

I have listened to the Minister and I take on board some of his points. I am not sure whether the hon. Member for South-West Hertfordshire was speaking in support of the amendment. If he wants to discuss the Barnett formula, that could be another interesting debate, but I suspect that it is not one for this Committee. I accept that there are difficulties with the amendment as currently worded. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Michael Weir (Scottish National Party, Angus)

I beg to move amendment No. 37, in

clause 180, page 137, line 28, leave out subsection (11).

Jonathan Sayeed (Conservative, Mid Bedfordshire)

With this it will be convenient to discuss amendment No. 38, in

clause 181, page 139, line 7, leave out subsection (11).

Michael Weir (Scottish National Party, Angus)

The object of the amendments is to remove subsection (11) in clauses 180 and 181 and thus to remove the time constraints and review periods. Our previous debate focused briefly on the nature of the hydro benefit and its successor, and I do not intend to comment further on that subject, other than to ask the Minister why there is a review every three years.

Clause 181 deals with the slightly different but related problem of high transmission costs. Again, that is a particular problem in the north of Scotland. Both energy companies in Scotland, Scottish Power and Scottish and Southern Energy Group, have said that if the transmission arrangements for England and Wales are imported to Scotland, that will lead to much higher charges for Scottish generators. Scottish and Southern, in particular, is concerned about the possible impact of transmission charges on its area.

There have been arguments as to whether the charge should be made cost-reflective. I understand that to be Ofgem's position and that it is shared by the National Grid Company. The argument is that transmission costs should fully reflect the costs of transmission, if that does not sound too convoluted. I submit that it is a fairly extreme position and, if adopted, would mean that generators in the north and other remote areas could face very substantial transmission costs, perhaps up to four times current costs. Such an increase would kill the renewables industry stone dead, as many of the potential sites for those schemes are in remote rural areas. It may interest the hon. Member for Western Isles (Mr. MacDonald) to know that the cost of connecting schemes in the Western Isles under the cost-reflective principle could be six times the present cost of transmission. That would be fairly disastrous.

Again, to be scrupulously fair, I must point out that the Government have, in clause 181, reacted to that concern. I have the same concerns about that as I have about clause 180, namely that it is permissive rather than mandatory. However, the reason for the amendment is to find out why subsection (11) takes the form that it does. As it is worded, the benefit would be for five years only, possibly renewable for a further five years to a maximum 10-year period. Given the nature of the business, it seems that the relative cost of

transmission is unlikely to fall greatly in the foreseeable future. Why is there such a time constraint in the subsection?

Calum MacDonald (Labour, Na h-Eileanan an Iar)

The amendments raise important questions, to which I hope the Minister will respond. Both clauses are very welcome in the north of Scotland. The first replaces the longstanding hydro benefit, which has been a necessary part of the scene since the introduction of electricity, and even survived privatisation under the Conservative Government. It would be regrettable if the hydro benefit were to disappear because of a European requirement, so I am glad that the Government listened to the case that was put to them and came up with clause 180, which finds a way round the problem.

The measure is necessary because the geography of the highlands and islands means that distribution charges are inevitably extremely high, so something like hydro benefit will always be needed. That being the case, I question why a review is required every three years. The geography is not going to change and the population is not likely to increase massively—although it is increasing, unlike that in the rest of Scotland. However, the conditions that gave rise to the need for the hydro benefit in the past, and to the need for this clause now, are unlikely to change substantially, so it would be useful to hear from the Minister why there is a requirement for a review at such frequent intervals.

Turning to amendment No. 38, I can tell the Committee that clause 181 is particularly welcome in the north of Scotland. It will benefit not only companies wanting to set up renewables projects in the north of Scotland, but the whole country, which will look to the north to supply a large amount of renewable energy that will enable the whole country to meet Government targets over the next 10 or 20 years.

Without the clause, renewables would be in danger of being priced out of the north of Scotland. It is therefore very welcome. However, precisely because the need for the measure is unlikely to change in the next 10, 20 or 30 years, I repeat that it would be useful to know why the Government consider it necessary to have a review after five years, and why it is necessary to for this to be a sunset clause, with the requirement ending after 10 years.

Michael Weir (Scottish National Party, Angus)

It strikes me that what the hon. Gentleman said about reviews occurring every five years is wrong. My understanding is that the clause can last only for 10 years—five years, then another five years—and that there is no provision for it to continue thereafter.

Calum MacDonald (Labour, Na h-Eileanan an Iar)

That is my understanding as well. My point was not that there will be a review every five years, but that a sunset provision will mean that after 10 years the clause falls away. My concern is not simply a self-interested constituency concern arising from the effect that the provision might have on the north of Scotland; I think that there is a national—a

UK—case for the clause because it will encourage and allow renewables generation to take off in the north of Scotland.

If a sunset provision is embedded in the clause, companies that may be thinking of investing tens, or perhaps hundreds, of millions of pounds in developing renewables projects in the highlands and islands—and expecting a 20-year payback time on that investment—will worry that the clause will radically change the circumstances in which they will be making their investment 10 years hence.

To sum up, there is concern not only about the provision for reviewing the clause after five years, but, even more so, about the 10-year sunset provision. It is at odds with the Government's desire to encourage companies to invest in renewables, particularly in the highlands and islands, and it undermines the good work that the clause would otherwise do.

Anne McIntosh (Conservative, Vale of York)

I congratulate the hon. Member for Angus on moving the amendment so eloquently. Mention has been made of European Union implications for this matter. I bring to the Minister's attention the fact that there will be energy provisions in the EU constitution. The Prime Minister has a passing conversational knowledge of French, but I am slightly concerned because I do not think that his knowledge of a French legal text is quite that of a juriste linguiste or a fully qualified EU translator, so I shudder to think what he has signed us up to. Will the Minister tell us the precise implications of EU law as it impacts on clause 180 and the amendments?

I am cognisant of the fact that the clause relates particularly to the ongoing so-called hydro benefit scheme. One would not want to detract from the background that, as the Minister mentioned, pertains in Scotland—low income, poor climate and a high energy supply cost—but would the Minister be minded to apply the clause and the amendments in other locations? Obviously I make special reference to North Yorkshire, not so much the Vale of York but the hillier parts on either side, where the cost of distributing and supplying electricity is much higher. In particular, if an application were made for undergrounding transmission of electricity, would that fall under the provisions?

Desmond Turner (Labour, Brighton, Kemptown)

As the debate has moved on to clause 181 as a result of the amendment tabled by the hon. Member for Angus, I speak in support of the point made by my hon. Friend the Member for Western Isles. Although the clause is essential to protect renewable energy from the impact of higher transmission charges resulting from a locational transmission charging regime, unfortunately, as currently drafted, it contains sunset provisions, and the implications of that are clear.

I understand that this clause was inserted by their lordships. I suggest to the Minister that the Government consider tabling amendments on Report to deal with the issue of the sunset clause. As my hon. Friend the Member for Western Isles said, the provisions will last for a maximum of 10 years, because it is stated that schemes will run from the beginning of

the operation of the clause. Therefore, if an installation does not get going for a couple of years, it will receive only eight years' protection at maximum, whereas the capital payback period that investors will have to consider in relation to renewable energy generation will be 20 years. The Committee has already agreed that if we are to promote the Government's policy on renewable energy, it is essential for investors to be given confidence. If investors are to be confident, they must know that there will be consistency in market conditions over a sufficiently long time scale for them to calculate their investments. Without that consistency, there is the real possibility that investors will be frightened off and will not invest.

I therefore want to reinforce my hon. Friend's point and ask the Government urgently to review the sunset provisions in clause 181(10) and (11); otherwise they could devastate the prospects of renewable energy deployment in the north of Scotland, which is essential if the Government's policy on climate change is to be achieved.

Nigel Griffiths (Labour, Edinburgh South)

These are important matters, and the new scheme has a number of benefits that I want the Committee to consider carefully. The cost of the new scheme, unlike hydro benefit, will not fall on just one company; it will be borne by all electricity suppliers, and all suppliers will be treated in the same way. That is why the Government are confident that the new scheme is not contrary to EC law, which is another important point that was raised.

I shall deal with the sunset clauses in a moment. I will first address the points made by the hon. Member for Angus and my hon. Friend the Member for Western Isles, by setting out the case for a three-year review, rather than a review after five years or longer.

Recent evidence and experience shows that the electricity market is a changing market and that it will probably continue to change. That change will affect distribution price controls and the level of distribution costs relative to other areas, and it will reflect the impact of BETTA and Ofgem's plans to move transmission and distribution charges on to the same basis within three years. The clause gives the Secretary of State the power to take all those aspects into account when the scheme is reviewed in three years. I am advised that if we removed that power, we would remove an important mechanism by which we intend to ensure that the future level of subsidy is appropriate. No one is in any doubt of the value of the subsidy to date, and my hon. Friend the Member for Western Isles, who has taken a keen and expert interest in the matter over many years, is aware of its value as well as the complexity of the issues before us.

My hon. Friend rightly highlighted the issue of sunset clauses. The power set out in the Bill is designed to give a helping hand to renewables while the industry gets on its feet and gains commercial respectability and the confidence of investors. A 10-year period has been set in which to achieve that; the power is not intended to be an ongoing means of support for renewables. The

Government have already planned for substantial support for renewables through the renewables obligation, which hon. Members will be pleased has recently been extended to 2015.

Desmond Turner (Labour, Brighton, Kemptown)

The Minister is right in stating that the renewables obligation lasts until 2015. However, the current value of the renewables obligation to a renewables generator is approximately half a penny per kilowatt-hour on top of the wholesale price. The potential difference in transmission charges without protection would be about three times that, so, unless something changes, the benefit of the renewables obligation will be nullified.

Nigel Griffiths (Labour, Edinburgh South)

In response to my hon. Friend's earlier point, I said that the provision is designed to give comfort to renewables and those investing in them over the next 10 years. The argument that it should be longer has not been accepted by the Government, hence my reference to the parallel help given through the renewables obligation. The Government believe that setting in stone a longer period than 10 years is neither practical nor desirable for a fast-evolving market.

Future Ministers and Governments will closely monitor the trend towards the increasing use of renewables, which we all support. If further provision has to be made, so be it. However, our intention to provide support for 10 years focuses the commercial sector on ensuring that it has commercially viable products, which I believe it will increasingly have as technologies improve, rather than giving the signal that such subsidies might continue beyond that.

Calum MacDonald (Labour, Na h-Eileanan an Iar)

Just to clarify, the Minister is saying that any renewable development—for example, a wind farm—that is set up and starts to operate in the north of Scotland over the next two or three years will suddenly find in 10 years' time that the cost of transmission and the charging regime will markedly increase compared with that for a wind farm off the coast of Northumbria or Cornwall.

Nigel Griffiths (Labour, Edinburgh South)

No, I can tell my hon. Friend that that is not what I am saying. Given technological developments and investment in the transmission and distribution infrastructure over the next 10 years, the cost differential may not be of the order that someone has suggested to him.

Desmond Turner (Labour, Brighton, Kemptown)

My hon. Friend has introduced a considerable number of uncertainties, which investors will have to take into account. The only thing that is set in stone is that the protection will end in 10 years.

Nigel Griffiths (Labour, Edinburgh South)

What is set in stone is the fact that investors will have protection over the next 10 years. If my hon. Friend can think of any other area of commercial activity in which there will be such certainty over the next 10 months—never mind the next 10 years—I would be interested to hear about it. However, I am not inviting analogies, because safeguarding energy production and using renewables are key Government priorities.

No decision has been made as to whether the power will be necessary. However, as my hon. Friend knows, any decrease in transmission charges would be worth much less to a renewables generator than the renewables obligation. The figures that my hon. Friends and other hon. Members have floated are very much hypothetical, and although that does not detract from their value, they are extreme. The cost of energy production and distribution in different areas over the past five or 10 years has changed dramatically, and given developments in technology, we can expect to be equally surprised by the direction that things take in future. I take an optimistic view, and I hope that I can encourage hon. Members to do the same.

