Energy Bill

Public Bill Committee, 5 February 2013.

Clause 109 - Designation of statement

Alan Whitehead (Labour, Southampton, Test)

I beg to move amendment 118, in clause 109, page 81, line 23, leave out ‘may’ and insert

‘shall within 12 months of the passing of this Act’.

Edward Leigh (Conservative, Gainsborough)

With this it will be convenient to discuss the following:

Amendment 119, in clause 109, page 81, line 35, at end insert—

‘(2A) The strategic priorities shall include a target (the “2030 target”) for decarbonisation of electricity supply in the United Kingdom which when taken in aggregate produces electricity at a level of carbon dioxide of 50g/kWh or less by 1 January 2030.

(2B) It is the duty of the Secretary of State to ensure that the 2030 target is met.

(2C) The Secretary of State must exercise all of the Secretary of State’s functions under Part 1 of this Act and under this Part, and any secondary legislation made under either Part, in order to achieve the 2030 target.

(2D) Progress towards meeting the 2030 target shall be included in the annual progress reports produced by the Committee on Climate Change under section 36 of the Climate Change Act 2008.’.

Amendment 120, in clause 110, page 82, line 10, at end insert—

‘(1A) The Secretary of State must lay and publish a delivery plan to achieve the 2030 target and any interim targets.

(1B) If at any time it appears that a delivery plan will or may not achieve the 2030 target, or any of the interim targets, the delivery plan shall be amended so as to achieve the 2030 target and the interim targets.

(1C) For the purposes of this section “the 2030 target” shall be defined as a target for decarbonisation of electricity supply in the United Kingdom which when taken in aggregate produces electricity at a level of carbon dioxide of 50g/kWh or less by 1 January 2030.’.

Amendment 116, in clause 112, page 83, line 42, at end insert—

‘(6A) The Secretary of State may, following advice from the Committee on Climate Change that the cost of carbon saving technology has significantly changed, by order amend the level at which the 2030 target is set.

(6B) The power in subsection (6A) may only be exercised if policies in other sectors of the economy will ensure that—

(a) the carbon budgets; and

(b) the 2050 target;

will be met regardless of the amendment to the 2030 target.

(6C) Where the Secretary of State makes an amendment under subsection (6A), the Secretary of State may amend any interim targets if, in the opinion of the Secretary of State, the amendment is necessary in order to achieve the 2030 target as amended.

(6D) Where the Secretary of State makes an amendment under subsection (6A), the Secretary of State must review and where necessary amend the policies that he has set out to achieve the 2030 target and the interim targets as amended.

(6E) For the purposes of this section—

“the 2030 target” shall be defined as a target for decarbonisation of electricity supply in the United Kingdom which when taken in aggregate produces electricity at a level of carbon dioxide of 50g/kWh or less by 1st January 2030.

“2050 target” has the meaning given in section 1 of the Climate Change Act 2008;

“carbon budgets” has the meaning given in section 4(1) of the 2008 Act;

“carbon saving technology” means the technology used, or capable of use in any sector of the economy to meet—

(a) the carbon budgets; and

(b) the 2050 target.’.

Amendment 117, in clause 112, page 84, line 7, at end insert—

‘(9A) The National System Operator (or any alternative delivery body specified under section 34(1)) and the Authority shall exercise their functions under this Act, and any secondary legislation, with the objective of meeting the 2030 target.

(9B) In providing any evidence and analysis, including in relation to any delivery plan, which may be required by the Secretary of State under this Act or under secondary legislation, the National System Operator (or any alternative delivery body specified under section 34(1)) shall ensure that the advice is given taking into account the objective of meeting the 2030 target.

(9C) For the purposes of this section “the 2030 target” shall be defined as a target for decarbonisation of electricity supply in the United Kingdom which when taken in aggregate produces electricity at a level of carbon dioxide of 50g/kWh or less by 1 January 2030.’.

New clause 5—Delivery plan for 2030 decarbonisation—

‘(1) The Secretary of State must lay and publish the first delivery plan for meeting the 2030 target as soon as is reasonably practicable after the designation of the Strategy and Policy Statement.

(2) Updated delivery plans must then be laid and published every five years after the date on which the previous delivery plan was laid.

(3) Each delivery plan must set out in respect of the period to which it relates—

(a) the policies and procedure to be adopted in order to achieve the 2030 target and any interim targets;

(b) the impacts which the policies and procedures are expected to have;

(c) the expected generating capacity including—

(i) electricity generated from renewable sources; and

(ii) other low carbon electricity.

(4) The policies and procedures referred to in subsection (3)(a) shall include policies to reduce demand for electricity.

(5) The impacts referred to in subsection (3)(b) shall include in particular the impact on—

(a) electricity bills including the impact of—

(i) electricity generated from renewable sources, and

(ii) other low carbon electricity;

(b) fuel poverty and low income households;

(c) the economy;

(d) the security of supply of electricity and gas to consumers.

(6) Prior to laying the delivery plan the Secretary of State must—

(a) obtain, and take into account, the advice of the Committee on Climate Change,

(b) subject to subsection (7), take into account any representations made by the other national authorities, and

(c) carry out a public consultation.

(7) Subsection (6)(b) shall not prevent the Secretary of State from laying the delivery plan where representations are made by a national authority after the relevant date.

(8) The Committee must, at the time it gives the advice to the Secretary of State—

(a) send a copy of the advice to the other national authorities; and

(b) publish the advice.

(9) At the same time as laying the delivery plan the Secretary of State must lay and publish a statement setting out how the order or delivery plan takes account of—

(a) the advice of the Committee;

(b) any representations made by the other national authorities; and

(c) any responses to the public consultation.

(10) The Secretary of State shall prepare an annual report which sets out the progress made in respect of the matters set out in the delivery plan.

(11) The Secretary of State shall each year within 30 days of the anniversary of the date on which the last delivery plan was laid—

(a) lay the annul report before Parliament, and

(b) publish the report.

(12) An order under this section is subject to the affirmative resolution procedure.

(13) If at any time it appears that a delivery plan will or may not achieve the 2030 target, or any of the interim targets, the delivery plan shall be amended so as to achieve the 2030 target and the interim targets.

(14) For the purposes of this section—

“affirmative resolution procedure” has the meaning given in section 91 of the Climate Change Act 2008;

“national authorities” has the meaning given in section 95 of the 2008 Act;

“relevant date” means the date three months after the day on which the advice of the Committee was sent to the national authority; and

“the 2030 target” shall be defined as a target for decarbonisation of electricity supply in the United Kingdom which when taken in aggregate produces electricity at a level of carbon dioxide of 50g/kWh or less by 1 January 2030.’.

Alan Whitehead (Labour, Southampton, Test)

The provisions would ensure not only that the Bill included targets for decarbonising the electricity and energy sector, but that, if those targets turn out to be difficult to attain, it would be open to, and indeed incumbent on, the Secretary of State to ensure they were met, in the context of the overall targets set by the Committee on Climate Change.

The committee argued that we must substantially decarbonise the power sector by 2030 for the UK to meet its 2050 carbon reduction targets. It emphasised clearly that that would require the carbon intensity of the electricity we use to fall from about 450 grams per kWh today to about 50 grams per kWh by 2030. That is not an insignificant part, by any means, of the overall climate change targets. The power sector accounts for a significant proportion of total greenhouse gas emissions. It is estimated that, in 2011, it accounted for about 27% of total emissions. Therefore, emissions from the power sector will play a significant part in cutting our emissions by 80% by 2050.

The provisions follow exactly the committee’s recommendation and set a 2030 decarbonisation target of 50 grams per kWh for the required strategy and policy statement. They also follow the Government’s impact assessment, which estimated that electricity market reform, with a 50 gram target, would have the benefit, among other things, of reducing consumer bills by £49 between 2016 and 2030. The impact assessment emphasised not just that that target was theoretical, but that it had practical consequences for customer bills.

Including this decarbonisation target will have consequences for the other important issue that we have discussed at some length: the extent to which the Bill will establish a climate of investment certainty for the future of low-carbon energy. It is clear from the evidence received during the Committee’s pre-legislative discussion sessions with industry and during the Energy and Climate Change Committee’s scrutiny of the draft Bill that investors want that clear signal. They want a signal in the Bill; they to be clear about the direction of energy policy after 2020. They want to be sure that they invest in a framework of clear understanding about where low-carbon energy is heading. It is not surprising, therefore, that the Bill’s decarbonisation target is supported by a whole range of investors. The low-carbon finance group, DONG, the Nuclear Industry Association, the Carbon Capture and Storage Association, RenewableUK, manufacturers including Siemens, Vestas, Alstom and Ecotricity and energy utility companies such as SSE and EDF, all want a decarbonisation target of 50 grams in the Bill. Those investors see the sense both in having that target in the Bill and in having a structure that gives us certainty about future energy decarbonisation in the context of our overall targets as set out by the Committee on Climate Change. These amendments not only propose that overall target; they propose interim targets to coincide with the five-year delivery plan that they set out. Indeed, the delivery plan includes a duty to meet these interim targets. The publication of the plan will show how the targets will be achieved.

Amendment 116 gives the Secretary of State discretion to amend the targets following advice from the Committee on Climate Change. If carbon saving technology costs have significantly changed, amendments may be made not just to how the 2030 target can be met but to enable other factors to be brought to bear to ensure that we stay in shape to meet our overall targets.

The amendments set out that the delivery body itself must set a five-year strategy and policy framework to deliver electricity market reform and give an objective to meet the 2030 decarbonisation target. They are a comprehensive addition to the Bill to ensure that we can confidently and reliably use what is in the long title of the Bill as a framework for our future decisions on low-carbon electricity.

I was going to say that in November 2010 the Secretary of State indicated to the Select Committee that Government amendments on a decarbonisation target would be introduced by 5 February. I had been going to say that today is 5 February, and those amendments have not been introduced; however, as of this morning, they have indeed been introduced. Amendments were tabled by the Government side yesterday evening which address this issue. However, it is clear at first sight that these amendments do not address the issues that I have set out this morning. The Government amendments do not require a decarbonisation target; they only say that the Secretary of State may set one if he so chooses. Certainly, in terms of the period up to 2016, they extend the time during which companies will not know whether there will be a decarbonisation target, nor what that target would be if there were to be one. There is no mechanism in the Government amendments to ensure that the decarbonisation target is met or, indeed, that the policy can be amended if the rate of decarbonisation is insufficient—certainly not in the way that it could be amended under the amendments that we are considering this morning.