Anne McIntosh (Conservative, Vale of York)

I have listened carefully to the Minister's remarks, but I would like to repeat the scenario that I put to him earlier. We are talking about a particular renewable source of energy in Scotland, but would his Department look favourably on, for example, an application for a wind farm in Vale of York or elsewhere in North Yorkshire? In such a scenario, there would have to be transmission lines connecting the onshore or offshore wind farm to the grid. Would his Department look favourably on extending the provisions to such a location in North Yorkshire?

Nigel Griffiths (Labour, Edinburgh South)

Applications from any part of the country would have to be viewed in relation to the powers in the clause, but we would, of course, have to revisit it if it was deficient in terms of providing powers to undertake desirable developments in any part of the country.

Andrew Stunell (Liberal Democrat, Hazel Grove)

On a point of order, Mr. Sayeed. We appear to be discussing clause 181, but I understand that we are considering clause 180 and its associated amendments. The issues are quite dissimilar, and I would like some advice before we proceed.

Jonathan Sayeed (Conservative, Mid Bedfordshire)

I am happy to advise the hon. Gentleman. Amendment No. 38 refers to clause 181, so I have permitted the discussion to go wider than clause 180. There will be an opportunity for a clause stand part debate on clauses 180 and 181.

Andrew Stunell (Liberal Democrat, Hazel Grove)

In that case, I shall confine my remarks to clause 180 and hope to catch your eye when we come to clause 181.

It is worth making it clear that clause 180, which refers to areas with high distribution costs, does not contain the sunset provisions that hon. Members have mentioned. It is important to make a distinction between the two clauses, which cover different areas and have different provisions. The hon. Member for Angus has ''leave out subsection (11)'' in both his amendments, but the clauses do not deal with the same issues.

It is necessary to include safeguard provisions for those with high distribution costs, but in the wider strategic restructuring of the United Kingdom's energy industry, which is necessary over the coming decades, we must ensure that an increasing proportion

of our generating capacity is nearer to the areas of largest consumption. One must therefore retain in the system some sensible location signals so that that process is encouraged through market forces.

Although we fully accept the need to protect an area with a special geographical problem, it is important to ensure in the long term that the energy generated in this country is closer to the south and south-east of the country—I mean both the United Kingdom and England—where there is the fastest increase in energy consumption. I hope the Minister recognises that, in reaching a special arrangement, as clause 180 does, we must not lose sight of the need to provide appropriate location signals.

Calum MacDonald (Labour, Na h-Eileanan an Iar)

In contrast to the point of order, the hon. Gentleman's remarks have strayed on to the territory of clause 181. Regardless of where the energy is generated, clause 180 is about the costs of distribution to consumers in the highlands and islands, which is a huge geographic area with a small population. Whether the energy comes from the highlands and islands or is pumped from the central belt, there is still a high distribution cost that must be offset by a mechanism such as a hydro benefit or the one in clause 180.

Jonathan Sayeed (Conservative, Mid Bedfordshire)

Order. Before the hon. Member for Hazel Grove responds, I am grateful to the hon. Member for Western Isles for doing something that I should have done, which is to remind the hon. Gentleman that we have not yet come to the stand part debate on clause 180, on to which his discussion and comments have strayed. If he confined his comments to the amendment, I would be most grateful.

Andrew Stunell (Liberal Democrat, Hazel Grove)

Thank you, Mr. Sayeed. I have been quite properly hoisted by my own petard, so I will conclude and seek to catch your eye later.

Michael Weir (Scottish National Party, Angus)

I have listened to the Minister's response and I am not satisfied. The hon. Members for Western Isles and for Brighton, Kemptown (Dr. Turner) made very good points about the clauses, but I have heard nothing from the Minister to explain why we have the reviews when we do.

The hon. Member for Western Isles rightly stated that things are unlikely to change in the foreseeable future. Although the Minister talks about the changing costs of energy, the relative costs between the north and the south are unlikely to change very much because the same costs of distribution and transmission in the north will remain whatever the overall price of energy.

The sunset provisions and clause 181(11) in particular are of great concern. I was interested to hear what the hon. Member for Brighton, Kemptown said about the renewables obligation, but if I heard him correctly it runs out in 2015. That is just 11 years away, so we could have a problem with it and the scheme in subsection (11) running out at about the same time. That could be disastrous for any renewable energy projects that are up and running. Many of those projects will take a long time to become established and produce electricity.

The sunset provisions are misguided. This is not, as the Minister suggests, a case of commercial activity only; it is an important strategic industry for the future, which must be treated differently from an ordinary commercial industry if we are to rely on it. I am not satisfied with the Minister's answer and I want to press the amendment to a Division.

Jonathan Sayeed (Conservative, Mid Bedfordshire)

I would be grateful if the hon. Gentleman assisted the Committee. Does he wish to press amendments Nos. 37 and 38 to a vote, or only one of them?

Michael Weir (Scottish National Party, Angus)

I would like to press each of them, because they are different.

Jonathan Sayeed (Conservative, Mid Bedfordshire)

For the information of the hon. Gentleman, the Division on amendment No. 38 will happen once we reach clause 181, after Government amendment No. 198.

Question put, That the amendment be made:—

The Committee divided: Ayes 1, Noes 15.

Anne McIntosh (Conservative, Vale of York)

I seek clarification from the Minister of the true electricity distribution costs by region. There is some useful relevant material in the Government's regulatory impact assessment. Page 130 shows, surprisingly, that the average cost of distribution in the north of Scotland is not much greater than that in the south of Scotland, which in turn is not much greater than that in, say, Yorkshire.

Against that background, and bearing in mind the renewables obligation that the Government have imposed on utility companies and electricity companies in particular, and given that the figure for network length in the north of Scotland is a staggering 66.4 km per 1,000 customers—more than double the figure for the south of Scotland and probably almost three times that for Yorkshire—does the Minister share my surprise that the cost of distribution for the north of Scotland is not greater than what is shown in the table on page 130?

Nigel Griffiths (Labour, Edinburgh South)

No. I do not share the hon. Lady's surprise, for several reasons. There is a long history to this. The previous provisions covering what we call hydro benefit go back to 1940, so there is a long history of close Government involvement in ensuring the cost-effective production of electricity in the rural north of Scotland, and, indeed, the part of the country that I was brought up in, the rural south of Scotland. That is one relevant factor. Obviously, the co-operation between the Government and the private sector introduces other factors that influence the cost to which the hon. Lady referred, so it is perhaps not as strange to me as it may be to others.

I very much welcome the cost-effective production of electricity in Scotland, but we do know that the greater distances and problems of access—as well as the problems of climate that mean that power lines, for example, are subject to much more severe weather and storms than anywhere else in the UK—bring costs with them. I would be the first to applaud the work done by the distributors and transmitters in ensuring that disruption continues to be minimised and that electricity is available at a cost-effective price.

Question put and agreed to.

Clause 180 ordered to stand part of the Bill.

Clause 181 - Adjustment of transmission charges

Jonathan Sayeed (Conservative, Mid Bedfordshire)

With this it will be convenient to discuss Government amendment No. 199.

Anne McIntosh (Conservative, Vale of York)

Would a proposal to adjourn be appropriate? I will speak for more than two minutes, but I do not know what the procedure is.

Jonathan Sayeed (Conservative, Mid Bedfordshire)

The hon. Lady can start.

Anne McIntosh (Conservative, Vale of York)

I would prefer to have the benefit of hearing the Minister speak to the amendment before I respond.

Nigel Griffiths (Labour, Edinburgh South)

The amendments relate to the adjustment of transmission charges for renewable generators and were tabled in response to Opposition amendments made in the other place. Amendment No. 199 is straightforward, as it simply brings the current drafting of the clause in line with parliamentary convention. The Government's original intention was

to commence the power under the clause using the negative procedure, which was believed to be adequate and appropriate for such a power. That was overturned by an Opposition amendment in the other place, which replaced ''negative'' with ''affirmative''. It is parliamentary convention that an order is subject to the negative procedure, but that the power to make an order is subject to the affirmative procedure.

Amendment No. 198 also seeks to tidy up the revised drafting in light of an Opposition amendment. Subsection (7) requires the Government to publish a draft of the scheme allowable under the clause, together with an impact assessment, and to consult on the scheme. The Opposition also inserted subsection (8), which requires the Secretary of State to publish an annual report on the ongoing costs of any scheme that is established. The amendment makes the legal effect clearer and clarifies the fact that the consultation on the power could take place before the section is

commenced. It also removes the requirement for the Secretary of State to publish an annual report on the ongoing costs of any scheme made under the power, which is believed to be unnecessarily bureaucratic.

The cost of any scheme to consumers should not change substantially from year to year, and will be made public via an impact assessment if a scheme is made. Any scheme will have a total duration of only five years, after which another order would need to be made to extend it or to create another scheme for a maximum of another five years. At that point, the costs and benefits of any extension or replacement scheme would be published. We publish many annual reports, and an annual report in this area would only increase bureaucracy while serving no purpose. The cost would also have to be met from the public purse. It is not necessary or justifiable.

It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned till this day at half-past Two o'clock.

Standing Committee B

Clause 181 - Adjustment of transmission charges

Bill O'Brien (Labour, Normanton)

I remind the Committee that with this we are discussing Government amendment No. 199.

Anne McIntosh (Conservative, Vale of York)

I welcome you back to the Chair most warmly, Mr. O'Brien; it is a pleasure to see you. Before the Committee adjourned this morning, we were hoping for more illumination from the Minister on the background to the amendments. I would like to refer to his ministerial colleague's letter to the Committee—[Interruption.]

The Chairman: Order. I am trying to listen to the hon. Lady.

Anne McIntosh (Conservative, Vale of York)

I am referring to the Minister for Energy, E-Commerce and Postal Services, who is a very busy Minister. It is nice that we have weaned him off his laptop for at least the next hour or so. He was kind enough to write to the Committee on 3 June to explain some of the background to the amendments. Without going into a clause stand part debate, which I hope will be allowed shortly, I shall say why I prefer the original text, which the Government amendments will strike from the Bill.

Amendment No. 198 will remove clause 181(7) and (8), but I believe that the requirement in those subsections should be imposed on the Government. The Minister spoke briefly this morning about the cost of the requirement. He would be the first to accept, because we have said this at length in this Committee and it has been said from the top to the bottom of the

Conservative party on every possible occasion, that we are wedded to deregulation. In fact, the current deregulation provisions were introduced by the last Conservative Government. The Minister need have no concern in that regard. However, I cannot believe that the cost of a requirement to draft and prepare an annual report would be of such an order that it would trouble his Department.

In the interlude following the adjournment, I was fortunate enough to hear the Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster say that every regulatory office has been instructed by the Government to prepare, for every regulation and Bill, a regulatory impact assessment like the one before us this afternoon. They are probably not all so extensive. However, I cannot see in this RIA what, in the view of the Department of Trade and Industry, the precise cost of preparing an annual report would be, so it would be most helpful if this Minister told us.

I would like to take issue with a couple of the Minister's other remarks. He did not like the fact that the Lords amendment referred to an affirmative resolution. That is in the context of amendment No. 198. I believe that, if scrutiny stands for anything—it is incumbent on Members of Parliament, whatever position we hold and whether or not we are part of a legislative scrutiny Committee, to ensure that it does—the affirmation resolution procedure provides much more opportunity for scrutiny, a matter that we have pursued in the context of other Bills. The negative resolution procedure is not subject to the same scrutiny and I am disappointed that the Minister is minded to reverse that decision. I hope that he will see fit to stick with the original wording.

It is amazing that I have found three issues in the Minister's short remarks with which I disagree, without even trying; I am not usually so disagreeable. The general tendency—[Interruption.] I shall ignore such remarks from a sedentary position. I shall not be baited. The Minister said that the tendency was for energy prices to decrease, but the thrust of every representation that has been made to me, and a careful reading of the Department's RIA, point out clearly that the tendency is for energy prices to increase. I should be interested to know on what factual evidence the Minister reached his conclusion.

In the words of the Minister for Energy, E-Commerce and Postal Services, the amendments would strike out the requirement for an annual report, which I find deeply regrettable and disappointing, as it won the support of the majority of the House of Lords. The Minister, in his letter to the Committee of 3 June, said that the Government's amendment

''does not seek to alter in any way the spirit of the original amendment made in the Lords, but simply seeks to improve upon its drafting.''