It is rather worrying that the Government amendments make any decarbonisation target for an earlier year than 2016 unlawful, even if a future Secretary of State considers that such a target would be a useful tool. We have to set the statements of intent in those Government amendments in the context of what—[Interruption.] Does the hon. Member for South Thanet want to intervene?

Edward Leigh (Conservative, Gainsborough)

I do not think anyone was trying to intervene.

Alan Whitehead (Labour, Southampton, Test)

I presume that it was an involuntary exclamation of support for my proposals. The Government amendments have to be read in the context of what the Government have previously said on the question of decarbonisation. For example, in a letter to his constituents, the Deputy Prime Minister said:

“We will continue to campaign for a target, but industry and NGOs do not need to convince the Liberal Democrats of the need for one—it is the Conservatives they need to persuade.”

In the Liaison Committee, the Prime Minister said:

“If we don’t decarbonise electricity, we’ve got no hope of meeting all the targets that we’re all committed to.”

The Secretary of State himself told The Guardian recently that the Conservatives were to blame for the Government’s failure to include a decarbonisation target in the Energy Bill. He said:

“The Conservatives wanted to wait, saying it should be done in 2016”.

It is clear that the Secretary of State supports the idea that there should be a decarbonisation target on the face of the Bill; indeed, at the Liberal Democrat party conference, he supported a motion to limit carbon dioxide emissions by power plants to between 50g and 100g per kWh. No such commitment appears in the Government amendments on the issue; one can only assume that they are the product of an unhappy marriage between what certain Ministers would like to see as energy policy and what the energy Department itself would like to see as energy policy. As far as the Government amendments are concerned, it unfortunately appears that, for the time being, what other Departments think should be the energy policy has won out.

I would urge hon. Members to stick with the clear principle of what we all know should be at the heart of the Bill. It should be a Bill about having low-carbon energy and electricity for the future and the means to ensure that, as part of our overall drive to ensure that we live in a low-carbon society, low-carbon electricity is guaranteed, by setting and reaching targets for the decarbonisation of our society, through our energy policy and our policy on electricity in particular. That is the straightforward principle that I am asking hon. Members to place in the Bill. My amendments would bring about not just the principle but a way of making the principle work and of guaranteeing that investment in the future would be on a clear-eyed basis, as we would know where we were going. We know that, as the Bill says, we face a low-carbon future, and we are determined to ensure that that future happens, so we should provide requirements and duties to bring it about.

As the Prime Minister himself has said, and as is my view, anything less means that we will not have the means to ensure that that low-carbon future happens. Without that certainty, we will not be able to ensure that we make the progress that we all know is necessary for a low-carbon future. I therefore hope that hon. Members will find it possible to vote for the principle, and will not be swayed by the idea that fudges and nudges can be the order of the day for our future energy policy.

Tom Greatrex (Labour, Rutherglen and Hamilton West)

It is a pleasure to serve under your chairmanship this morning, Mr Leigh. As you know well, confession is good for the soul and perhaps today we may reflect on that. As I missed mass on Sunday—that was not connected to other issues that will be discussed later on today—and have missed it for a number of weeks, I wonder whether I could indulge the Committee with a couple of confessions this morning.

First, I confess that, during September, in the week before my party conference, I had an enjoyable and convivial evening in Glasgow with some old friends in a few hospitable drinking establishments. There, I proved to myself that I am not as young as I was before I had children.

My second confession is that on the following day I was not much use for anything. Therefore, at home I flipped on the TV and watched a bit of the Liberal Democrat conference. In watching that conference for a few hours, while feeling lethargic and fevered, I—and perhaps a considerable proportion of the TV audience—found myself paying attention to the Chief Secretary to the Treasury’s comments. I confess—it is habitual now; this is my third confession in just a few minutes—that I am not the greatest orator in the world; nor, for all his talents in government, do I think that the Chief Secretary would necessarily claim to be, but that did not stop him saying something important and interesting. He said:

“It seems to me that green investment is one of the fastest routes to getting investment, growth and jobs going in this country, and we just need to have a very, very clear position and a very, very clear plan. I don't think as a Government we can afford to send mixed messages on that point.”

He said that when talking to his party at conference, at which at least one, if not both, of the Liberal Democrat members of the Committee were present, and I am sure that those who were there enjoyed some of it very much, but he was making an important point that is relevant to the amendments we are discussing: at various points, there has been near universal support for setting a target for the decarbonisation of the power sector by 2030.

I remind members of the Committee that last year, the Leader of the Opposition became the first party leader to call for a 2030 target; the Liberal Democrats followed suit, overwhelmingly supporting the motion moved by the Chief Secretary to the Treasury at their conference. That motion proposed to:

“Stimulate green growth in the economy and create a framework where there is greater certainty and confidence among businesses to invest in renewable energy, including by…Establishing a target range of 50–100g of CO2 per kwh for the decarbonisation of power sector by 2030 in addition to existing carbon emission reductions.”

Just two years ago, the Prime Minister conceded that decarbonisation was necessary if we were to meet climate change commitments. As well as among the party leaders, there was broad consensus among those members of this Committee who are, or were in the recent past, members of the Energy and Climate Change Committee; they will be aware of their report on the pre-legislative scrutiny to the Bill, to which they agreed unanimously, earlier in the year. It stated:

“It is right to prioritise the decarbonisation of the electricity system because this is likely to deliver the most cost effective route to meeting our 2050 climate change targets. Although statutory carbon reduction targets are set out in the Climate Change Act 2008, these are economy wide, rather than sector specific. We conclude that providing greater clarity about the contribution that the power sector is expected to make towards meeting these targets would help to provide certainty to investors. The Government should set a 2030 carbon intensity target for the electricity sector in secondary legislation based on the recommendation of the Committee on Climate Change.”

We have heard about the Committee on Climate Change a number of times during our deliberations and I know that the Minister, the right hon. Member for Bexhill and Battle, takes that Committee’s work seriously. Indeed, when he was shadow Minister for Energy and Climate Change, he said:

“We attach the highest importance to the full implementation of the Climate Change Committee’s recommendations.”––[Official Report, Climate Change Public Bill Committee, 24 June 2008; c. 60.]

I am sure that he holds those words, which he uttered while in Opposition, closely. They show his personal desire to ensure that the Government promote green growth and renewable energy. That position has been reached at various points by members of the Committee. That is why the amendments are important. The Secretary of State told us that he supported a 2030 target saying:

“I do not think that it is a secret. That is my position and the position of my party. We are in coalition and we have had discussions with assertive colleagues.”––[Official Report, Energy Public Bill Committee, 15 January 2013; c. 8, Q11.]

I know that that can cut both ways. The Minister of State, Department of Energy and Climate Change, the right hon. Member for Bexhill and Battle, explained in a previous session that we do not have movement on the changes to the levy on community energy because discussions are ongoing. The Secretary of State said his party has a position on this and the Opposition are here to help. It is right to be generous to colleagues across the political divide. The Liberal Democrats have an opportunity today to vote for their policy. Indeed if the Liberal Democrats on this Committee voted for their policy and for these amendments, there would be a majority and the target that the Secretary of State insisted that he wanted will be in the Bill and a number of people can leave very happy. Indeed, the members of the Select Committee who are on this Committee can leave happy.

The Minister of State, Department of Energy and Climate Change, the hon. Member for South Holland and The Deepings, although he will not be able to admit it, will probably reflect that that would be quite a good move. The hon. Member for Sittingbourne and Sheppey spoke courageously in an earlier debate on green jobs and growth and the impact on his constituency. He will leave happy because he made the point, which was reiterated by several of those from industry who gave evidence to us, that having this target is crucial to driving the long-term investments that are needed.

The point is made not just by those one might expect—people from Policy Exchange referred to it as rent-seeking behaviour—such as RenewableUK, Vestas, DONG Energy and people involved in the renewables sector. It is made by a wide cross section of more than 65 organisations. They are big businesses such as Asda and Sky, which do not have a direct energy interest but are concerned to ensure that there is a clear agenda from the Government. That is why they have signed up in support of this target alongside organisations ranging from Quakers to Microsoft, British American Tobacco, Kingfisher and everything in between, together with academics and non-Governmental organisations.

So the evidence is very strong that this is needed and the amendment gives us the opportunity to place it in the Bill. The Secretary of State has been clear that he was unable to carry through his desire and get it into the Bill for which he is responsible. This is an opportunity for us to help him do that. This is not just about the environment, although that is important. It is not just about security of supply, although I think this would make a contribution to that. It is also, crucially, about jobs, growth, investment in industry and confidence to invest in the UK. As we heard a number of times, one of the barriers to that investment is the lack of certainty and predictability. One of those forms of investment relates to manufacturing and the supply chain. The Government’s offshore wind task force want to reduce the costs to the equivalent of 100g per kWh. It is hard to do that without the scale that comes from having the manufacturing capacity within the UK.

Various companies in Scotland and other parts of the UK have indicated an intention to make that investment. The Gamesa proposal in Leith is one example. While the high-level agreements are there, the manufacturing plant is not yet there. That is for a number of reasons, but one relates to certainty and to the predictability of the Government’s course. Predictability helps to reduce costs, which then reduces costs for the consumer—a concern I am sure we will hear about during the debate.

That is why this target is important. That is why the Aldersgate Group made it clear in its letter to the Chancellor towards the end of last year that it

“is essential for government to provide investors with the long-term confidence they need to transform our electricity market”.

That is why there is such a wide array of support for the measure. That is why, as my hon. Friend the Member for Southampton, Test explained, the Government’s impact assessment indicated consumers will save £49 on their energy bills under EMR with a 50 grams per kWh decarbonisation target, relative to doing nothing.

I know this is not my decision, but I am not sure we need to divide the Committee. According to the statements members of the Committee have made at various points in the relatively recent past, a majority are in favour of a target; it is not an absolute majority, but it is an overwhelming majority. By accepting a target, the Committee would be doing a service to the Government, to the Bill, to industry and to opportunities for jobs, growth and investment in their constituencies. The Government talk about the importance of rebalancing the economy and driving growth in the nations and regions, and we have a crucial opportunity to do that.

That is why these measures are important and why members of the Committee should have the courage of their convictions, based on their previous statements, and support them. I hope they will do so without the need to have a Division later this morning.

Robert Smith (Liberal Democrat, West Aberdeenshire and Kincardine)

I welcome the debate introduced by the hon. Member for Southampton, Test, which relates to an important reason why the Bill is before us. The Bill is meant to decarbonise our electricity system, to bring about the investment we need in it and to take it down the path of decarbonisation.