I hope that the Committee is clear that what is proposed is a direct contravention of that statement, as the amendment would reverse the requirement for the publication of a report by affirmative resolution procedure making it a negative resolution procedure.

The Minister's letter states that the Government are seeking to overturn the requirement for an annual report,

''as it is considered to be an unnecessary burden on the grounds that we do not believe that the cost of the scheme to consumers will change significantly from year to year and the costs of any scheme will be laid out at the time of applying for it in an impact assessment.''

The Minister continued:

''It is also worth noting that any scheme can only have a total duration of five years''

and it can be extended for another five years after that, which is already 10 years. In the interests of transparency and close scrutiny, it is advisable to have an annual report. I await further clarification from the Minister, because there is an assumption that an annual report is not needed, and because earlier he referred to the cost as excessive. What is the cost of preparing an annual report? I should also like to know the basis on which the Minister concluded that energy costs would go down, whereas all the evidence is that they will go up.

Andrew Stunell (Liberal Democrat, Hazel Grove)

The amendments relate to three subsections of the clause and there are different considerations to be made in respect of each of them. The first of the two amendments would remove subsections (7) and (8) and substitute a new subsection (7). From the Liberal Democrats' perspective, there is no objection to the inserted words as a replacement for subsection (7), as a sensible and useful tidying-up job. However, we object to the removal of subsection (8), and the hon. Member for Vale of York (Miss McIntosh) made a number of the points that I would have made about needing to keep track of what the Secretary of State is up to.

It is a constant theme of mine, particularly with energy matters, that only so much can be done by announcement and slogan, but real progress is monitored by seeing reports of what has happened and how a scheme is proceeding. I understand the reasoning in the letter that the Minister circulated to us that, in any case, the scheme can last for only five years, but Parliaments last for five years and that does not mean that we do not expect to hear from Ministers in the meantime. That is not the best argument that I have heard for removing an accountability proposal. Therefore, although the new wording of subsection (7) is fine, the absence of wording for subsection (8) is a difficulty.

Amendment No. 199 tinkers with the words of subsection (14), and the Minister has contrived to create a misunderstanding between my interpretation and that of the hon. Lady. If I am reading the amendment correctly, the subsection would read: ''The power to make an order containing provision authorised by this section is subject to the affirmative resolution procedure.'' Therefore, it seems to me that the order would be subject to affirmative resolution procedure, but the hon. Lady has put forward an equally plausible argument that it would mean exactly the opposite.

It would be helpful if the Minister would tell us whether the subsection is as the House of Lords wanted or whether he has advertently or inadvertently

reversed that decision. His letter took a good deal of reading, and I fully understand why the hon. Lady had a different interpretation from mine. I want to hear from the Minister a better reason for omitting subsection (8) from the Bill, and I want clarification about the precise intention of subsection (14).

Laurence Robertson (Conservative, Tewkesbury)

I welcome you back to the Committee, Mr. O'Brien. I shall be brief because, as ever, my hon. Friend the Member for Vale of York made a comprehensive speech and advanced many reasons to resist the Government's amendments. The fact that the clause is a diversion from the free market—I am not criticising it for that reason—through the adjustment of transmission charges means that there should be a report about the charges and costs of the scheme. That is not unreasonable. There is a requirement on many authorities, including local and police authorities, to produce reports and strategies. One wonders how they deliver services when they have so many reports and strategies to produce.

Given the enormous number of civil servants amassed by the Government, I am sure that they can publish a report on the matter. The adjustment of transmission charges is an important issue. It is not asking too much for a report to be produced. Therefore, I am persuaded to vote against the amendment and shall ask my hon. Friends to do the same, unless the Minister comes up with a more convincing argument in his winding-up remarks than he did in his opening remarks.

Nigel Griffiths (Labour, Edinburgh South)

I am puzzled. An amendment was made in the other place that was supported by both Opposition parties and opposed by the Government. We have subsequently reconsidered it and accepted it.

Amendment No. 198 will improve the drafting of subsection (7), which was added on Third Reading by the Opposition. It will also allow the consultation on the power in the clause to take place before the section is commenced. It removes subsection (8), which was inserted by the Opposition to place an annual reporting obligation on the Secretary of State in relation to any scheme. That is the only difference between us.

We have accepted the change from negative to affirmative, but we do not accept the additional bureaucracy of yet another annual report. I meet few parliamentary colleagues on both sides who read annual reports. I recognise the value of some of the key annual reports, but others are not studied in detail by the Opposition. The hon. Member for Vale of York asked how much it would cost the public purse to issue a report each year. My answer is too much.

The reason is fairly straightforward. The Opposition now want another annual report and yet another set of regulations. This is yet another piece of bureaucracy that they are trying to force on us. If I had some faith that they would do more than they did with the 3,100 or so regulations that were introduced last

year, I might believe that they were scrutinising the legislation when they sounded off about red tape. Yet of those regulations the Conservatives objected not to 3,000 of them or indeed to 300 of them, but closer to 30 of them. The biggest chunk of those 3,100 regulations related to road closures, yet the Opposition could not be bothered to get up, and they opposed only 42 of them. I therefore want a cast-iron guarantee.

Laurence Robertson (Conservative, Tewkesbury)

On a point of order, Mr O'Brien. Is this really relevant to what we are discussing?

Bill O'Brien (Labour, Normanton)

That is not a point of order for me, but a matter for those who respond to the Minister.

Nigel Griffiths (Labour, Edinburgh South)

If I was convinced that the Opposition, in wanting to bolt into this Bill the additional bureaucracy and cost to the taxpayer of producing a report, would not then add it to the list of so-called crimes of bureaucracy committed by this Government, I might accept the amendment.

Brian White (Labour, North East Milton Keynes)

I serve on the Joint Committee on Statutory Instruments and therefore read them all, so will my hon. Friend the Minister explain why the Tories never turn up to the Regulatory Reform Committee if they are so committed to anti-bureaucratic measures?

Bill O'Brien (Labour, Normanton)

Order. We are moving away from the spirit of the amendment.

Nigel Griffiths (Labour, Edinburgh South)

I do not want to add any unkind remarks or politicise this in any way. I am grateful to you, Mr. O'Brien, for allowing me to return to the substance of the debate.

Amendment No. 198 does not seek to alter the spirit of the original amendment made in the House of Lords, except to remove the annual reporting requirement on the Secretary of State. It will reinstate the ability to consult on the use of the power before it is commenced. The Lords made no objection to consultation before then. We believe that the power was accidentally removed by the Opposition amendment. Perhaps hon. Members might like to correct me and tell me that they will table a better amendment on Report. Our amendment simply cleans up the drafting put forward by the Lords.

Amendment No. 199 amends subsection (14), which states that the power will be commenced through an affirmative resolution; it is a drafting change to bring the subsection into line with parliamentary convention, which we are happy to endorse.

In short, we are determined to ensure that the amendments give practical purpose to one of the amendments that was not initially included in the Bill, but which the other place suggested as an improvement. On the question of the annual report, we do not intend to go down the road of producing even more paper and bureaucracy. Even if that reply has not satisfied the Opposition, I hope that it satisfies my hon. Friends.

Question put, That the amendment be made:—

The Committee divided: Ayes 14, Noes 4.

Andrew Stunell (Liberal Democrat, Hazel Grove)

I have had a couple of false starts on this, so I shall try to get it right this time. This clause is an important gateway to developing renewable projects and I shall certainly support it, despite the changes that have been made. However, the clause is nevertheless very limited in what it can achieve, with its references to particular areas of the United Kingdom and the short periods of time for which the schemes can be enforced. That was the subject of a number of contributions to this morning's sitting, and a number of Government Members powerfully made the point that it will take longer than 10 years for a scheme to come to fruition and mature. The renewable period of five years also introduces another layer of uncertainty and unpredictability, which makes investment more difficult to achieve.

The Minister rather brushed away the differences in the benefit to be achieved by a scheme from the renewables obligation on the one hand and the benefit to be achieved by the operation of clause 181 on the

other. There is, in fact, a very substantial—some might say huge—differential in benefit to schemes under the renewables obligation and under clause 181. The sheer cliff that schemes being introduced under clause 181 will face at the end of their five or 10 years will be a major handicap to getting schemes running as the Minister, and, I think, hon. Members from both sides of the Committee would want to see.

The clause is certainly better than no clause at all, but it has in-built, inherent defects. I should not be at all surprised to find either that very few schemes come forward under it and/or that the Minister comes back and says that, after mature reflection, we need transitional arrangements at the end of the 10-year period to provide a softer landing and more certainty for those who intend to invest under it. I hope that the Secretary of State will take note of those comments and come back with better suggestions on Report.

Calum MacDonald (Labour, Na h-Eileanan an Iar)

I want briefly to support what the hon. Gentleman has just said and to reiterate what I said in the earlier debate. This clause is tremendously important not only for those of us in the north of Scotland who want to see renewable generation take off there, but for the whole country and the Government, who want to meet their environmental targets. Without renewables taking off substantially in the north of Scotland, it is difficult to see how the Government can meet their targets for 2010 and 2020.

As I said earlier, I have serious worries that the sunset provision in clause 181 will act against those targets and that companies that are thinking of investing in renewables in the highlands and islands will be put off by the fact that the charging arrangement in the market within which they will be trying to operate will change radically after 10 years. Their planning will therefore be confronted with the big uncertainty that will happen after 10 years when the sunset provision comes into effect and when the transmission charging regime in the north of Scotland will become the same as in the rest of the country. Given the feedback about the worries of uncertainties in the market that we receive all the time from companies that are thinking of investing in renewables, this further uncertainty in 10 or 20 years will undermine the incentive to invest in renewables in the north.

While I appreciate the Minister's point about changes in technology and circumstances, they would be better taken account of by having a five-year review rather than a sunset provision. I take on board what he said, but the Government will have to keep an eye on the situation. If, over the next few months, industry says that there is a serious problem, the Government will have to respond quickly and readily.

Anne McIntosh (Conservative, Vale of York)

I request clarification from the Minister about the contents of clause 181, which, it will come as no surprise to him, I support. Will there be

implications for other locations? I asked earlier but he did not have an answer. Will clause 181 apply to a renewable proposal in other parts of the country?

I am taken by the factual position set out in the regulatory impact assessment. Paragraph 5.322 on page 138 states:

''Given the uncertainties about the future level of TNUoS generation tariffs in the coming years and, as a result, the exact location of new renewable build, it is presently very difficult to estimate with confidence the extent of any impact of comparatively high tariffs on the likelihood of successfully meeting the Government's 10 per cent. target.''

Pursuant to that, according to the explanatory notes, subsection (2)(b) requires for

''any costs arising from the scheme to be spread across all GB supply companies.''

Whereas the renewables obligations under clause 181 will apply primarily only in Scotland, it is extraordinary that costs arising from the scheme will be spread across all Great Britain supply companies, despite other parts of the country not necessarily receiving any benefit.

The table on page 144 of the regulatory impact assessment shows that the zonal tariffs of the northern highlands, Peterhead, the western highlands, and Skye and Quoich are excessively high. The zonal tariff of the northern highlands is three times that of northern England, which is staggering. I seek clarification from the Minister on those points.

Desmond Turner (Labour, Brighton, Kemptown)

I support my hon. Friend the Member for Western Isles (Mr. MacDonald) in asking the Minister to think again about subsection (10), which spells out the sunset provision. It must be a deterrent to potential investors, who have to work on a 20-year time scale. The Government do not need subsection (10) and the specific sunset provision to allow them the freedom to review the situation as market conditions change—subsection (11) would do that. I would advocate the removal of the limitation of only one period of renewal from that clause, because a five-yearly renewal gives the Government ample opportunity to respond to changes in conditions.

Andrew Stunell (Liberal Democrat, Hazel Grove)

Does the hon. Gentleman agree that it is not just 10 years from the commencement of a scheme, but 10 years from the commencement of the section, so that a scheme might be chopped off much more quickly than within 10 years?