Why do we need to do that? Climate change is a threat to the planet and our society. To tackle it, we need to reduce our carbon emissions quite dramatically, and the electricity system is at the heart of our being able to do that. Crucial to achieving that is that we get the Bill through Parliament, that we get contracts for difference and that we get the money on the table. The practical delivery of decarbonised electricity will happen when people build a low-carbon power station that has been incentivised by the Bill.

The Bill therefore has a crucial role to play in meeting our decarbonisation agenda. Crucial to that is the fact that the Bill has come from parties that have negotiated a coalition agreement. In a coalition, parties have to compromise to deliver practical results. Without that coalition, there would be no certainty for investors. Investors can take the fact that two parties with differing points of view have compromised to introduce a Bill that will deliver decarbonisation investment in the electricity system as a signal that there is a commitment to decarbonisation. It is therefore crucial that the Bill is delivered.

Barry Gardiner (Labour, Brent North)

Why would investors not simply conclude that one party is in favour of decarbonisation, and they know where it stands, while the other party is not in favour of it, which might be a problem?

Robert Smith (Liberal Democrat, West Aberdeenshire and Kincardine)

That is why it is most important that the other party sends out signals to investors to make it clear where it stands on the decarbonisation agenda for the long term. That party will have that opportunity not only in this debate, but in the next election, when all parties will have the opportunity to make it clear where they stand. With the delivery of this Bill, there will be a power to set a decarbonisation target for the electricity system.

Tom Greatrex (Labour, Rutherglen and Hamilton West)

Surely the hon. Gentleman accepts that there is a majority for the decarbonisation target in this House and reflected in this Committee? If Members voted alongside those policies, there would be a majority in this Committee and we would have a target in the Bill.

Robert Smith (Liberal Democrat, West Aberdeenshire and Kincardine)

What the hon. Gentleman has to accept is that none of the parties had it in their manifesto. When there is a coalition Government, then the delivery of that coalition has to be by agreement of the programme for Government. When issues come up that are not in the manifesto, one has to make a compromise to deliver a coherent package from the Government.

Ian Lavery (Labour, Wansbeck)

The SNP is in favour, the Liberal Democrats are in favour, and the hon. Gentleman, together with the members of the DECC Committee, invariably voted for a decarbonisation target. We are all in this together. Why the change of mind?

Robert Smith (Liberal Democrat, West Aberdeenshire and Kincardine)

As I have explained, when the Committee reported, it was a recommendation to Government that made a lot of sense to the Committee and would, ideally, be the solution. That was a recommendation to Government to change the Bill. The Bill was changed on the single counterparty and on the investment programmes and the Government accepted a lot of the Committee’s recommendations, but not all of them. As I am seeking to explain to the Committee, when there is a compromise in coalition, one has to accept the compromise.

Albert Owen (Labour, Ynys Môn)

I know that the hon. Gentleman is in a difficult position, but as my hon. Friend the Member for Rutherglen and Hamilton West laid out, we are genuinely trying to improve the Bill. That is the duty of Parliament and the duty we all have. If there is a common agreement against the majority will of the House, surely that overrides any compromise within coalition Government and will give a clearer signal to the investors?

Robert Smith (Liberal Democrat, West Aberdeenshire and Kincardine)

We can debate this on the floor of the House, and see where the House stands, on Report. I believe that the deal to deliver a power to set a carbon target and the agreement to have a single counterparty and take forward the CFDs deliver the practical measures to get us started on a low-carbon agenda. A target is a great benefit on top, but if that is at the price of not delivering the practical agenda, then the outcome of low carbon is not delivered.

Laura Sandys (Conservative, South Thanet)

What we need to establish here is that everybody is totally committed to the Climate Change Act and decarbonisation. There is no debate about that. What there is a discussion about is looking at how we achieve that and there are many ways we can do it. A target is not necessarily the most opportune from the point of view of the economy and flexibility, looking into the future.

Robert Smith (Liberal Democrat, West Aberdeenshire and Kincardine)

But given the uncertainties, of course a target would be a helpful improvement. Therefore the power to have a target in 2016 is an important one that needs to be incorporated into the Bill, so that it can actually be delivered for the long-term planning horizons. It would be important for the hon. Lady’s party to make clear its commitment to that low-carbon agenda in debates and in the House, because it is crucial that investors get that signal that we want a low-carbon agenda. They are getting the signal that we are putting £7.6 billion in a low-carbon agenda, which is a good start and a good practical measure to deliver the physical, on-the-ground low-carbon generation that we desperately need in this country.

Several hon. Members rose—

Edward Leigh (Conservative, Gainsborough)

Order. Sir Robert is being assailed on all sides. This is a very relaxed Committee. People can give a long speech, a short speech, as many as they like. They do not have to intervene all the time on Sir Robert, but if Luciana Berger wants to make a quick intervention, I do not mind.

Luciana Berger (Labour, Liverpool, Wavertree)

Thank you. My only brief point is that in substantiating why he will not support the amendment, the hon. Gentleman tried to tell us all about the importance of coalition Government and the compromises that his party has to make. His arguments are quite weak in the face of what we saw last week, with his party voting against one of the key elements of the coalition agreement on boundary changes. Does he think that saving his party on the boundary changes vote is more important than giving investors in this country certainty?

Edward Leigh (Conservative, Gainsborough)

Order. This is quite a technical and interesting amendment, and I am sure we can have a useful debate on it without veering into boundaries.

Robert Smith (Liberal Democrat, West Aberdeenshire and Kincardine)

That was a reminder to both sides of the coalition of the importance of not breaking it. The other half of the coalition had not delivered on the House of Lords reform programme motion. Therefore, there is a lesson there on the importance of coalition governments sticking to agreements if they are going to deliver the whole package.

Michael Weir (Scottish National Party, Angus)

I strongly support the amendments. It is imperative to decarbonise the energy sector, and a decarbonisation target on the face of the Bill will give a clear and unmistakable message that we intend to do so. The first and most obvious reason for doing so is that we must reduce our carbon emissions. The energy sector is a major contributor to carbon emissions and the Committee on Climate Change has made it clear that decarbonising power is the cheapest way of meeting our overall carbon budget.

In the evidence sessions, Ministers opposed the need for such a target and pointed out the existing targets within the Climate Change Act 2008. To an extent, they may have a point, but when this Bill was published, the Government also announced their gas strategy, which clearly envisaged a substantial number of new gas generation stations. As we debated last week, the current emissions performance standard would allow for the building of new unabated gas stations. That brings some uncertainty into the equation. As the debate on EPS between myself and the hon. Member for Brent North showed last week, there is a certain tension between the economic imperative and the environmental ideas behind this Bill. The hon. Member for West Aberdeenshire and Kincardine rightly said that it is important that this Bill proceeds because it does a lot of things that are important for encouraging economic development of low carbon energy, and giving some certainty for the future. As I said in my speech on Second Reading, I was not prepared to support the amendment put forward by the Labour party to stop the Bill at that stage because of the absence of a decarbonisation target, and I was criticised in some quarters for doing that. It is important that the other things go forward, but we have a chance here to make the point about the decarbonisation target. As has rightly been said, there is a majority in this Committee and within the House for a decarbonisation target, and it is important that it goes on the face of the Bill.

As Professor Mitchell in our second evidence session said:

“If you look at what has been going on just in terms of the EMR over the last two years, we have a lobby full of nuclear industry, strong movements for renewables and now a gas strategy coming out of the Treasury. It is an incredibly uncertain world for those who wish to invest, going into the long term.” ––[Official Report, Energy Public Bill Committee, 15 January 2013; c. 72, Q217.]

That is the economic reason, as opposed to the climate change reason, for a decarbonisation target. There is at best a mixed message coming from the Government as to how they intend to proceed with the decarbonisation of energy. That mixed message could be very harmful to our efforts to attract not only new renewable generation, but crucially the supply chain that will ensure we reap the economic benefits and jobs that can come with it.

Minister also rightly made the point that other nations do not have a decarbonisation target, but the point is that many of these countries are already ahead of us in creating that supply chain. It is already there and it can supply investments and renewable energy in their territories. We are now, pretty late in the game, trying to attract it to this country to ensure that it sets up, and we do not simply import the infrastructure that we need to create the green energy of the future. As David Handley of Renewable Energy Systems put it:

“The value of a 2030 decarbonisation target, as we heard earlier, is in providing that greater signal to the supply chain, to the entrepreneurs who are looking to invest in new businesses and to the people who are developing projects that there is going to be this long-term market for the products that they are delivering.” ––[Official Report, Energy Public Bill Committee, 15 January 2013; c. 57, Q168.]

Danielle Lane of DONG Energy made it clear that, at present, the 2020 target is acting as a cliff edge and that industry needs certainty as to the direction of travel after 2020.

Dan Byles (Conservative, North Warwickshire)

We consistently hear the line that investors need a signal as to the direction of travel, but does not the hon. Gentleman accept that the UK has the world’s toughest legal decarbonisation target to 2050? There is not another nation on the planet that has enshrined in law a decarbonisation target as tough as we do. If people believe in Government targets, that is the daddy of all targets.

Michael Weir (Scottish National Party, Angus)

I made the point just a minute ago that with the gas strategy that is coming out along with this Bill, an element of uncertainty has been injected into how Government or, to follow what the hon. Member for West Aberdeenshire and Kincardine said, part of Government, view the matter. It is that uncertainty that is causing difficulties for industry in particular and that is why we need to press for the target.

Danielle Lane said that industry needs a clear sign that after 2020 there will continue to be a clear commitment from all parties to continue along the route of decarbonisation. As the hon. Member for Southampton, Test noted, the Government have now tabled amendments and they will be discussed on Thursday. It is not the place to discuss them in detail now. Even if the Government decide to act on decarbonisation, it could be well into 2016 before that happens and, given the time scale of new generating build, that will be very late for people who are looking to bring in new generation after 2020 to get that clear sign, even under the Government’s own amendments. Such points have been made again and again in both verbal and written evidence, and we must take note of what is said.

Let us take the example of offshore wind, which has a strong and vibrant future. There are plans to install up to 10 GW of capacity in Scottish waters over the next decade, including three projects off the coast in my constituency of Angus. Many more sites have been considered for deployment in 2020 alongside commercial wave and tidal generation. We must ensure that we send out a clear and unambiguous message that we want those developments and we will continue to push for the decarbonisation of the energy sector. If we fail to include a decarbonisation target, we will be continuing the uncertainty for industry, and we may find that we fail to reap the economic benefit of the huge amount of work and investments that we are making, not least in this field.

Peter Aldous (Conservative, Waveney)

As I set out in the Register of Members’ Financial Interests, I have interests in family farms in Suffolk where renewable energy projects are being pursued. I am also a member of the Aldersgate Group, to which my hon. Friend the Member for Rutherglen and Hamilton West referred in his speech.

I should also declare that my Waveney constituency—Britain’s most easterly constituency—stands to benefit from some of the larger projects that will hopefully flow from the Bill, such as the construction of Sizewell C 20 miles down the coast and the development of the East Anglia Array, the largest round 3 offshore wind farm, to which Lowestoft is the nearest port. Such projects present a once-in-a-lifetime opportunity to bring jobs and prosperity back to an area that has been hard hit in the last 30 years by the dramatic decline of the fishing industry, the closure of factories and the rise of package holidays, which has hit the domestic tourist industry. With energy generation, if we can build a strong domestic supply chain, there is an opportunity to reverse this decline and properly to rebalance the economy.

That opportunity is not restricted to East Anglia, but repeated all around the coast of the British Isles: in Kent and Sussex, in the constituencies of my hon. Friends the Members for Sittingbourne and Sheppey and for South Thanet; in the south-west, Wales, Scotland and the north-east—Yorkshire and Humberside. We have received a submission from the hon. Member for Huddersfield (Mr Sheerman) and my hon. Friend the Member for Brigg and Goole (Andrew Percy), who represent the all-party parliamentary group for Yorkshire and northern Lincolnshire, in which they set out the role that energy can play in their local economy. The issue before us this morning is the role that having a decarbonisation target in the Bill could play in building the supply chain.

Before I look at that in detail, Mr Leigh, I would like to emphasise two important, positive themes that have come out of the Committee under your, and the other Chairmen’s, wise guidance. First, we have shown that the political parties in this place are broadly in agreement on the direction of travel and are supportive of the mixed energy economy that the Bill seeks to promote. That collegiate approach is needed to attract much-needed investment into the UK energy sector: an estimated £110 billion by the end of the decade and £330 billion by 2030. To have been singing from a completely different hymn sheet would have unnerved investors and would have seen them fleeing from these shores. Instead, despite differences, largely of emphasis, we have heard from many witnesses and those who presented evidence that the British energy sector, as a whole, is a good place in which to do business. What we have been debating is what needs to be done to make it the world leader; the place to come to.

Those listening to these sittings have heard the expertise and knowledge of the hon. Members for Southampton, Test and for Brent North and the responsible and probing approach adopted by my hon. Friends the Members for Rutherglen and Hamilton West and for Liverpool, Wavertree.

Secondly, it is appropriate to draw attention to the approach adopted by the ministerial team, my hon. Friend the Member for South Holland and The Deepings and my right hon. Friend the Member for Bexhill and Battle. My hon. Friend the Minister has listened to Members’ concerns, taken them on board and adopted an open-minded approach to many of the proposals and amendments presented to him. That is evidenced by the fact that the Bill is in a very different form—a better shape—to the draft first considered by the Energy and Climate Change Committee. I know that he will continue to pursue that approach until the Bill receives Royal Assent.

In considering whether there should be a decarbonisation target in the Bill, it is appropriate to highlight some views of those who appeared at the evidence sessions or submitted representations. First, neither CBI nor the British Chamber of Commerce believe that there should be a decarbonisation target; both believe that the most important requirement is for the Bill to obtain Royal Assent as quickly as possible, as no investment decisions will take place until that happens. The CBI is of the opinion that it is the instruments contained in the Bill —the contracts for difference, the capacity market and the levy control framework—that will influence boardroom decisions and unlock investments.

Barry Gardiner (Labour, Brent North)

If that is their position, why do the Government propose to introduce provisions so that there may be decarbonisation targets?

Peter Aldous (Conservative, Waveney)

They felt that the tools in the Bill were more important and they were aware of the amendment that the Government proposed at that time.

E.ON adopts a similar approach; it believes that the need to decarbonise the electricity system should not be up for debate, but that the focus should be on agreement at EU level with the EU emissions trading scheme remaining a key driver in decarbonising European economies, and that member states should not do their own things.

Albert Owen (Labour, Ynys Môn)

I, like the hon. Gentleman, have spoken to number of energy companies, including E.ON, and its concern was that it did not want decarbonisation to hamper progress or to wreck the Bill in any way. I put it to him that this amendment, tabled by my hon. Friend the Member for Southampton, Test, will improve the Bill, not wreck it in any way. We support the main recommendations put forward by the Government; this is an enhancement.

Peter Aldous (Conservative, Waveney)

I thank the hon. Gentleman for his intervention. At the moment, I am going through a wide variety of industry comments and feedback. As he will see, I will come on to some that take a different view on matters and draw my own conclusions from that.

Energy UK believes that a decarbonisation target could be beneficial if certain conditions are met. However, it, too, emphasises the importance of timeliness and the need for a variety of market arrangements to take us beyond 2020 to 2030 and then to 2050.

RWE questions the merit of unilaterally setting a decarbonisation target, believing that it will not deliver further investment if we do not simultaneously strengthen the EU-wide target. It believes the focus should be on developing, and getting clarity on, an investable low-carbon support mechanism and the allocation process under the levy-control framework.

ESB International, too, emphasised the need for timely progress on the Bill’s passage. It understands and supports the Government’s motivation for including enabling powers for introducing a target.

Vestas and Siemens—both manufacturers of turbines—strongly support a target. They believe that, without one, supply chain investment will grind to a halt in 2020. They point out that the Government’s 2016 proposal will unnecessarily prolong the uncertainty faced by investors and that the long lead-in time for many supply chain investments means that 2016 could be too late. DONG Energy expresses similar concerns.

The Renewable Energy Association also supports a decarbonisation target, expressing the opinion that there is a need for supply-chain companies to have confidence in the post-2020 framework so that they can invest in capital and skills. It believes that, while other countries might not have a CO2 target, one is needed in the UK, as we lag behind other countries in our industrial stake in renewables.

RenewableUK expressed the view that the failure to include a decarbonisation target or a range in the Bill is a missed opportunity to give manufacturers and developers the confidence they need to make the necessary investments.

Statkraft, with specific emphasis on round 3 offshore wind, which is of particular interest to me, expressed the opinion that, without the market signal of a decarbonisation target, many round 3 offshore projects may not be developed and that supply-chain companies would not be able to put together a business case for developing facilities in the UK, thus not delivering the attendant benefits of cost reduction, investment and job creation. It believes that a decarbonisation target will avert the risk of an investment hiatus, which could have significant implications for growth and jobs right down the supply chain.

Luciana Berger (Labour, Liverpool, Wavertree)

I was reflecting on what the hon. Gentleman said about the CBI, because I was not sure whether he was correct. I have subsequently done some investigation, and perhaps I can put on record what Neil Bentley, the CBI deputy director, said about the decarbonisation target a couple of months ago. He said:

“The Energy Bill must deliver the pace of decarbonisation required to achieve”

the carbon budgets. He continued:

“This link to the existing Climate Change Act…should be enshrined in the Energy Bill.”

Peter Aldous (Conservative, Waveney)

I am grateful to the hon. Lady. My findings about what the CBI had said came from its submission to the Committee.

The conclusions of Dr Robert Gross were particularly concerning.

John Hayes (Conservative, South Holland and The Deepings)

My hon. Friend is making a passionate speech, but I want to help him and, perhaps, the hon. Member for Liverpool, Wavertree, who is relatively new to these things. Dr Brown from the CBI said:

“We hear from businesses that…are opposed to a carbon intensity target”

and

“businesses who are in favour…The key issue is that it is not at the top of anybody’s priority list for boosting investor confidence.”––[Official Report, Energy Public Bill Committee, 15 January 2013; c. 52, Q156.]

You cannot be any clearer than that.

Luciana Berger rose—

Peter Aldous (Conservative, Waveney)

I give way straight away to the hon. Lady.

Luciana Berger (Labour, Liverpool, Wavertree)

I remember that evidence session very clearly. When that member of the CBI—he was not the deputy director—was asked to name any of his members who took that view, he was unable to name any, and we have not received subsequent correspondence from the CBI about who held that view.

Peter Aldous (Conservative, Waveney)

I am grateful to the hon. Lady. It would be unfair of me to say that the CBI is speaking with forked tongue, but we may need to revisit what its exact position is.

I found the conclusions of Dr Robert Gross particularly concerning. His view is that without a decarbonisation target, renewable investment in the UK will almost cease. As a result, UK energy bill payers would be supporting industrial jobs not in Britain but elsewhere in Europe—in Denmark and Germany. That would be a very poor deal for British households.

Finally, I will summarise the views of Vattenfall, which strike a particular chord with me as it is the joint developer, with ScottishPower, of the East Anglia array. Vattenfall believes that the UK is one of the best prospects for investment in low-carbon generation anywhere in the world up to 2020; it thinks that thereafter, the outlook will not be so positive unless we give a strong signal towards effective decarbonisation by 2020. If there is such a signal, the UK can maintain its pole position.

I sense I may have taken up too much of the Committee’s time; however, this is an important subject.

Stephen Gilbert (Liberal Democrat, St Austell and Newquay)

What discussions has my hon. Friend had with his colleagues on this issue? I find his case very persuasive; have any of his ministerial colleagues in the Department—or, indeed, in the Treasury—heard the case he is making, and if so, what was their response?

Peter Aldous (Conservative, Waveney)

I have presented my case in discussions with colleagues and on the Floor of the House. There was a degree of understanding of the position from whence I came; indeed, as I said, the concern I am expressing is one felt around the whole of the British coast. However, as we have heard, we have the coalition agreement and there is a need for a collegiate approach, with decisions being taken by “the quad”. We all work within that framework, but all of us put forward different views and concerns. That is the approach we are adopting in Committee as well.

To a large extent, one can cherry-pick the evidence we have heard for and against a decarbonisation target to suit one’s own case. I draw two conclusions. First, the sands of time are fast ebbing away; the Bill must be enacted as soon as practically possible. Secondly, there is a cliff edge fast looming into view. I personally do not want to look over that cliff, let alone go over it. Loyalty to the Minister and respect for the way he has put forward the Government’s case and responded to amendments during the past three weeks mean that I will be supporting him today. However, I urge him to consider carefully during the Bill’s remaining stages the evidence we have heard on the need for a decarbonisation target. It is not a silver bullet, but it may well be an important piece of a jigsaw that can attract investment, build a domestic supply chain, bring down costs and enable British companies to win contracts, thereby creating home-grown jobs.