Desmond Turner (Labour, Brighton, Kemptown)

Yes, I quite agree. I think that I made the same point before lunch. I ask my hon. Friends to reconsider the matter; we do not need that sunset clause.

Michael Weir (Scottish National Party, Angus)

I shall be brief, as I made these points in an earlier speech. I agree with the hon. Members for Western Isles and for Brighton, Kemptown (Dr. Turner). There is rare cross-party agreement on the fact that the sunset clause is an impediment to the development of renewable energy. If Ministers want to have a review, a five-year review without the inclusion of the sunset clause could achieve the same objective. As I understand it, new primary legislation will be

required to amend the provision at the end of the 10-year period, so it will be much more difficult to react quickly to changing events. I urge the Minister, as he has been urged by hon. Members on both sides of the Committee, to look again at the matter before consideration on Report.

Nigel Griffiths (Labour, Edinburgh South)

I welcome the qualified support for the clause. In response to the comments made by the hon. Gentleman and by my hon. Friend the Member for Brighton, Kemptown, I can say that we do not need to wait to the end of a 10-year term before introducing primary legislation to tackle the matter. Obviously, if unforeseen problems arose at any time during that period, there would be nothing to stop any Government or hon. Member from introducing legislation that they thought was necessary.

Let me spell out the position once again for the hon. Member for Vale of York. As is made clear in the Bill, and as I believe is made clear in our helpful briefing, and in the House of Commons Library briefing on the Bill, the clause and arrangement apply specifically to one area—the north of Scotland. If Parliament wants to make provisions to cover other areas, it should feel free to do so.

I have carefully noted the comments of my hon. Friends and of hon. Members, particularly those made by my hon. Friend the Member for Western Isles. I know that I can rely on him to keep us informed and in touch with local views and the local impact of the provisions. I am sure that the excellent service that he provides for his community and constituents will allow us to react as quickly as is necessary to any unforeseen contingencies.

Anne McIntosh (Conservative, Vale of York)

I am most grateful to the Minister, both for his reply and for giving way. The Minister said clearly that if Parliament wanted to make provision for another area, it should feel free to do so. Is he therefore saying that primary legislation will be required in that regard? Will he also reply to my query in relation to subsection (2)(b)—whether any costs arising from the scheme will be spread across all GB supply companies?

Nigel Griffiths (Labour, Edinburgh South)

The answer to both the hon. Lady's questions is yes. I hope that that clarifies the position for her.

Question put and agreed to.

Clause 181, as amended, ordered to stand part of the Bill.

Clause 182 ordered to stand part of the Bill.

Clause 183 - Payments of sums raised by fossil fuel levy

Andrew Stunell (Liberal Democrat, Hazel Grove)

I beg to move amendment No. 218, in page 139, line 43, at end insert—

(1A) The total of amounts directed to be paid under this section must not exceed £10,000,000 or such higher figure as may be specified in an order under this section.'.

Bill O'Brien (Labour, Normanton)

With this it will be convenient to discuss amendment No. 219, in page 140, line 21, at end add—

'(7) In section 7 of the Sustainable Energy Act 2003 (c.30) (use of certain money held by Gas and Electricity Markets Authority), at the end of subsection (2) add—

''or such higher figure as may be specified in an order under section 183 of the Energy Act 2004.''

(8) An order under this section, which may raise the cash limit in subsection (1A) above or section 7(2) of the Sustainable Energy Act 2003 or both, is subject to the affirmative resolution procedure.'.

Andrew Stunell (Liberal Democrat, Hazel Grove)

Clause 183 concerns what should happen to the money raised from the fossil fuel levy, which is the leftover from the non-fossil fuel levy as amended in the Sustainable Energy Act 2003, and also what should happen to the money accumulated via the Scottish renewables obligation, which is the parallel mechanism north of the border.

The provision in clause 183(1) relating to the Scottish moneys has no ceiling or cap on the amount of money that should be reinvested in renewables. That contrasts with the situation south of the border, where the Sustainable Energy Act has a ceiling of £60 million. I am indebted to the Renewable Power Association for bringing the matter to my attention and for a certain amount of technical help—it is obviously a complex matter. Basically, there is a new provision north of the border to deal with the surplus arising from the Scottish equivalent of the fossil-fuel levy—the Scottish renewables obligation—that has no ceiling on the amount of money that can be reinvested in renewables. Many might say that that is a good thing. On the other hand, the Bill maintains that there should continue to be a cap south of the border of £60 million; that is to say, it is silent on changing any of the provisions of the Sustainable Energy Act.

The problem would not really matter, except for the fact that, south of the border, a substantial surplus is building up. The fossil fuel levy is generating in excess of £60 million per year, and one estimate is that by 2010, there will be £350 million in the fund, of which only £60 million will have been taken out and invested in renewables, that being the limiting factor set by the Sustainable Energy Act. On the other hand, north of the border, where it is estimated that perhaps £7 million or £8 million a year will accumulate, there is no restriction on a 100 per cent. investment in the renewables industry.

Amendments Nos. 218 and 219 would have two contrasting effects. Amendment No. 218 says that if the Government believe that there should be a cap south of the border, the Bill should contain a cap north of the border, as it is illogical to have an open-ended investment programme north of the border and a capped investment programme south of the order. Amendment No. 219 would mean no cap on either side of the border. In terms of obtaining more investment in the renewables industry, that is the better alternative. In other words, it says that the cap of £60 million being reinvested in renewables should be lifted, allowing all the money generated north and south of the border, both by the fossil fuel levy and the Scottish renewable obligation, to be reinvested in the

renewables industry. As I understand it, that was the original intention when the arrangements to wind up the non-fossil fuel obligation were being considered during the passage of the Sustainable Energy Act.

I hope that that explanation was sufficiently transparent. The amendments are alternatives, and are probing the Government's intention, and I ask that the Government's response give full consideration to the need to reinvest all the benefits of the two obligations back into the renewables industry, which I would have thought is what the Government intended in the first place.

Nigel Griffiths (Labour, Edinburgh South)

I thank the hon. Gentleman for his helpful suggestions in amendments Nos. 218 and 219. The amendments seek to bring together the approach taken to limit the funds for Scotland, on the one hand, and England and Wales, on the other. In principle, that is, of course, a reasonable idea, but there are specific reasons why we want to maintain separate approaches, not least the fact that the powers to spend beyond a set limit, which this proposal would remove from Scottish Ministers, involve very small sums. They are estimated at under £4 million per annum and may be considerably less than that.

Given the small scale of the sums, it would not make much sense to limit Scottish Ministers' powers over the fund in this way, and it would give rise to resentment and accusations that neither the hon. Gentleman nor I would wish to have to deal with in the context of devolution. If the sums were far higher and the principle at stake more important, I might be inclined towards his view, but I hope that, after making that brief argument, which I am willing to expand on for the benefit of the Committee, I have persuaded him to withdraw the amendment.

Amendment No. 219 would raise the limit on the amounts that the Secretary of State can, under the Sustainable Energy Act, direct for use on renewable energy. Apart from the need to keep up a £30 million reserve, no decisions have been taken on the use of the sums that the Secretary of State can direct for use on renewables. The England and Wales fund stands at just over £150 million, and there is a £60 million limit on the amounts that the Secretary of State can direct for use on renewables. We have only recently legislated, through the Sustainable Energy Act, on the use of £60 million of the fossil fuel levy surplus to promote energy from renewable sources to meet the Government's energy White Paper commitment to increase funds for renewables capital grants by a further £60 million.

I therefore hope that the hon. Gentleman accepts that at this stage the amendment is unnecessary. We have demonstrated our commitment to renewables through our renewable energy policies and programmes, and we will continue to do so. I hope that, in the light of that explanation, he feels, even if he is not wholly satisfied, able to withdraw amendment No. 218 and not press amendment No. 219 to a vote.

Andrew Stunell (Liberal Democrat, Hazel Grove)

I thank the Minister for his response. I am sure that he will have detected that, in advancing these two alternatives, I prefer the second to the first. The last thing that I would want to do is tread on the toes of colleagues north of the border, given their proper sensitivities about devolution. However, I am interested in his concept that £4 million is too trivial a sum for the Committee to worry about. I shall bear that remark in mind when I have suggestions to make on spending very small sums as he has just defined them. I shall not press the amendment.

I am not so satisfied, however, with what the Minister said on amendment No. 219. I understood him to say that the fund stands at £150 million and the only authorised expenditure from it is the £60 million under the Sustainable Energy Act, with the rest simply lying fallow and building up at a rate of more than £60 million a year in addition—in due course, to a total of about £350 million. Indeed, judging by the figures that he gave, the money could be accumulating even more rapidly.

The Minister's answer that the Government have given earnest of good intent is not very satisfactory. In fact, they are being miserly with that money and it is not being spent. It is being accumulated far more rapidly than the Secretary of State is approving proposals. I have in mind the fact that, next Tuesday, we shall hear about the Chancellor's three-year spending review. I imagine that he is looking round the shelves in the larder to see what pennies are at the bottom of the jars, and I fear that he will shake out this jar and use the money for something else completely. I therefore say to the Minister, and through him to the Secretary of State, that they must keep a tight hold of that jam jar and ensure that the resources that have been accumulated in this way are ultimately and fairly quickly ploughed into the renewable generation industry.

When investment funds are not easy to come by, it seems paradoxical that we already have £80 million unspent and unspendable in the fund, building up at £60 million a year. Yet although we are considering a Bill that notionally is about improving our energy policy, the Minister does not see fit to find a mechanism for releasing that money. I may wish to come back to this on Report. In the meantime, I hope that the Minister thinks carefully about the issue and will perhaps make his own proposals at that stage. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 183 ordered to stand part of the Bill.

Clause 184 - Power to impose charges to fund energy functions

Anne McIntosh (Conservative, Vale of York)

I am grateful for this opportunity to question the Minister. We are told that the clause relates to the imposition of charges and allows for a

consistent and transparent charging regime applied by the Secretary of State to be put in place to cover a range of energy services. The activities relating to oil and gas are a reserved matter. The Secretary of State is responsible for their administration for the whole United Kingdom and its waters, except the Isle of Man onshore and the waters of Northern Ireland offshore.

We heard earlier that the Minister is keen not to waste taxpayers' money, and he would not put a figure on the cost of an annual report—he felt that it would be an unnecessary burden—yet paragraph 6.24 of the regulatory impact assessment states:

''There will be cost implications of budgetary control on both a resource and a cash basis (probably monthly) and the additional input to the other resource bidding and monitoring processes''.

Paragraph 6.25 states:

''DTI staff and overhead costs including a notional accommodation cost would be £45K per annum.''

Paragraph 6.27 states:

''Overall, the costs to industry and the DTI are estimated to be £1.9M and £45K respectively.''

I humbly submit that £1.9 million is not an inconsequential sum. The Minister is imposing that burden, so can he help the Committee by explaining his definition of a regulatory burden? Why is an annual report deemed to be a costly regulatory burden, although he did not see fit to put a figure on it? Here we are told that there will be a burden on industry of £1.9 million per annum. That seems to me to be a regulatory burden. I wonder whether he agrees.

Anne Picking (Labour, East Lothian)

Will my hon. Friend the Minister tell us what energy functions relating to the oil and gas industry he has in mind for possible changes? Will he give an assurance that he will consult the industry fully about any proposals for charges and assess whether they would impact on the important policy of ensuring maximum recovery of oil and gas from the North sea?

Nigel Griffiths (Labour, Edinburgh South)

I am amazed that the hon. Member for Vale of York, with her knowledge of Library documents, has not sought an indication of the cost of various annual reports. In the absence of that, we are doing it at this moment and will let her know the costs.

Certain sums have been mentioned. The hon. Member for Hazel Grove (Mr. Stunell) put words in my mouth, which is a Liberal tactic I am afraid. I did not mention the word ''trivial'' in relation to £3 million or £4 million. I would appreciate it if the Liberals did not use their slightly-less-than-honest by-election tactics against me. I did not say that it was an insignificant sum.

Andrew Stunell (Liberal Democrat, Hazel Grove)

Will the Minister give way?