Barry Gardiner (Labour, Brent North)

It is a great pleasure to speak under your chairmanship again today, Mr Leigh. Why is the fox not dead? The Government clearly thought that by introducing their amendments and new clauses at the last minute—I do not propose to speak to those, Mr Leigh, because I know you would rule that out of order—they might manage to shoot the fox of my hon. Friend the Member for Southampton, Test. However, they have not succeeded. Even when the hon. Member for Waveney gave, with generous words, his allegiance to the Minister, let’s face it, he did so not out of conviction that the Minister was right but out of a sense of loyalty to him or respect for the way he has conducted himself in our debates.

We have been treated to the spectacle of the hon. Member for West Aberdeenshire and Kincardine, who speaks for the Liberal Democrats on these matters with great distinction—and who, I have to say, comes to better conclusions on the Energy and Climate Change Committee than he does today—jumping through hoops. What did it boil down to? Why is this fox not dead? Because, I am afraid, of the political convenience of the parties in trying to appease the Chancellor.

What we all know and I suspect everybody in this room realises—perhaps one or two do not—is that this would be a better Bill, better able to incentivise investment and focus the attention of industry on achieving our objectives of driving investment into the sector, if decarbonisation targets were in it. But they are not. They are not going to be, because of this strange arrangement to appease the Chancellor. The interesting this is, we know precisely what the Government are saying—what St Thomas Aquinas said: “Lord make me virtuous, but not yet”.

Edward Leigh (Conservative, Gainsborough)

Actually, it was St Augustine.

Barry Gardiner (Labour, Brent North)

Indeed. I am not such a good Catholic as my hon. Friend the Member for Rutherglen and Hamilton West. St Augustine said, “Lord make me virtuous, but not yet”; however, he did not say, “Make me virtuous in 2016”. Is the idea to agree that this is the right thing to do, but to decide that we want to put it off to 2016 as a matter of principle—beyond the next election—so we might not have to decide what that decarbonisation target should be? We see in the Government’s new clauses and comments that there are matters—the economic and fiscal circumstances—the Secretary of State will have to consider at that point. We know what is driving this: the fact that they do not want to do it anyway. By “they” I do not mean those present here, who all recognise the need for the target—indeed, three Opposition members of the Committee have already signed up to it in the Energy and Climate Change Committee’s report—but the Chancellor.

The Chancellor does not believe in all this. He thinks it is a distraction that we should not bother with—that we should let, as this Committee has already discovered, unabated gas go careering forward right the way through to 2045. Of course, a decarbonisation target in the Bill would rule that out of order. Then, we would not have needed an EPS, because with a decarbonisation target that the Government were actually responsible for delivering on, there is no way they could have done that, and the amendments I tabled the other day would have been beside the point. The key point is: will we reach the targets that we have already set for 2050? The hon. Member for North Warwickshire, who is on the Energy and Climate Change Committee, said, “Look, we have 2050 and the strongest targets in legislation anywhere, so this is beside the point and does not really matter”. Well, it does matter, because 2050 is beyond the period when most of us in this room believe we will still be in public office. It is certainly beyond the time when some of us think we might still be alive. It means that we can shuffle off that responsibility. Investors know that.

Gregory Barker (Conservative, Bexhill and Battle)

2016?

Barry Gardiner (Labour, Brent North)

No, 2050. We are talking about the targets for 2050. Investors and industry are pleased to have that 2050 target, but they know that the target begins to take on the form of reality only if there are intermediate targets. That has been accepted by the Climate Change Committee, and it has been accepted at other moments by the Government, too.

Gregory Barker (Conservative, Bexhill and Battle)

The whole point is that we have such intermediate targets. We have very detailed intermediate targets—they are called carbon budgets. We have just passed them through to the late 2020s.

Barry Gardiner (Labour, Brent North)

There is a play on words, is there not? I spoke of targets; the Minister speaks of budgets.

Gregory Barker (Conservative, Bexhill and Battle)

This is not a debate about semantics. I served on the Committee that considered the Climate Change Bill and supported that very important piece of legislation from the Opposition Front Bench in 2008. The meaning is clear: to establish a clear trajectory, piece by piece, step by step, and not just one target in the never-never-land distance of 2050. This is very clear progress that can be monitored and verified as we go—a target, surely, by any other name.

Barry Gardiner (Labour, Brent North)

The Minister knows full well that I am not in any way opposed to carbon budgets—of course I am not. It is absolutely right that we have those budgets set and that we keep to them. However, he will accept that there is difference, because he has just tabled new clauses that are precisely not carbon budgets, but carbon or decarbonisation targets. There is a difference, as the Minister knows full well, because I presume that he will support the Government’s new clauses. There is no question but that these are the same thing—both are necessary—but we need not simply a 2050 target, but a 2030 target, for the very reason that the hon. Member for Angus has already cited: there is a cliff edge in 2030, and that cliff edge will undermine confidence and undermine investment. Despite all the other good things that are in the Bill, this is a problem, and the Government should recognise that, rather than faffing around with the proposals that they have put forward.

Stephen Gilbert (Liberal Democrat, St Austell and Newquay)

On the faffing around point, we saw scores of energy Bill under the previous Labour Government, none of which contained a decarbonisation target. In 2010, when the Labour party put its case to the British people in the general election, it did not support a decarbonisation target. Is it not the hon. Gentleman’s party that has been faffing around on this issue for far too long? Thankfully, the coalition is delivering security for investment.

Barry Gardiner (Labour, Brent North)

I do not want to faff around here too much. The previous Labour Government introduced some of the most important legislation that this country has ever seen by setting targets right the way through to 2050, which we maintain, and they also set up the Climate Change Committee. The Conservative party supported them, quite rightly, and the hon. Gentleman should not try to diminish that now. No Government can say, “We have done all that is now necessary in this area and we don’t respond to the change in investor climate and the change in requirements as we see things change in the world.” That is what we seek to do by introducing decarbonisation targets for 2030. It is to improve what has already gone before; not to say that that was bad, but to say, “Yes, it can be improved”. As other hon. Members have said, this is about enhancing the Bill. It is not about detracting from it and it is certainly not about delaying it, because we need the Bill quickly as we need the investment quickly. This week’s events with Centrica have only proved just how much we need the Bill and how quickly, because this country’s energy policy is in real danger of being unable to keep pace with the demands of industry and the public, and also of Europe, in terms of the end-of-life directive.

We need to set a framework to which industry will respond quickly, and decarbonisation targets for 2030 would achieve that. It would be a tragedy if Government Members—many of whom have already voted for this by agreeing to the Energy and Climate Change Committee’s report—should now back off simply as a way of appeasing coalition partners on the one hand and, on the other, appeasing the Chancellor. That would be a dereliction of their duty.

Phillip Lee (Conservative, Bracknell)

It is a pleasure and a privilege to serve under your wise chairmanship, Mr Leigh.

I have been stimulated—indeed, provoked—into making this speech, so I do not have any prepared notes. I have the utmost respect for the knowledge of this area of the hon. Members for Brent North and for Southampton, Test. However, although I share their desire that we should reach goals for decarbonisation by certain points, I am not 100% convinced that setting targets is necessarily the way forward. I was one of those on the Select Committee who voted in favour of the decarbonisation target. I guess that I was persuaded by the charm and reasoned arguments of the Opposition members of that Committee but, of course, a unanimous report has strength, as they well know.

It is possible, however, to change one’s mind slightly in politics, and I am now persuaded that we do not need any further complexity in this field. I would like to talk to that and also about the reality of how the Bill will sit in our present economy and the global economy we are all trying to survive within.

First, on the value of targets, I recall that political targets were numerous under the previous Labour Administration. I recall a target for waiting times in A and E—that is a particular favourite of mine, as a practising doctor—that resulted in ambulances parked outside hospitals because they were not allowed into the casualty department for fear of breaking Labour’s target on a four-hour wait. The situation was complete nonsense and had a severe impact on the clinical care of patients. I also recall the Labour Administration’s target on 50% university education for all, which was a completely ludicrous and unaffordable target that led to some people viewing the absence of a university education as somehow representing a lack of value in someone’s training for life.

The target to which we signed up of 15% renewables by 2020 was also a silly target, because it has distorted our priorities for where we offer Government help, and that leads me to the track record of the previous Administration in trying to meet those targets: we had a ludicrous, unsustainable solar subsidy and a tendency to subsidise wind to the detriment of support for nuclear. With reference to nuclear, I encourage the hon. Member for Angus to look at the DECC calculator and try to reach a solution for energy generation by 2050 that meets our current 2050 target yet does not include nuclear because, as I understand it, his party is against nuclear power.

Barry Gardiner (Labour, Brent North)

The hon. Gentleman is making a wide- ranging case against targets. Can we therefore assume that, on Thursday, he will vote against the Government’s provision to have some form of decarbonisation target?

Phillip Lee (Conservative, Bracknell)

I welcome that intervention, because I have read the new clauses that the Government have tabled and I note that there is some wriggle room on setting decarbonisation targets. The hon. Gentleman has given me an opportunity to lobby the Minister on record to resist the temptation to set a further decarbonisation target. I say that because, as members of the Select Committee know, I am the enemy of complexity; I absolutely loathe complexity generally in government, let alone in energy policy. We already have far too much complexity, some of which is inherited, but some, I fear, is to do with the Bill. The sooner we make things simple, the better.

If we ask the wider public what in the Bill interests them, we find it is the same thing that is always at the forefront of people’s minds when they talk about their lives: the cost of living—paying to heat their homes and to feed their children and families. However admirable the Bill is in targeting climate change—the hon. Gentleman knows I am fully signed up to that—the wider public are, if we are honest, ultimately more interested in being able to heat their homes and feed their families. Anything that could make that more expensive in the next 10 or 15 years is out of touch with political reality.

The final thing I would say about complexity is that the fourth carbon budget and, as my hon. Friend the Member for North Warwickshire said, the commitments in the Climate Change Act 2008, show that this country is pretty good compared with its international competitors. Given that we are so committed to decarbonising our electricity over the next 40 or so years, I find it difficult to believe that wider industry will be put off just because we do not have this target for 2030. Ultimately, industry and the private sector will always want more assistance in developing things; that is what companies always want, and Governments must be realistic about how much support they can give.

Targets do not always help. The actions and track records of Governments matter. It is surprising that Government Members do not make much hay about the approach to nuclear taken by the Leader of the Opposition when he was Secretary of State under the previous Government. In view of the DECC calculator, it is pretty obvious we have to go nuclear to some degree by 2050—as technology stands, we have no choice—so the question is why the previous Administration sold off virtually all our nuclear assets. Even this week, we have seen Centrica pull out of a nuclear deal. Opposition Members will be surprised to hear—perhaps they will not be, because they may have heard what I said in the Select Committee—

Edward Leigh (Conservative, Gainsborough)

Order. We are getting just a tiny bit wide of the provisions. I know the hon. Gentleman will get straight back to targets—keep on target as it were.

Phillip Lee (Conservative, Bracknell)

Indeed. There is some value to targets, Mr Leigh.

My point is that the Opposition’s track record on providing the direction that will decarbonise energy generation does not match their desire to have a target for 2030. It is all very well stating, “We should have a target,” but what about doing things that mean we actually achieve decarbonisation in the most realistic and economically affordable way?

In conclusion, like most Members in the room, I desire decarbonisation. However, I crave simplicity. Above all, I want all this to be economically realistic. That, at the moment, is the most important thing for us to adhere to. If we do not, none of this will matter, because the country will not be able to do any of the things that most members of the Committee want to do on decarbonisation.

Albert Owen (Labour, Ynys Môn)

It is a pleasure to follow the hon. Gentleman. I know he is a strong advocate of nationalisation of nuclear energy.

Phillip Lee (Conservative, Bracknell)

Partial.

Albert Owen (Labour, Ynys Môn)

Partial. If I thought we had enough money to do it, I would support him in calling for that. The market as it stands is certainly flawed, and many companies have gone in and pulled out of nuclear investment in this country. That said, I support the Bill, and I support a rich energy mix, of which nuclear is a part. We need to move forward.

The hon. Gentleman is not a Committee member who can be persuaded easily; I know that he has strong views, and is a free-thinking individual. He asked about reality and said that we need to get real. The amendment is about reality. It is about fixing targets and goals for the future, as we argued strongly in the Select Committee on Energy and Climate Change, based on the evidence that we heard from a wide range of individuals. I argue the same thing today, because Committee members should be thinking of consistency.

As both Government and Opposition Members have said, a decarbonisation target is not the Bill’s priority per se, but it is certainly an important feature. I await the Government’s position, but individual targets set a good framework for the future, linked to the carbon budget. The Minister talked about differentiating between budgets and targets, but I think that they are one and the same. We must give certainty in future. We need proper budgets and proper targets. [Interruption.] I will come to the Government’s position, because it is unclear and I am trying to understand it. If the hon. Member for South Swindon wants to help me, he can do so.

Robert Buckland (Conservative, South Swindon)

I yield to no one in my respect for the hon. Gentleman, who is very knowledgeable on this subject, but has he not just given away his argument? If he is saying that budgets and targets are exactly the same thing, why are we adding a further legislative burden to a clear set of rounds of agreement that will take us up to 2027, which is virtually there?

Albert Owen (Labour, Ynys Môn)

I think that the hon. Gentleman is trying to be helpful; he usually is. I will explain in two ways. I think that they are part and parcel of the same thing, but if the Government are now telling us that they are going to stick to the budget, why are they introducing a target? The confusion does not lie with me; it lies with the Government. I am seeking clarification, and I hope that the Minister will explain his position.

I will not detain the Committee long. I am interested in the Government’s position; where do they lie on this? I have not heard any strong argument from them about why we should not have a target of 2030. What I have heard is that there was a split among the coalition partners, and that Treasury and DECC Ministers could not agree and came up with a compromise. I do not think that that is good enough. We are making important legislation involving different components. I support the contracts for difference and moving forward, and I genuinely believe that the 2030 carbon target will enhance it.

Robert Smith (Liberal Democrat, West Aberdeenshire and Kincardine)

But the hon. Gentleman lived all that time under the Labour Government with a compromise between the Brown and Blair camps within his own party.

Albert Owen (Labour, Ynys Môn)

That is a little silly, as I am one of the few individuals who can stand up and say I got on with both Mr Blair and Mr Brown, and I argued consistently with them. Whether the hon. Gentleman wants to play that kind of politics is up to him, but I have always had a strong opinion, as has he, that carbon targets should be included. We are at one on this. Bringing in past Prime Ministers does not help.

We on this Committee have a responsibility to produce the best legislation possible. I await the Minister’s response on why it would be wrong to take the decision here, in debate on an Energy Bill, which is the best vehicle for energy legislation, rather than putting it into the long grass, which—let us be honest about it—is a political fudge. The Liberal Democrats are good at political fudges; I was happy to take the hon. Gentleman’s intervention. We saw last week that they can turn turtle on issues: they can be principally for something and principally against it when it comes to a vote.

That is why I am happy to support this well-thought-out amendment tabled by my hon. Friend the Member for Southampton, Test. It is not a priority, but we need to focus attention on the Government, and targets do that. I support the amendment. I will not detain the Committee any longer; I await the Minister’s argument from the Government’s perspective, and I support the amendments.

Dan Byles (Conservative, North Warwickshire)

In keeping with tradition, it is an absolute pleasure to serve under your benign leadership, Mr Leigh. Listening to this debate one could be forgiven for thinking that the UK is somehow dragging its feet in terms of climate change. This green lobby group’s Opposition MPs are adamant that without an immediate imposition in law of a 2030 decarbonisation target for the power sector, we will lose our claim to be the greenest Government ever, jobs and investment will flow elsewhere; they suggest it is a bit of a no-brainer. I would suggest that things are a bit more complicated than that.

First, there is a tendency amongst some of those who support a 2030 decarbonisation target to give the impression that not having such a target immediately on the face of the Bill, somehow represents some sort of U-turn in Government policy; of course it does not. The coalition Government never promised such a target; nor did the previous Labour Government. Secondly, we have heard dire warnings that investment will flee elsewhere without a clear UK commitment to this.

Albert Owen (Labour, Ynys Môn)

The hon. Gentleman certainly provokes an intervention. There might not be such in the Labour Government or in the coalition partners’ manifesto, but he believes in a 2030 target which he signed up for. It is not them who are doing the U-turn at the moment, it is him.

Dan Byles (Conservative, North Warwickshire)

I will briefly revisit my response to another hon. Member opposite who challenged me on the same issue. Yes, I signed up to the ECCC pre-legislative report that called for a 2030 decarbonisation target. During that Select Committee’s evidence sessions, I challenged David Kennedy and made it very clear in my discussion with him that I did not agree with him, nor did I support that. However, as a Committee we have always taken the view that unanimous reports hold considerably more weight. I am sure that there may be the odd snippet here and there in a previous report that the hon. Member might not be 100% behind it, but in the interest of unanimity, he would have supported the report.

Barry Gardiner (Labour, Brent North)

But unanimity in error cannot be something to be lauded. Unanimity of error when it is a minor and trivial thing might be understandable, but the hon. Gentleman is elevating what was unanimity in error on what I take it he then thought was a minor and trivial thing, to a significant and important thing now. He is now arguing that this is completely wrong and that we should not do it. There is surely a real question over the consistency in that.

Dan Byles (Conservative, North Warwickshire)

I will take that firmly on the chin. In retrospect, I should not have voted for it in the Select Committee report, and I accept that I did make an error in doing so.

Returning to the dire warnings about investment fleeing elsewhere, a casual observer might well ask which other country in the EU or elsewhere already have a 2030 decarbonisation target and are therefore sitting and rubbing their hands, eager to attract all the investment that is going to flow out of the UK? The answer, of course, is none. Not a single country anywhere in the world has a 2030 decarbonisation target for the power sector, which we are told is essential for the UK.

Michael Weir (Scottish National Party, Angus)

Does the hon. Gentleman not recall the evidence that we heard that the difference is that a country such as Germany or Denmark already has that infrastructure in place? They have invested in it over the years when the UK has been behind in doing so, and we are trying to attract it now.

Dan Byles (Conservative, North Warwickshire)

The hon. Gentleman is hoist on his own petard. The countries he mentions managed to attract and develop a supply chain infrastructure in this way without 2030 decarbonisation targets of their own. We were told in Committee that the reason that some of these counties did, is because there are other ways of attracting investment into this sector. This demonstrates that the 2030 target itself is not necessarily required.

I also recall being told by some of the witnesses that one of the reasons why Germany, for example, may have done better than us in the past at attracting such a target, is their clear energy policy in this area. Everybody could see exactly where they were going and predict what was going on. When I then challenged—I think it was Professor Mitchell—as to who could have foreseen Germany suddenly deciding to switch off all of their nuclear power plants and replace them with lignite power stations, answer came there none.

There is also an underlying thread running through the 2030 decarbonisation debate, which basically says that nobody is going to trust the UK to continue investing in low carbon energy projects without a 2030 target and that we need this signal to give confidence in our continued direction of travel. I want to explore that line in a little more detail, by briefly asking how the UK has done historically along our path to lower greenhouse gas emissions, where we are now and what signals we have already given for the future. It is a myth to suggest that people will simply not believe that the UK will remain on this path without a 2030 target. Our track record has been very good, Mr Leigh, but you might not believe that from listening to the doom-mongers.

According to the House of Commons Library, between 1990 and 2010, UK emissions were cut by 20%; by contrast, the EU as a whole reduced emissions by only 15.4%. Of the 27 EU member states, only nine reduced their emissions by more than the UK. What about the rest of the world? Of the G20, only Germany did better than us. Between 1990 and 2010, Germany reduced its emissions by 23%, while we reduced ours by 20%, so Germany only just beat us, despite being held up as an exemplar to which we should aspire. Eighteen other members of the G20 did worse than the UK over those 20 years, and 13 members had higher emissions in 2010 than in 1990. The UK’s historical record is not one that any investor might look at and worry about.

Where are we today? UK emissions in 2010, the most recent year for which full figures are available, were 9.8 tonnes per capita and 300 tonnes per million dollars of GDP—lower than Germany on both counts. Yes, you heard it here first, Mr Leigh: the UK currently has lower emissions per capita and per GDP than Germany. UK emissions are lower than 13 other EU countries on the per capita measure and lower than a staggering 21 other EU countries on the GDP measure. We are doing pretty well.