Nigel Griffiths (Labour, Edinburgh South)

If the hon. Gentleman apologises for saying that I said it was a trivial sum, I will happily give way.

Andrew Stunell (Liberal Democrat, Hazel Grove)

I am certainly prepared to accept that the Minister did not use the word ''trivial'', but he took a trivial attitude. He said that he did not think the

matter merited consideration in the Bill because the sum was too small, which I interpreted as trivial. I apologise to him, and to you, Mr. O'Brien, if that was a misuse of the word ''trivial''.

Nigel Griffiths (Labour, Edinburgh South)

That gets us back on a nice, even keel where we understand each other.

The important issue is the Government policy to charge for services where appropriate to ensure that resources are allocated efficiently. This ensures that the general taxpayer does not bear those costs that should properly be borne by the users who benefit from the service.

The clause is an enabling power only; it will allow for secondary legislation to be put before the House under the negative resolution procedure should new charges be decided on. Such decisions would, of course, be taken after compliance with the Cabinet Office's latest best practice guidance on the introduction of new regulations, including stakeholder consultation. Any changes in the service could be introduced only to recover the Government's direct costs in providing that service. The clause allows us to do that.

I do not believe that even some in the industry will think that an unreasonable approach. Should the enabling power be approved by the House and not be negatived by any hon. Member, as it could be, any costs involved would be considered reasonable.

In response to my hon. Friend the Member for East Lothian (Anne Picking), new charges may be levied on several functions—for example, the approval of field development plans or environmental inspections, drilling consents or pipeline authorisations, metering inspections and flaring issues. The industry will be fully consulted on any new charges. The United Kingdom Offshore Operators Association was consulted on plans to include the clause in the Bill and it accepted our logic.

Having raised the issue, my hon. Friend will want to track its impact on behalf of her constituents who may be affected and the two power stations in her constituency in which she takes a keen interest. My hon. Friend the Minister for Energy, E-Commerce and Postal Services and I will be keen to hear from our hon. Friend if there is any deleterious effect as a result of the proposal, but we do not believe that there will be.

Question put and agreed to.

Clause 184 ordered to stand part of the Bill.

Clause 185 - Power to modify Petroleum Act 1998

Anne McIntosh (Conservative, Vale of York)

My understanding is that we are being asked to modify, and therefore repeal, parts of the Petroleum Act 1998. This is an exciting part of the

Bill because it relates to the role of interconnectors, which are at an advanced and positive stage, in the provision of energy to this country. Perhaps the Minister would confirm what the role of interconnectors will be. Bearing in mind that we will increasingly become a net importer of energy over the coming years, interconnectors will have a great impact.

The regulatory impact assessment refers to the Norwegian interconnector and I understand that an interconnector agreement is also being negotiated with the Netherlands. Those are the two primary interconnector agreements. Will the Minister explain our position? The piping in of energy has implications for other aspects of energy policy, particularly the large combustion plant directive and the expected forthcoming announcement from the Department for Environment, Food and Rural Affairs. We need an assurance that energy being imported through those pipelines will be as clean as domestically produced energy.

We heard earlier about exposed overhead pylons, particularly in the north of Scotland. In my experience the elements can be just as perverse and destructive in the north of England—we had no electricity for three days over the new year. What protection is there for pipelines and interconnectors against the natural elements and a possible terrorist attack? The Committee must be aware that we will become increasingly dependent on interconnectors, such as those coming into the east of England. There is talk of French energy workers going on strike and, if they did, that would have a huge impact on the supply of energy, particularly to the south of England.

The clause is extremely welcome. It goes to the heart of the future of the Government's energy policy, particularly for electricity companies developing ventures with Norway and the Netherlands. I await the Minister's reply with anticipation.

Nigel Griffiths (Labour, Edinburgh South)

A number of existing agreements between the United Kingdom and other states relate to the production and/or conveyance of petroleum by pipeline to or from areas over which other states exercise sovereign rights. Most are with Norway, but there are also agreements with Ireland, the Netherlands and Belgium. In its present form, power under the Petroleum Act to make decisions in UK waters rests with the Secretary of State alone. As we move to import a greater proportion of our energy supplies, the new power in this clause will ensure that we are able to give full and appropriate effect to international agreements to further our aim of keeping energy supplies secure and reliable.

The clause provides the power for the Government to modify the Petroleum Act by Order in Council to give effect to international agreements relating in whole or part to the construction, operation, use, decommissioning, or abandonment of an offshore gas or oil installation or pipeline. The extension of the

powers is necessary to reflect the international scope of British energy supplies. I hope that the clause will stand part of the Bill.

Question put and agreed to.

Clause 185 ordered to stand part of the Bill.

Clause 186 - Application of general duties to part 4 functions etc.

Clause 188 - Powers exercisable by statutory instrument

Anne McIntosh (Conservative, Vale of York)

The Minister, in his helpful summing-up remarks to the debate on clause 185, referred to the fact that the Government intend to use an Order in Council. I hope that the—[Interruption.]

Bill O'Brien (Labour, Normanton)

Order. Can we have some quiet please?

Anne McIntosh (Conservative, Vale of York)

I congratulate the hon. Member for Brighton, Kemptown on his victory, which seems to have escaped most members of the Committee, but I am sure that after our proceedings, we shall go away and do our homework. I share the excitement at his success at having his amendment endorsed by the Minister; I think that that is a first for the Committee.

As we had a little debate on groups of amendments referring to the use of affirmative resolutions—both for amendment No. 219, which was moved by the hon. Member for Hazel Grove and the earlier amendment No. 119 that was successfully moved—I should like to point out that it is always preferable to debate the regulatory impacts of the Bill. We were told by the Minister that he, his Government and his Department intend to use the Order in Council extensively and lavishly to push through the extension of powers required to vary the Petroleum Act 1998. I would make a humble plea that the Minister consider more lavish use of the affirmative procedure for the reasons that I set out earlier.

Those of us from both sides of the House who take our scrutiny role seriously believe that there is more scope to give detailed scrutiny of such an extension of powers through affirmative resolution procedure than through the negative resolution procedure. To respond to earlier remarks about no-shows in certain quarters, when Orders in Council are being scrutinised, I am sure that I speak for my hon. Friend the Member for Tewkesbury (Mr. Robertson) when I say that we are the most assiduous Members, taking

every opportunity to scrutinise any statutory instrument. However, we would particularly welcome the opportunity to scrutinise an Order in Council by the affirmative resolution procedure. Will the Minister reconsider his view?

Nigel Griffiths (Labour, Edinburgh South)

Of course, I would not question the diligence of the hon. Lady and her hon. Friend in such matters. I undertake to consider whether an affirmative resolution is more appropriate than a negative resolution in matters appertaining to this Bill.

Question put and agreed to.

Clause 188 ordered to stand part of the Bill.

Clauses 189 to 193 ordered to stand part of the Bill.

Schedule 23 agreed to.

Clause 194 - Short title, commencement and extent

Andrew Stunell (Liberal Democrat, Hazel Grove)

I beg to move amendment No. 221, in

clause 194, page 149, line 43, at end insert—

'( ) Sections 91, 92, 131, 134(1), 136(1), 165 and 173 shall, unless previously commenced under subsection (2), come into force nine months after the passing of this Act.'.

The amendment relates to the coming into force of the Bill. At present, subsection (2) has the standard provision that the sections should come into force on a day appointed by the Secretary of State. The amendment proposes a backstop date nine months after the Act is passed.

As we know from our debate on clause 181, the statutory time limits run from the commencement of the relevant sections of the Bill. As the various sections can be commenced individually, that means a series of separate starting dates, which in some cases will trigger separate finishing dates, or sunset clauses.

We believe that the Bill should become an Act, and that it should come into force as soon as is practicable. We recognise that certain things have still to be sorted out; the draft provisions for licences and so on have not yet been published and there will inevitably be delays and some overlap. The amendment is designed to tease out of the Minister when the Act will be fully implemented. We say that all sections should be in force within nine months of the Bill's being enacted, and we look forward to what the Minister has to say on the topic. We should be even more pleased if he accepted the amendment as his own backstop provision.

Nigel Griffiths (Labour, Edinburgh South)

I accept that the Act should be in force as soon as is practicable, when all views on its impact have been considered. The Bill that emerges from our considerations is not the same as the Bill that went in, which is the proper democratic process. The measure has been improved in some ways, but it has not met with the sort of approval that I wanted in others. I want to ensure that all those involved in a vital sector of the economy—consumers, consumer organisations and others who might be affected by the Bill—have time to give us feedback, which will allow

us to choose a date for enactment, not a fixed date, that reflects that information. However, I accept that the hon. Gentleman has not chosen an arbitrary date. He agrees with me that we want the measure to be enacted as soon as is practicable, but we also want to ensure that all the consequences have been considered when the Bill leaves the Committee and the House. I hope that I have persuaded him to withdraw the amendment.

Andrew Stunell (Liberal Democrat, Hazel Grove)

The Minister has somewhat reassured us and we would not want to truncate the process of consultation on the Bill and its implementation, especially in view of the changes already made and those that may be made on Report. I will not press the amendment, but I urge the Minister not to lose the momentum and to ensure that the Bill is fully enacted at the earliest practicable moment. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Nigel Griffiths (Labour, Edinburgh South)

I beg to move amendment No. 21, in

clause 194, page 150, line 8, leave out subsection (5).

The amendment simply removes the privilege amendment inserted in the Bill in the other place. The privilege amendment is a procedural amendment, which I am advised is no longer necessary. As hon. Members will be aware, it is the privilege of the House of Commons to control charges on public funds, and the amendment reminds us that that privilege has not been infringed in the other place.

Anne McIntosh (Conservative, Vale of York)

I am not as familiar as the Minister with the ways of the other place, so would he be good enough to explain what has happened since the amendment was made in the Lords, presumably with Government support, and why it is deemed to be no longer necessary? Under various aspects of the Bill, and as is set out in great detail in the regulatory impact assessment, there will be a charge.

Bill O'Brien (Labour, Normanton)

Order. Perhaps I can help the hon. Lady. According to the rules of the House:

''Where the Lords have inserted the privilege disclaimer as the last subsection of the last clause of a Bill, the scope of debate on the amendment to remove it is confined to question of whether the Commons should maintain their claim of financial privilege.''

The Minister is saying that the Lords have no issue with the financing of the Bill. It is a question of procedure. Further information can be obtained if the hon. Lady so wishes, but those are the rules given to us.

Amendment agreed to.

Clause 194, as amended, ordered to stand part of the Bill.

New Clause 7 - Reports under section 1 of Sustainable Energy Act 2003

New Clause 3 - Renewable Energy Authority

Desmond Turner (Labour, Brighton, Kemptown)

I beg to move, That the clause be read a Second time.

Bill O'Brien (Labour, Normanton)

With this it will be convenient to discuss the following: New clause 4—Constitution of the REA—

'(1) The REA—

(a) shall consist of not fewer than seven and not more than thirteen members; and

(b) shall have a membership comprising both non-executive members and executive members.

(2) The non-executive members shall be—

(a) a chairman appointed by the Secretary of State; and

(b) a number of other persons appointed by the Secretary of State (after consultation with the chairman); and (subject to subsection (1)) it is for the Secretary of State to determine how many non-executive members there are to be in addition to the chairman.

(3) The executive members shall be—

(a) a person appointed by the non-executive members to be the REA's chief executive; and

(b) the other persons (if any) appointed by them (after consultation with the chief executive) to be executive members in addition to the chief executive;

and it is for the non-executive members to determine (subject to subsection (8)) whether there are to be executive members in addition to the chief executive, and (if so) how many.

(4) The approval of the Secretary of State is required for the appointment of the chief executive.

(5) Before—

(a) appointing a person to be the chairman or otherwise to be a non-executive member of the REA, or

(b) approving the appointment of a person to be the chief executive, the Secretary of State must consult the Scottish Ministers.

(6) Subsection (5) may be satisfied by consultation that took place wholly or partly before the commencement of this section.

(7) If there are executive members in addition to the chief executive, each must be a member of the staff of the REA.