Let us not forget from where we are now going forward. The UK is in the process of switching off, over the coming years, significant amounts of dirty coal-fired power stations, which will be replaced partly with cleaner gas and renewable energy, and we are investing in a new generation of low-carbon nuclear power stations. By contrast, Germany, which currently has higher emissions than the UK, is switching off 20 GW of low-carbon nuclear energy and replacing it with 20 GW of coal-fired generation. We have a good track record, and our current situation is nothing to be ashamed of.

My next point, which I outlined in an intervention, is about where we are going in the future. The UK has the most ambitious, legally binding emission-reduction target in the world. The Climate Change Act 2008 enshrines in law a commitment to reduce total emissions by 80% by 2050 compared with 1990 levels. We have a carbon budget process to manage that, which means that, in effect, we now have a 50% emission-reduction target by 2027—the daddy of all targets, as I have said.

I have given lots of facts and figures, which I am sure Committee members will want to digest and ponder on overnight. The long and short of it is that we have done very well up to now without a 2030 target and that none of our rivals has a 2030 target, so I have yet to be convinced of the need for having an immediate 2030 target in the Bill.

Stephen Gilbert (Liberal Democrat, St Austell and Newquay)

It is a pleasure to serve under your chairmanship, Mr Leigh, and to be in Committee with so many very knowledgeable colleagues to consider this landmark legislation. We are seeking to do three things—keep the lights on, keep bills low and keep our energy as clean as possible. Those are the strategic aims of the Bill and exactly why we need to make considerable progress in getting it passed by the House, so that we can give investors the certainty they need to invest the £120 billion necessary for Britain’s future energy supply.

It is also a pleasure to welcome the amendments about having a decarbonisation target. It is not without a sense of irony that I note, as I said to an Opposition Member earlier, that in the many years that the Labour Government were in power, they did not introduce such a target in their many draft Bills. Despite the advocacy of the issue by the hon. Member for Southampton, Test—as is suggested by his amendments—within the Labour party during those years, it did not present a decarbonisation target to the British people in 2010; neither did either of the coalition parties.

Ian Lavery (Labour, Wansbeck)

The hon. Gentleman continually criticises the Labour party, but only last year at the Liberal Democrats’ conference there was a motion, which was supported unanimously, that emission levels should be between 50 grams per kWh and 100 grams per kWh. What has changed your mind?

Edward Leigh (Conservative, Gainsborough)

Order. Nothing has changed my mind, but it may have changed the hon. Member’s mind.

Stephen Gilbert (Liberal Democrat, St Austell and Newquay)

Mr Leigh, that statement must be inadvertently incorrect because nothing is ever agreed unanimously at the Liberal Democrats’ party conference. The reality is that the Liberal Democrats passed a motion supporting a decarbonisation target of 50 grams to 100 grams; that is not what the hon. Gentleman’s amendment suggests that the House does today, but I accept that that is a technicality and I will not dwell on that.

We should get back to the business of welcoming the measures in the Bill—the control levy framework, the contracts for difference and the capacity market—which will deliver the outcomes that we all seek, and the clear signals towards decarbonisation that both coalition parties have sent out. As my hon. Friend the Member for North Warwickshire suggested, we have a decarbonisation target that is among the most ambitious of any country in the world.

Albert Owen (Labour, Ynys Môn)

The hon. Gentleman started off by saying that the Labour Government did nothing, but now he says that we have the best targets. Which one is it?

Stephen Gilbert (Liberal Democrat, St Austell and Newquay)

The hon. Gentleman reflects the incoherence of the hon. Member for Brent North, who on the one hand said that the Labour Government delivered the 2050 target, but now says that we need something else in between. The reality is that the Government are bringing forward provisions to set a 2030 decarbonisation target for the electricity sector in secondary legislation and we should welcome that. It is quite right that that target should not be set until the Committee on Climate Change has provided advice on the fifth carbon budget, which will cover the relevant period.

Barry Gardiner (Labour, Brent North)

The hon. Gentleman just said that it would not be appropriate to set a target until the Climate Change Committee has pronounced on the fifth carbon budget, so why does he think that the Climate Change Committee itself has suggested the target for 2030?

Stephen Gilbert (Liberal Democrat, St Austell and Newquay)

The hon. Gentleman will be well aware that we are in the middle of a carbon budget. It is quite right that we wait to review the progress made and look at the evidence going forward and it strikes me that the time at which the fifth carbon budget is set is the right time to do that. In the meantime, the Government can take other measures, such as issuing guidance to National Grid and others, to prepare the sector for the changes that I hope to see in due course.

John Hayes (Conservative, South Holland and The Deepings)

What an interesting debate we have had; characterised by its liveliness, insight and imagination. I think that C. S. Lewis said that the last of those is the organ of meaning, and we have had much meaning today. The debate has drawn attention to the important amendments that the Government tabled yesterday evening on the decarbonisation target. So let us be absolutely clear at the outset: this is not a debate about principle, as some have argued. The principle, that it would be useful and of value to set such a target, is established. The debate is not about that, but about process and timing. I hope that that might create a synthesis across the Committee.

I know that the hon. Member for Ynys Môn eschewed compromise, but I am inclined to think that we can achieve such a synthesis once we have made absolutely clear that the Government intend to do just what the members of the Committee—particularly those who have spoken from the Opposition Benches, but actually from the whole of the Committee—have said is necessary: to signal our intent. The ambitions of the Government were set out yet again—as if we had not done so before—by the Prime Minister yesterday. He said that

“it is the countries that prioritise green energy that will secure the biggest share of jobs and growth in a global low-carbon sector set to be worth $4 trillion by 2015…to those who say we just can’t afford to prioritise green energy right now, my view is we can’t afford not to”.

He went on to say

“I said I wanted Britain to have the greenest government ever and I am as committed to that today as I was then”.

The case that has been made by, for example, my hon. Friend the Member for Waveney—I congratulate him on both the passion and the tone of his contribution—and by others on the Committee is reflected by the Government’s determination to build precisely the low-carbon generation mix necessary to guarantee energy security, in line with our well-established ambitions, as set out in a range of legislation, most notably in respect of our achievements in the Bill and in the policy agreed at the very beginning of the relationship between the two parties that form the coalition. That point has been emphasised by hon. Members on the Liberal Democrat Benches.

So there is no debate about our ambition, about the principle or about the efficacy of establishing a target that allows us to gauge the effect of the Bill. However, there is a difference of opinion about how and when we achieve that ambition. Just before I come to the nub of that difference, the kernel of my argument, let me again be crystal clear that I do not think that emblems are unimportant. I do not want there to be any misunderstanding: I do not think the emblematic significance of establishing—perhaps I should say confirming—our intentions through a target is without value. Emblems are often an important way of making known to imperfect men and women the character of the sublime, are they not? It is not that I resist the amendment because it is emblematic.

I accept, however, what has been said about the tapestry of totems and the absence of purpose that can characterise a Government when they become preoccupied with emblems. I am with Nietzsche; I think it is the translation from will to action that allows man to be his best. It is purpose that the Bill gives life to, not merely emblems. As the CBI said, and my hon. Friend the Member for Waveney made clear, it is the fundamental changes that the Bill brings about in respect of certainty that are likely to add to the confidence necessary to bring investment to build the very kind of green economy that the Prime Minister described in his remarks yesterday.

It is the essence and substance of the Bill, with all that that means for greater clarity and certainty, that will allow constituencies on the coast of the country, such as those of my hon. Friends, to benefit from the extra jobs and skills that will come from the growth of new forms of generation. To accuse this Government, of all Governments, of not having the resolve to bring that certainty and not having the will to establish the clarity necessary to bring about investment is, as everyone on the Committee knows, at best unfair and at worst something less than unfair. The hon. Member for Brent North is about to explain what that something less is, I think.

Barry Gardiner (Labour, Brent North)

I will certainly attempt to do so. Could it be that, in the Minister’s own proposal under new clause 9, we have nine separate evacuation routes from the constraint of having to put a decarbonisation target in place by 2030—

Edward Leigh (Conservative, Gainsborough)

Order. You are speaking very softly. I cannot hear you very well, and I want to hear every word you say.

Barry Gardiner (Labour, Brent North)

Indeed, with complete justification, if I may say so.

Edward Leigh (Conservative, Gainsborough)

Absolutely.

Barry Gardiner (Labour, Brent North)

I asked the Minister whether new clause 9 represented nine separate evacuation routes from the constraint of having to put in place a decarbonisation target by 2030.

John Hayes (Conservative, South Holland and The Deepings)

I was just describing how the certainty that the Bill brings, including through the amendments we have tabled in respect of decarbonisation, creates no uncertainty—

Edward Leigh (Conservative, Gainsborough)

Order. We do not want to spend a great deal of time discussing the new clauses, do we?

John Hayes (Conservative, South Holland and The Deepings)

I will be guided by you, Mr Leigh. I was slightly disarmed not only by the soft words of the hon. Gentleman but by a photograph that has been passed to me of a kitten being caressed and a covering note saying “A cat has nine lives”. I will not go any further down that road.

Edward Leigh (Conservative, Gainsborough)

Is that a formal submission to the Committee?

John Hayes (Conservative, South Holland and The Deepings)

It will be after your instruction, Mr Leigh. I am more than happy to make it so.

The kernel of our case is first that the strategy and policy statement is not the right place in the Bill for a decarbonisation target for the power sector. Secondly, it is less desirable to set this out in the Bill than to deal with it in secondary legislation. I pray in aid in that respect the Climate Change Committee itself. In its letter dated 13 September, which I know the Committee will have available but I can certainly make it available again for convenience, the Climate Change Committee wrote:

“We therefore strongly urge that you accept the recommendation of the Select Committee and address investor concerns by setting a 2030 carbon intensity target in secondary legislation with a reference to this in the next draft of the Energy Bill.”

That is precisely the argument that is being put by those who feel that it is necessary to set this target in concert with and informed by the fifth carbon budget.

Luciana Berger (Labour, Liverpool, Wavertree)

We would be more inclined to listen to what the Minister is saying about the Climate Change Committee if we had any faith that the Government would bring forward a decarbonisation target. Having examined what the Government have proposed in their new clauses and amendments, it is clear that they do not have to have a 2030 goal. They do not have to be set in line with climate targets and they do not have to be set in 2016 or at all. I listened carefully to what the Minister said about the Climate Change Committee. It was his colleague the Minister of State, Department of Energy and Climate Change, the right hon. Member for Bexhill and Battle, who told the House that he attached the highest importance to the full implementation of the Climate Change Committee’s recommendations. It recommended that we have a 2030 decarbonisation target. Can the Minister tell us why his party does not attach the highest importance to the full implementation of the Climate Change Committee’s recommendations?