(8) Where the Secretary of State so provides by a direction to the REA, the non-executive members must secure that the number of executive members in addition to the chief executive—

(a) is not less than the minimum set by the direction; and

(b) does not exceed the maximum so set; and the direction must not set a maximum of more than three.

(9) The Secretary of State must exercise his powers under this section to secure, so far as practicable, that the number of executive members is at all times less than the number of non-executive members.'.

New clause 5—REA: powers for carrying out functions—

'(1) The REA shall have power, for the purposes of carrying out its functions, to do all such things as appear to it to be likely to facilitate the carrying out of its functions, or to be incidental to carrying them out.

(2) The powers of the REA include, in particular—

(a) the power to promote research and development in renewable energy by grant or contract as is appropriate, and

(b) the power to promote the commercial deployment of renewable energy.'.

New clause 6—REA: Strategy for carrying out functions—

'(1) It shall be the duty of the REA—

(a) to prepare its strategy for carrying out its functions; and

(b) from time to time to revise that strategy.

(2) The strategy prepared must include both—

(a) the REA's strategy for promoting research and development in renewable energy by grant or contract as is appropriate; and

(b) its strategy for promoting the commercial deployment of renewable energy.'.

Desmond Turner (Labour, Brighton, Kemptown)

We have completed our discussions of the amendments to the Bill so we can relax a little, but these new clauses make a serious point, so I do not want the hon. Member for South-West Hertfordshire (Mr. Page) to get over-excited. The new clauses could be described as being serious and probing in nature, but probing none the less.

The new clauses represent the final policy plank that the Science and Technology Committee, on which I served, put forward in its report last year on the subject of moving towards a non-carbon fuel economy. We identified three principal policy legs to provide the mechanism to achieve the Government's declared climate change objective of renewable energy being deployed at 10 per cent. by 2010. We are all familiar with that. However, it will not happen by accident—there must be mechanisms to make it happen.

The amendment concerning fiscal regimes, which was moved in my absence last Thursday, contained one of those mechanisms: a proposal to replace the present renewables obligation regime with a carbon tax and carbon tax credit system to provide the fiscal incentives for the development of renewable energy, clearing the potential hurdles, as we did with the amendment on the statutory duties of the Secretary of State and the regulator. I was not criticising the regulator, but if the regulator were to take as read the statutory duties included in the Bill as currently drafted, that would be disadvantageous, as we know from recent experience—until the past few months, when the regulatory regime fortunately changed.

The final recommendation was the establishment of a renewable energy authority. The Bill already—quite rightly—establishes a nuclear decommissioning authority. That important and complex job must be done, and I agree that it is best done by a dedicated authority. In tabling proposed new clause 3, we suggest that deploying renewable energy is just as important in the current context as nuclear decommissioning. It is possibly more important, because if we do not deploy renewable energy as we need to at the rate at which we need to, we will not fulfil our climate change objectives.

Just as, after the war, the United Kingdom Atomic Energy Authority was set up to drive through the establishment of nuclear power stations, so we could usefully establish a dedicated renewable energy authority, which would subsume the responsibilities of several bodies that currently exist—for example, parts of the DTI, and the Carbon Trust—and their budgets, and bring all their functions together in one body. Its sole purpose would be to drive the deployment of renewable energy from research and development through to deployment on the ground or in the water, as appropriate. There would be savings in administrative costs, because there would be one agency instead of several separate administrations, as at present, but more importantly there would be a critical mass that would produce results. I shall not press the proposed new clauses to a vote; they are probing, but with serious intent. I commend the policy of a renewable energy authority to the Minister as worthy of consideration.

Joan Walley (Labour, Stoke-on-Trent North)

I welcome you back to the proceedings, Mr. O'Brien, which seem to be going along at great pace this afternoon. I want to speak briefly to the proposed new clauses that have been moved by my hon. Friend. I am slightly relieved to hear that he is not going to press them to a vote.

I want to take the opportunity to obtain more information from the Minister on the progress that the DTI has made and is making in respect of delivering on the whole agenda. How will we get a dedicated policy to deal with renewable energy? I am not sure whether it should be a renewable energy authority as such, or whether in the short or medium term we could set up a sustainable energy policy agency. Such an agency was recommended by the Environmental Audit Committee in our 2001-02 report, entitled ''A sustainable energy strategy? Renewables and the PIU Review''.

We must be assured that we are finding a way to promote the development and deployment of renewables. The new clauses would incorporate the Carbon Trust and ensure the commercial deployment of renewable energy. The Carbon Trust does a good job, but how much more could we do if we brought all the different strands together under one authority or one agency? We want to see a greater take-up of the available renewable energy. There is a feeling that we are not progressing quickly enough.

Could the Minister give us more information about the progress that the Government have made? I refer him to the Government's response to the Environmental Audit Committee's report, which said:

''The Government does not believe that we need new structures or organisations to support the delivery of the ambitious programme, as set out in the Energy White Paper. Instead, the Government will strengthen the analytical and strategic capability of the DTI in the area of energy policy. This will serve as the focal point of a network—a Sustainable Energy Policy Network—of departmental policy units that will be involved in delivering the White Paper's commitments.''

The agenda has moved on. The Environmental Audit Committee's eighth report of 2002-03 points out that there are many split responsibilities. We have already heard how the Department for Environment, Food and Rural Affairs has responsibility for energy efficiency. The Office of the Deputy Prime Minister is responsible for planning permissions, and the DTI has a focus on energy policy, but it is not alone.

If we could move more quickly towards a dedicated authority that could bring all these strands together, we would be in a much better position to exploit the commercial adaptation of renewables that we want to see. That would take us much more quickly on the way towards the carbon-free economy that we want and to meeting our renewable targets. There is no coherent overview of how we deliver policy on renewables. These new clauses give the Minister an opportunity to provide an update of how he is adding more coherence to delivery on renewables. We want to see progress on this issue as quickly as possible.

Richard Page (Conservative, South West Hertfordshire)

I warm to these new clauses, but to give justice to their contents would take a great deal of time. The

Committee will be delighted to know that I do not intend to go through them all in great detail. We have plenty of time. I understand that another two days of Committee stretch ahead of us, so it is not as if we are coming up against any time barriers. I hope that the Committee is relaxed about that.

We have to ask the basic question: why have these new clauses been tabled at all? It is not as if they are small amendments pushed in to get and elucidate information. Nearly two pages are covered with the details of the new clauses, so they were not thought up on the back of an envelope. The hon. Members involved are making a serious point. We must ask why new clause 3 is designed to establish a renewable energy authority? Why does the new clause incorporate the Carbon Trust? New clause 4 relates to the setting up of the board and its secretarial functions. It is just about the way in which the body should operate.

New clause 5 is the guts of the thing and it refers in particular to

''the power to promote research and development in renewable energy by grant or contract as is appropriate''.

Why have that new clause and that point been included? In proposing that there be a new authority to promote research and development, are the hon. Members saying to the Government that they are not happy with what Government are doing in that area? New clause 5(2)(b) refers to

''the power to promote the commercial deployment of renewable energy.''

Again, why is that provision there? Have the Government not got, somewhere in the whole area of their activity, the power to do all those things?

Why have three responsible, senior, important, respected Labour Members of Parliament tabled the new clauses? The hon. Member for Milton Keynes, North-East (Brian White) should not sell himself short, as he is a respected member of the Committee and very knowledgeable on information technology and energy. I listen with a great deal of interest and respect to what he has to say and what he recommends. I am with him on so many of these issues, as he knows. I have supported him on the aims that he wants to achieve. The fact that we have managed to get him to squeak a vote in favour of a proposal only once is by the bye. Now that he has decided to go beyond the line once, who knows? We may get him to do it a second time.

It hurts me to say this, but I believe that the new clauses were tabled because, among Labour Members of Parliament and perhaps others, particularly Conservative Members, there is a lack of trust in the Government. What is in the Bill and what will the Bill achieve? The Committee will be delighted to hear that I will not go through the various aspects of the Bill line by line, but you will agree, Mr. O'Brien—actually, you have to be neutral and above all these things. I do not know about everyone else, but I thought that hon. Members on both sides of the Committee were

shocked by the cavalier fashion in which the Minister simply wiped out clause 1. Suddenly, it was gone; forget it. There is no such responsibility for the Secretary of State. Let me remind the Committee of what the clause said:

''The Secretary of State shall have a duty to ensure the integrity and security of electricity and gas supply.''

When we came to clause 2, we asked whether there could be targets that might be matched for each area of renewables to see how they are getting on, so that we could reach the 10 per cent. target by 2010. The rest of us are as one on that—there is no disagreement—but the Minister disagreed.

When we wanted to support clause 3 on the annual report on energy efficiency—

Bill O'Brien (Labour, Normanton)

Order. Far be it from me to want to intervene on the hon. Gentleman, but he is straying from new clause 3. I ask him, given his wide experience, to stick with the business before the Committee.

Richard Page (Conservative, South West Hertfordshire)

I stand duly chastised by you, Mr. O'Brien, but in fact, I was going to go back through these points, because the very reason that responsible, senior Labour members of the Committee have tabled these new clauses is that there is a failure in other parts of the Bill to achieve what their new clauses seek to achieve.

If Ministers had not wiped out clauses 1, 2 and 3 in a cavalier fashion to start with, I wonder whether hon. Members would have tabled these new clauses. I was producing examples, Mr. O'Brien, to show why they have been tabled. It is hard for me to think my way into the brain of a Labour Member of Parliament—it is a real leap into the dark, the unknown and certainly the void—but I believe that Government Members have tabled the new clauses because some original clauses were wiped out with no feeling or thought whatever. Why do they want to incorporate the targets and activities of the Carbon Trust?

The aim of clause 3—to report the

''savings from domestic energy efficiency of 5 MtC per annum''—

was wiped out. I can understand why new clause 3 aims to incorporate the Carbon Trust, because to do so would return us to those targets that we all wanted in the first place. That is why I spoke as I did, Mr. O'Brien. I made those remarks in a clumsy and inefficient fashion, and you were quite right to reprimand me. I hope that I have explained myself, and if I am not back in your good books I hope also that I have not incurred any opprobrium for the future.

My feeling is that if all the measures in these new clauses were in the Bill, hon. Members would not have tabled them. They felt it necessary to table them because they have nagging doubts that those targets and aims are not in the Bill. I am being absolutely serious on that point; I am worried that the Government have arranged the Bill so that they can weasel out of any commitment to achieving the energy efficiency that we all want.

Of all that I have said, I would like to put those last two sentences in heavy type and underline them, because I genuinely believe that that is the reason

behind these various proposals. I have every sympathy with what hon. Members are trying to achieve with them, and the Minister will have to work quite hard to convince me that the aims of new clauses 3, 4, 5 and 6 can be achieved through the operation of the Bill. It does not matter to me, as I am just one of an at-risk breed—a Conservative Member of Parliament—but he has to convince three colleagues, and if he does not do so, who knows? Maybe some amendments will be tabled on Report to try to redress the situation.

Nigel Griffiths (Labour, Edinburgh South)

Let me help the hon. Gentleman by speaking in words of one syllable and explaining clearly to him why my hon. Friends have tabled these new clauses, even if he does not understand: they care passionately about the environment, have long championed renewables, have shaped Government policy in this area and care about ensuring that this country's energy supply is both safeguarded and, just as importantly, derived as far as possible from renewables. We must not squander the future of our energy supplies, but leave energy available from which future generations can benefit.

My hon. Friends were instrumental in shaping Government policy in this respect, and I hope to offer them reassurance. We have established the Renewables Advisory Board, and I can assure them that the Carbon Trust plays a key part in that board and in shaping the critical agenda it takes on. It includes other appropriate bodies, as well as other Government bodies and devolved Administrations, and it provides expert advice to us on renewables issues.

The commitment of the DTI and the Government to renewables is second to none: as well as £117 million of capital grants to support the round 1 offshore wind farms developments, we are supporting other marine technologies.

Laurence Robertson (Conservative, Tewkesbury)

Obsessed.

Nigel Griffiths (Labour, Edinburgh South)

The Opposition may be obsessed with wind farms, but they should consider marine technologies such as the wave and tidal research and development programme, which has assisted a number of UK companies and has already led to a number of full-scale prototype devices. I understand that such progress has established the UK as a clear world leader in that area.

I pay tribute to my constituent, Professor Stephen Salter, who from the 1960s, at the department of mechanical engineering at Kings buildings, was one of the pioneers of wave power. I am sure that he joins me in taking some satisfaction from the fact that we have managed to progress that agenda after years, if not decades, of stagnation.

These new clauses are not being rejected because we doubt the sincerity of my hon. Friends or because we think that their proposals are impractical, but we believe that the purpose of new clause 3, for example—to set up a renewable energy authority—is, if not redundant, certainly largely duplicated by the Renewables Advisory Board and other bodies that are in place.

We believe that the Government have a strategy to cover the renewables energy issues that concern us all. That is the purpose of new clause 6, in placing a duty on the Renewables Advisory Board. The other new clauses would give the body the powers to carry out other functions. This is a coherent set of new clauses, but I believe that the Government are addressing each of the issues covered in a proportionate way and with a commitment that I hope my hon. Friends applaud.

My hon. Friend the Minister for Energy, E-Commerce and Postal Services is committed to that agenda. I know that he has met my hon. Friends on a number of occasions to take on board their concerns and positive suggestions. I believe that in resisting new clauses 3, 4, 5 and 6, we are not rejecting elements of the proposals as we have incorporated them firmly in the Bill. I hope that that reassurance means that my hon. Friends will not press their new clauses for inclusion.

Desmond Turner (Labour, Brighton, Kemptown)

I thank the Minister for those remarks. He is quite right in his assessment of the motives of those who tabled the new clauses, which are not meant to be deeply critical of the Government, but he must understand that we will never be satisfied: one cannot have too much progress. The support of the hon. Member for South-West Hertfordshire is most appreciated—at least the serious parts of it. I remind him, however, that whatever any of us may have said about the DTI in expressing the feeling that it could do more with greater urgency, the legacy left by the previous Government was that the DTI had hardly heard of renewable energy. It certainly had not heard of marine technologies, and dismissed them as an unworkable, unrealistic solution of no interest whatever.

I am confident that had the political colour of Government not changed in the glorious year of 1997, things would have gone on in much the same way. However, I fully accept what the Minister said, that the DTI is organising things and that the Carbon Trust is involved. The Committee felt that the Carbon Trust lacked urgency, so the point of the proposal is to bind things together and give it a real kick. It does not need a new structure to do that. If the Government are sufficiently determined, they can do so without the structure, but it would make it easier. The three policy elements that I set out were of a piece: the fiscal regime would have enhanced the capital flow through the renewable energy authority, enabling it to do more and to do it faster.

If I am being critical of the Government, it is because we will never be satisfied with the progress; we want more. The targets, which are technically feasible and extremely realistic, will not be achieved unless better mechanisms are installed, but they could be exceeded with sufficient determination. Given the imperative of climate change, we cannot go too fast. I will not press the new clause to a Division, but I want Ministers to think seriously about the motives behind it and to be prepared to think radically about energy policy, so that mechanisms are in place to deliver what

we want. Even Opposition Members are genuine in sharing our desires. I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

New Clause 14 - Compliance with community law

Anne Picking (Labour, East Lothian)

I beg to move, That the clause be read a Second time.

I hope that it will not shock the Committee if I say that I am sick and fed up with hearing about renewables. I support the balanced energy policy that ensures the security of supply and safety. Although there is a place for renewables, there is also a place for other sources of energy. In that respect, my constituency has a diversity that is second to none.

My concern is about transmission charging, and the new clause reflects the intent of the directive on the revised internal market for electricity, which will come into force this summer. The directive states:

''Regulatory authorities shall have the authority to require transmission and distribution operators, if necessary to modify the terms, conditions, tariffs . . . To ensure that they are proportionate and applied in a non-discriminatory manner.''

Before I proceed, I should declare that I have a constituency interest in the issue, which the proposal would resolve. There are two large generating stations in my constituency: Scottish Power's Cockenzie power station and British Energy's Torness power station.

The Minister will be aware that although generators in Scotland support the introduction of BETTA and the access to a UK-wide market that it will provide, they are deeply concerned about the impact of the proposals to charge generators for access to the GB transmission network. Essentially, that would mean extending the existing system of locational charging, which currently applies in England and Wales, to Scotland. The impact will be a rise in transmission charges for generators in Scotland to more than four times the current level on day one of BETTA. We know that because the National Grid Company has already published indicative charges for the new system.

To put that in context, Cockenzie power station will see its charges increase by approximately £10 million. Both Cockenzie and Torness have long track records of providing high-quality employment in East Lothian. Cockenzie is a large coal-fired station that is coming to the end of its life, particularly as it faces pressures from the introduction of emissions trading and the large combustion plant directive. Despite that, Scottish Power believes that the plant has a number of years left in it and is trying innovative methods of improving the viability of the plant, such as a trial to examine the feasibility of burning sawdust residue along with coal. However, those efforts may be in vain if massive increases in transmission charges are heaped on top of the pressures that the station already faces. We could have a long debate about whether extending locational transmission charges to Scotland is appropriate at all. However, regardless of the method used to calculate charges, surely we can agree that an increase in charges to more than four times their current level overnight is neither proportionate nor non-discriminatory, as the directive states it must be.

Surely we can also agree that it is vital that someone has clear responsibility for ensuring that the transmission charging system is compliant with the directive. My new clause seeks to do exactly that by making it clear that Ofgem has a responsibility to ensure that, in its view, charges are proportionate and non-discriminatory. If nothing else, accepting the new clause will give generators in Scotland the comfort of knowing that there is a duty on the regulator to take a clear view on this issue.

The Minister's likely response may be that the provision is within the internal market for the electricity directive so there should be no need for it to be in the Bill. If that is the case, why is it not clear who has responsibility for addressing the issue? If he will not accept the new clause, will he state how the Government will ensure that they comply with that aspect of the directive?

The Minister may also say that although it is true that transmission charges will rise substantially in Scotland, BETTA will be financially neutral overall for Scottish Power and the Scottish and Southern Energy Group. If that is true, the impact for the big electricity companies of transmission charges will be offset by the socialisation of the England to Scotland interconnector. However, those charges have acted as a barrier to trade in the electricity market since its introduction. Therefore, it does not seem fair to replace one set of unfair charges with another.

Anne McIntosh (Conservative, Vale of York)

I congratulate the hon. Member for East Lothian on so eloquently moving her amendment. I regret that hon. Member for Sherwood (Paddy Tipping) is not here today, but I am sure that she will get support from her other hon. Friends. From the thrust of her remarks, she seems to be saying, as I have been arguing, that transmission charges in Scotland will go up, which is in direct contrast with what the Minister has been saying. Article 23(4) of the directive to which the hon. Lady referred states:

''Regulatory authorities shall have the authority to require transmission and distribution system operators, if necessary, to modify the terms, conditions, tariffs . . . to ensure that they are proportionate and applied in a non-discriminatory manner''.

How does the Minister respond to the proposed new clause? Does he feel that it will strengthen or weaken the Bill?

The remaining part of part 4 includes a power to enable Scottish Ministers to direct GEMA to pay surplus revenue arising under the fossil fuel levy in Scotland into the Scottish consolidated fund. Does the Minister accept that the transmission charges are to go up? The hon. Lady used the example of the Cockenzie power station. Will he accept her argument that the Bill needs to enable Ofgem to direct a change in the charging method?

Calum MacDonald (Labour, Na h-Eileanan an Iar)

I wish to say a brief word in support of my hon. Friend's new clause. She rightly says that this is a matter of immediate concern to the non-renewables sector in Scotland. As we discovered in our debate on clause 181, it will also be a matter of concern to the renewables sector in Scotland 10 years after the sunset provision comes into force. It should therefore concern not only those of us who represent the stations that will be affected by the new charging regime in Scotland, but everyone who wants to see renewables take off in the north of Scotland and who worries that locational charges might act as a disincentive.

I am told by Scottish and Southern, which provides for the north of Scotland, that whereas it currently pays transmission charges of £6 per kilowatt connected, in future it will pay £16 per kilowatt connected for non-renewables. Presumably it will also face a similar increase for the renewables sector in 10 years' time when the sunset provision comes into force. That increase is a considerable hike in price and it causes concern.

Could the Minister explain why the Government feel that locational charging is the correct route to take and that the English system should be applied in Scotland, rather than the reverse? After all, the Scottish system—the postage stamp principle—is applied almost entirely throughout the European Union, with the exception of Scandinavia. If he could tell us what he understands by the terms ''proportionate'' and ''non-discriminatory'', which are contained in the European directives, it would be a useful guide for the industry and for us.

The Minister will be aware that Scottish Power is still deep in discussions with Ofgem about how locational charging will impact in practice and what the final figures will be. It would be useful to know what the final court of appeal will be for that argument. What is the appeal procedure if Scottish Power remains dissatisfied with the terms proposed? Does Ofgem have the final say or does Scottish Power have to go to the Secretary of State? Is there another process of review? It would be helpful if the Minister said something about that as well.

To reiterate, this is a matter of major concern for Scottish Power and the non-renewable sector in Scotland. My worry is that it will be a matter concern for the renewable sector as well over the next 10 years, because of the sunset provision in clause 181.

Nigel Griffiths (Labour, Edinburgh South)

I am very grateful for the detailed way in which my hon. Friends the Members for East Lothian and for Western Isles set out some fundamental issues that the new clause covers.

The new clause would require the Secretary of State to comply with European Community law and the authority—in this case Ofgem—to ensure that any charges for access to and use of the transmission system are proportionate and non-discriminatory. The new clause would give Ofgem the power to require that such charges be modified if those requirements were not met.

The new clause would also import part of an EU directive to primary legislation, which I am advised is unnecessary. The Secretary of State is already required to comply with European Community law in relation to all activities for which she is responsible. Equally, EC law binds Ofgem, which, I am advised, could not lawfully sign off a transmission charging system that was anything other than proportionate and non-discriminatory.

Informed by the points that my hon. Friends have made, we are considering our compliance with the directive to which new clause refers. We believe that we are compliant with that provision, but intend to consult on aspects of it. That consultation will include this particular issue. I am concerned to ensure that locational charging, as against postage charging, does not force up consumer prices. I know my hon. Friends are concerned about that.

Desmond Turner (Labour, Brighton, Kemptown)

The rationale for choosing the locational charging system instead of the postage stamp system has not been set out. I am quite convinced that both systems are workable in terms of getting investment in the grid. Locational charging is not required to get investment in remote parts of the grid, so can my hon. Friend explain why the Government and Ofgem have come down on the side of locational as opposed to postage stamp charging?

Nigel Griffiths (Labour, Edinburgh South)

Yes, of course. I am advised that the case for cost-reflective pricing means ensuring that generators and suppliers take into account the costs that they impose on the transmission system when choosing where to locate. Ofgem's aim is to ensure that an efficient transmission system is delivered at the least cost. Ofgem's concern is that if a generator could locate anywhere and still be charged the same price for using the transmission system, the overall cost of the transmission system would increase. Ultimately, such increases would be passed on to the consumer.

I am advised that Ofgem is concerned about postage stamp charging because it would ensure that some users of the transmission system subsidised much larger costs imposed by others. Given that private companies are involved, Ofgem is concerned about why private companies should subsidise other private companies in such a way. There is no social reason for

doing so—that is not the case in the postal sector, however—provided that electricity prices are maintained at levels that are viable for consumer and business needs.

The consultation, which I mentioned before, will take place on aspects of the EU directive on the internal market for electricity, and on article 23(4) in particular.

Bill O'Brien (Labour, Normanton)

I call Anne Picking.

Anne McIntosh (Conservative, Vale of York)

I am really upset by some of the names that I have been called in this Committee, but I will not take it personally. I would rather be called the latter than the former, which was Anne Robinson. I hope that the hon. Member for East Lothian will take it as a compliment.

Are the Government not very late in implementing directive 2003/54/EC? In spite of that, is the hon. Member for East Lothian, in moving the new clause, not still in time? A number of Government Members have requested an answer, which has not yet been forthcoming, on why the Government have uniquely chosen to go down the location charging route rather than the postage stamp charging route, and what the implications of that are.

Nigel Griffiths (Labour, Edinburgh South)

I do not believe that we are facing infraction proceedings or anything that would follow particularly late implementation of article 23(4) of the directive. In terms of implementation, we are consulting on some key areas. If we conclude in the light of the new directive that a change is required to enable Ofgem to require that transmission charges are modified to make them proportionate, I can assure the Committee that we will implement such a change through regulations under the European Communities Act 1972, not through primary legislation.

In response to my hon. Friend the Member for East Lothian, I believe that we are already compliant with most provisions of the directive, which is to be implemented by 1 July. We may be slightly late, but as I said earlier I do not believe that we will be substantially late or will face infraction proceedings over article 23(4). As I have said, we are consulting on aspects of the directive, so that what we implement in UK law is helpful and appropriate to electricity suppliers and consumers in Britain.

My hon. Friends have raised serious issues. I will get Ofgem to set out to them the case that it has made for locational charging over postage charging. I hope that we can secure their agreement to withdrawing new clause 14.

Anne Picking (Labour, East Lothian)

I am particularly reassured about the consultation, and given that I am a disciplined Back Bencher and I believe in collective responsibility, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

Column Number: 526

Recovery of gas charges etc.

Brian White (Labour, North East Milton Keynes)

I beg to move, That the clause be read a Second time.

I began this Committee by pointing out that security of supply had a demand side aspect and I conclude it by saying that energy companies have a role in achieving the Government's fuel poverty strategy. We touched on the matter in our debate on clause 177—I thought that this new clause might have been considered then—but I am happy that this debate will conclude our proceedings, because it serves to remind us that energy is a universal and essential service.

Ofgem has a duty to develop codes of practice in a number of areas, including the most efficient use of supply, which we discussed in the Committee; methods of payment for fuel; dealing with customers in difficulty; the use of prepayment meters, which was debated under clause 177; and services for customers who are of pensionable age, disabled, chronically sick, blind or deaf. The codes of practice contain detailed procedures that companies should adopt when consumers are unable to pay gas or electricity bills and set out a range of payment options available to assist in budgeting and to help in debt recovery.

The most crucial factor is the customer's ability to pay. In the 1980s, there were 60,000 gas and 100,000 electricity disconnections. In 2003, there were 15,900 gas and 1,360 electricity disconnections. Those figures are for Great Britain, because in Northern Ireland there has been no disconnection since 1999. There is also the issue of self-disconnection—when people are unable to charge prepayment cards or tokens. There have been major improvements in that area too, with the development of sophisticated and sensitive policies on emergency credit. Also, prepayment meters are

calibrated to help to guarantee companies both the payment of current consumption and the recovery of debt for the 2 million gas and 3.5 million electricity consumers who use such meters.

The licence conditions do not allow disconnection during the winter months, but when people are disconnected in the other seasons, there is no policy to enable them to be reconnected during the winter months. During the recent consultation, which was referred to earlier, questions were raised as to why the presence of a non-pensioner occupant in the property allows disconnections to occur. We do not do that with water, so why do we do it with energy?

The consultation paper has encountered an adverse reaction, not least from the National Consumer Council and from others in the energy field. They pointed out both the anachronistic language, which refers to infirmity, and the proposal that disconnections should continue. There is no rational reason for putting the other occupants of a property at risk, irrespective of the circumstances of the bill payer. The paper also refers to social services and how they can sort things out, without taking on board the fact that they are already overworked. I do not understand how social services will be able to either arrange for the debt to be repaid or broker a deal.

This is the nub of my new clause: I can well understand why companies want to retain disconnections, but I cannot understand why Ofgem and the Government would want to keep them. A legal ban on disconnections from fuel supply would encourage alternative tariffs as well as the development of different payment methods and schemes that we could build on, such as Fuel Direct.

The debate's focus on defining vulnerability is a good example of why we need to stop disconnections. I thank the Minister and the Government for moving away from the stale old argument that disconnections are required to keep people in check. That was the argument of the 1980s and the early 1990s, but I am glad that the Government have moved away from it. The approach that we took to the Water Act 2003 is the right way forward.

In conclusion, let me make it clear that the new clause refers to domestic customers. I am sure that it is defectively drafted and that it would have loads of unintended consequences, so I shall not press it to a vote. However, I want the Minister to take on board the spirit of what I have said and to recognise that there is widespread concern about the proposals that emerged from the consultation exercise.

Anne McIntosh (Conservative, Vale of York)

I congratulate the hon. Gentleman on having moved his new clause. Can the Minister tell us how the Government define a vulnerable customer? The National Consumer Council has put forward what I think is a workable definition, and I wonder whether the Government are minded to accept it.

Nigel Griffiths (Labour, Edinburgh South)

I congratulate my hon. Friend on having moved the new clause and on his great success last year with his private Member's Bill, which many

of us welcome. I agree that disconnections for debt should be minimised. Indeed, I hope that they can be eliminated, as they have been in Northern Ireland. He welcomed the reduction from an average of 250 people per constituency being cut off—which was an absolute disgrace—to 30, but that is still unacceptable. That is why the Government are doing more to reduce it further.

Appropriate safeguards have to be built in to the disconnection arrangements, especially where vulnerable customers are affected. This morning, we heard the example of the elderly couple whose gas supply was cut off and who died of hypothermia. The Government believe that a ban on disconnections could increase debt levels and the costs associated with recovering debt. We are also concerned that a number of people would be forced into having prepayment meters as the only alternative to debt, when many hon. Members have spoken forcefully against any increase in such meters and the associated costs.

Brian White (Labour, North East Milton Keynes)

The Minister is arguing that prepayment meters are the only way forward. There is a range of options to consider, and prepayment meters, properly calibrated with emergency credit on them, can play a useful role. Disconnections have no role to play.

Nigel Griffiths (Labour, Edinburgh South)

I entirely agree with my hon. Friend that that is only one method of payment. Of course, it might be appropriate in some circumstances. However, I know from constituency experience that unfortunate individuals facing the threat of being cut off generally have other problems too, so it is important and appropriate to involve social services and others in counselling and working with them; they should not be left alone.

I also have concerns about self-disconnection. What can follow from self-disconnection is a disconnection from society and from the services that can help people, whether their problems are with drugs—we all have such people in our constituencies—or with factors less linked with poverty than with other circumstances that can affect their lives.

I am pleased to alert the Committee to the fact that Ofgem has, with Ministers' encouragement, undertaken extensive discussions with suppliers about disconnection. Those have focused on improving the processes for identifying and dealing with vulnerable customers, and clarifying procedures for notifying the relevant agencies when such customers are in difficulties with payments.

Proposals were put forward in April for improved industry-wide arrangements; I am informed that, as far as possible, they will ensure that valuable customers do not face disconnection in future. It is obviously important that we monitor that carefully.

The trend has been good. The figures speak for themselves, with a massive decrease in the number of disconnections—somewhere in the order of a sixth or seventh of the number of disconnections of only a few years ago. We have the good example of the elimination of disconnections in Northern Ireland, so

it is clear that the sentiments of my hon. Friend the Member for Milton Keynes, North-East and other hon. Members are being taken forward by the Department of Trade and Industry, and by the regulator and the electricity suppliers.

The change has been made in a way that has a great element of social inclusion. Those customers who do not have difficulty in paying their bills regularly—they have incomes that are adequate and lifestyles that match their incomes and they therefore do not suffer fuel poverty and are not threatened by disconnection—have been less sympathetic than my hon. Friend. They might not appreciate the need for us all to care about the more vulnerable. The trend towards eliminating disconnections is good. As I said this morning, disconnections were accepted almost as a matter of routine when I was a member of an electricity consultative committee. I never accepted that. My heart is very much with my hon. Friend.

Ofgem is taking steps, prompted by my hon. Friend the Minister and my right hon. Friend the Secretary of State. With everything moving in the right direction, and with the Northern Ireland example for us to emulate, I hope that I have persuaded my hon. Friend not to press his new clause.

Brian White (Labour, North East Milton Keynes)

I welcome the Minister's commitment to monitoring. I have concerns about that lingering clinging to the comfort blanket of disconnections—as if it makes a difference. We live in a grown-up world; we do not need that comfort blanket. I urge the Minister in his discussions with Ofgem to take that final step. We have done so much good work; only one more step is needed. I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

Question proposed, That the Chairman do report the Bill, as amended, to the House.

Nigel Griffiths (Labour, Edinburgh South)

I thank you, Mr. O'Brien, for your excellent chairing of the Committee. On behalf of the Committee, I also thank your co-Chairmen, Mr. Sayeed and Mr. Gale. I am grateful to members of the Committee, from all parties, for their contributions. I am grateful also to the Clerks, the attendants, the police and Hansard. I thank the staff at the Department of Trade and Industry for their excellent vigilance. I extend warm words also to the hon. Members for Tewkesbury and for Vale of York, to those who speak for the Liberal Democrats and to others for allowing such well informed debates.

I do not know whether it was a threat or a promise when the Opposition Whip said at the beginning of our proceedings that he would be a speaking member of the Committee. He failed to tell us that he would be speaking not in the Room but outside—in the Tea

Room and elsewhere. None the less, his attendance and his usual Whip's reticence have facilitated the work of the Committee, and I am grateful to him for that. With that, and with a word of thanks to you, Mr. O'Brien, I hope that the Bill will proceed as appropriate.

Laurence Robertson (Conservative, Tewkesbury)

As the Committee knows, in general, we support the Bill. We have done our best to add to the improvements that were made in another place, and we look forward to further debate on Report.

May I thank you, Mr. O'Brien, and your fellow Chairmen, Mr. Sayeed and Mr. Gale, for your expert guidance and good humour, and Mr. Lee, the Clerk, and his staff for their help? I should also like to thank my hon. Friends the Members for Vale of York, for South-West Hertfordshire, for Salisbury (Mr. Key) and for Bury St. Edmunds (Mr. Ruffley) for their guidance and good humour and for the hard work that they have put into the Bill, much of which is complicated. I am grateful to them. I also pay tribute to Liberal Democrat Members, who have contributed greatly, as has the hon. Member for Angus (Mr. Weir), who has, all alone, provided us with a great deal of worthwhile information.

May I also pay tribute to the Labour rebels, who have made the Committee very interesting? I look forward to hearing their contributions at later stages. I am sure that they will not lose their voices, and will continue to promote the beliefs that they hold so sincerely. I thank the Parliamentary Under-Secretary of State for Trade and Industry, who has dealt with some of the Bill. I think that he would acknowledge that the Minister for Energy, E-Commerce and Postal Services has probably handled the greater part of it, which is only right, given his brief, and I should like to pay tribute to him in his absence. He showed his customary degree of courtesy and friendliness, and was a pleasure to work with. I thank him as well.

Andrew Stunell (Liberal Democrat, Hazel Grove)

I am delighted to add my thanks and congratulations to you and your fellow Chairmen, Mr. O'Brien, for having steered us through what was not too stormy a Committee stage. I should like to thank the two Ministers. They have not always had the easiest of tasks, with the Opposition in front of them and the enemy behind them, but they have successfully steered the Bill to its next stage. Some of us will have more to say about it on Report—it is still work in progress.

I very much appreciated working with the hon. Member for Tewkesbury and his team, and with the hon. Member for Angus. We receive a lot of support from our officials and the Clerks, and I should not like to exclude them from my thanks. I look forward to our debates on Report.

Bill O'Brien (Labour, Normanton)

On behalf of my co-Chairmen and myself, I thank members of the Committee for the co-operation that we have received in our sittings. The proceedings have not been difficult to conduct because members have recognised the rules of debate, which

has been helpful to us as Chairmen. We have, of course, been guided by the Clerk, so I should like to make special mention of him and thank him for his co-operation and guidance on amendments and new clauses that have been submitted and put on the amendment paper. We also owe special thanks to the

Hansard staff, who work hard on our behalf to ensure that the record is correct. It is only right to thank them and all concerned with their work.

Bill, as amended, to be reported.

Committee rose at one minute to Five o'clock.