John Hayes (Conservative, South Holland and The Deepings)

This Bill’s link to section 1 of the Climate Change Act requires the Secretary of State to have regard to both the 2050 target and carbon budgets when exercising key EMR functions. The Government are clear that in setting a decarbonisation target—the Secretary of State said this in his letters to the Committee that were sent when we tabled our amendments— that we are bringing forward powers to set a 2030 decarbonisation target for the electricity sector in secondary legislation, exactly as the Climate Change Committee set out in its letter of 13 September. In addition, the connection to the Climate Change Act means that that would be carried out in concert with carbon budgets and the other key elements of policy.

Alan Whitehead (Labour, Southampton, Test)

How does the Minister reconcile what he has just said with the proposals recently set out in the gas strategy to consider the possible uprating of targets in 2014, upon review of the carbon budgets, from 100 to 200 grams of emissions? Does he think that that is in line with what the Committee on Climate Change has said, or does it take a different course?

John Hayes (Conservative, South Holland and The Deepings)

Well, as the hon. Gentleman knows, 26 GW of new gas is consistent with the decarbonisation of the power sector to a carbon intensity of 100g/kWh in 2030, and consistent with achieving the full carbon budget. So the argument that our perfectly understandable and entirely necessary desire to encourage gas investment is incompatible with our long-term ambitions is not well made. I accept—and have done previously in Committee—that, were we to exclude other forms of low-carbon generation in the mix that we build, and concentrate wholly or solely on gas, that would be incompatible not only with our ambitions on carbon reduction, but with our argument that, through a mix of generating technologies, we build the greatest degree of resilience and sustainability. I have said that before in Committee, and I say it again now. I am sympathetic to the argument that we cannot just go for gas, but we certainly need to have gas in the mix, as the hon. Gentleman well knows.

Barry Gardiner (Labour, Brent North)

The Minister must acknowledge that 26 GW of unabated gas going through to 2045—

John Hayes (Conservative, South Holland and The Deepings)

Sorry?

Barry Gardiner (Labour, Brent North)

I seem to have a problem with volume this morning—not one of my normal failings.

The Minister must acknowledge that 26 GW of unabated gas going through to 2045 will create a graph that, at the very least, is incredibly steep in its final phase to get down to 2050. It is inconceivable that, in those final five years, one could move to achieve the 2050 targets without a wholesale shifting round of our power sector and our economy.

John Hayes (Conservative, South Holland and The Deepings)

I know that the hon. Gentleman is aware that, to meet those ambitions, a whole range of other things needs to happen. We spoke earlier about the importance of carbon capture and storage. He of course understands that we share the view expressed by Members of all parties about the importance of demand reduction. He knows that it is not just decarbonisation of the electricity market that matters in terms of decarbonisation more generally, so he will understand that other Departments and other aspects of Government are involved in this. A whole range of things is necessary for us to meet those targets. There is no doubt about that. He equally well knows that, to guarantee security of supply, given the character of nuclear new build and the time it will take to establish a new generation of nuclear power; given that carbon capture and storage will not be available immediately—though the latest information suggests that it will be available rather earlier than some previously believed—and given the intermittence of some renewables, gas is necessary.

I do not want to get into a detailed debate on the gas strategy, because that would not be entirely compatible with the conversation we need to have about the amendments, but the hon. Gentleman makes a perfectly reasonable point that, if we solely or wholly concentrated on gas, we could not achieve what we want. That is not the Government’s intention.

Alan Whitehead (Labour, Southampton, Test)

I would like to press the Minister briefly on the question set out in the gas strategy. The Secretary of State may, according to that strategy, uprate the ambitions on climate change, if he considers that necessary, in 2014, when a revision point for carbon budgets has already been agreed by Government, to 200 grams of emissions by 2030, rather than 100 grams, as set out in the current departmental strategy. Does the Minister not consider that a target in the Bill might settle that argument and create a much more level playing field for future investment, both in gas and otherwise, in an area in which it is envisaged there will be a state of great uncertainty, as the gas strategy currently sets out?

John Hayes (Conservative, South Holland and The Deepings)

That would be a stronger argument were it not for the other mechanisms that allow us to establish certainty, not just about investment but about carbon. If we did not have a carbon budget, if we did not have the mechanisms by which we want to encourage, through the levy control framework, a range of low-carbon technologies, and if we did not have a firm commitment to a new generation of nuclear power, which of course is, by its nature, low carbon, the hon. Gentleman might have a more persuasive case, but there is a range of means whereby we intend to achieve what we hope to achieve in respect of carbon.

The idea that what I described earlier as the emblematic role of the target is the only salient or even the principal salient in achieving those ambitions is, I think, an exaggeration of its significance, but we do not say that it is insignificant. As I have said, there is no debate about principle here. We agree that it is important to consider these matters, and the amendments that we have tabled do just that. They make it clear that, when the Government have set the level of the fifth carbon budget in law, which is due to happen in 2016, in line with Committee on Climate Change advice on that budget, which covers from 2028 to 2032, we will indeed consider a 2030 target.

However, as my hon. Friend the Member for St Austell and Newquay said in his contribution, we will, before then, to ensure the clarity that the hon. Member for Southampton, Test desires, issue guidance to the national grid on an indicative range of decarbonisation scenarios for the power sector up to 2030, consistent with a least-cost approach, to achieve our overall 2050 carbon targets. Therefore, it is not only that we have introduced a Bill that will build the investor certainty that will create the capacity to deliver low-carbon generation; it is not only that we have tabled amendments that allow us to do just what has been argued for here, which is to clarify our position on decarbonisation, in line with the advice from the Committee on Climate Change, in line with the fifth carbon budget; it is not only that we have established, through a carbon price, further mechanisms that catalyse that ambition; it is also that we are prepared to give further advice to the national grid about exactly how we get to where we want to go. The Government’s position, articulated again just yesterday by my right hon. Friend the Prime Minister, is that we want to build a low-carbon generating mix sufficient to meet demand, at an affordable price, in line with our ambitions for decarbonisation.

Barry Gardiner (Labour, Brent North)

The way in which the Minister has taken the debate on decarbonisation targets in 2030 and prayed in aid the position of 2017-18, the potential loss of supply and the need to incentivise gas on to the market is very interesting. I wonder whether he would almost trade concessions with me on this. I recognise that he is saying that we do not want such stringent decarbonisation targets for 2030 in the Bill now, because there is genuine concern that one would not then see the dash for gas or incentivise the investment in gas we sorely need to cover us from 2016 to 2020. Would the Minister trade for that acknowledgment the equal acknowledgment that, if we allow up to 26 GW of new gas to come into the system, which the Department has said is consistent with the 2030 target, there is a severe danger that we lock ourselves into unabated gas right the way through to 2045? That is not in the long-term interests of reducing our carbon emissions or tackling fuel poverty, given the likely impact on prices for the consumer over that long period, because we would be grandfathering the rights all the way through.

Edward Leigh (Conservative, Gainsborough)

That was a very long intervention.

John Hayes (Conservative, South Holland and The Deepings)

Let me be very clear. My hon. Friend the Member for Waveney highlighted the fact that it is right, during the continuing scrutiny of the Bill, that the Committee and the Government listen to arguments of the kind that have been advanced today. I would not want in any way to change the spirit that has imbued our consideration of the Bill so far by being intransigent about how it will develop over time. It is absolutely right that we continue to listen to arguments. If it is a synthesis I seek, as I described a moment or two ago, that is most likely to be found in a willingness to listen and to respond to what one hears. That necessitates thinking about the context that has been described today, as well as the process and the principle I have briefly spoken about. I hope that gives the hon. Gentleman some comfort; I would not like to say whether it was sufficient, but I hope it is at least some comfort.

I was making a case for why the provisions are probably not the right way to take the issue forward, whatever one thinks about it. By that, I mean the Opposition provisions, not, I hasten to add, the Government’s provisions. As I said, the strategy and policy statement is not the right place in the Bill for a decarbonisation target, because it is at odds with the intended effect of the Bill’s provisions. Those provisions are designed to improve the alignment between the Government’s energy objectives and the regulation of energy markets by the Gas and Electricity Markets Authority. The strategy and policy statement has an important part to play in providing industry certainty about a range of regulatory issues, and I am not sure the Opposition’s provisions fit terribly well with those intentions.

The right place for provisions on the decarbonisation target is in a new part 1, right at the front of the Bill. We intend to include the new clauses on the decarbonisation target range there. That position reflects the overarching nature—

Edward Leigh (Conservative, Gainsborough)

Order. Could the Minister go a bit slower? He puts much more passion into his words when he is not reading out his civil servants’ brief, and I have to hear what he is saying.

John Hayes (Conservative, South Holland and The Deepings)

I am so sorry. Having criticised the hon. Member for Brent North for being too sotto voce, I need to be clear and almost Wagnerian.

We propose to place the amendments we tabled last night at the beginning of the Bill, because that is where we want to set out broader ambitions than simply EMR. The Opposition provisions therefore probably apply to the wrong part of the Bill; that is the essence of the argument I was making. I hope that is sufficiently clear for you, Mr Leigh.

Edward Leigh (Conservative, Gainsborough)

Very clear.

John Hayes (Conservative, South Holland and The Deepings)

The second thing I was critical of in my opening remarks was the business of setting a target in the Bill. That argument has been well rehearsed, and I do not really need to add to it.

It is certainly true, and no member of the Committee would take the contrary view, that there is a pretty fundamental interaction between the electricity sector and other sectors as we move towards decarbonisation. I refer in particular to heat and transport, which may well become more dependent on electricity as we move into the 2020s and ’30s. We must ensure therefore that the target range in respect of decarbonisation is not set in isolation. It is very important for those who have made the case that this is fundamental to the business of all of Government and a societal change of profound significance that we do not limit our ambitions. Arguably, were we to be rigid and inflexible about the way in which we proceed, we would have less chance of that holistic approach to decarbonisation that many members of this Committee believe is so vital.

The view that we have put was broadly supported by the chief executive of the Committee on Climate Change when he gave evidence. He said that

“the levy control framework gives confidence to the energy companies that want to get on and bring forward, particularly, investments in renewables to meet the 2020 target, but we will quite quickly hit a period in three years’ time when they will want to develop projects that will come on the system after 2020.”

He says in three years’ time, not now. Mr Kennedy repeated that, saying

“as I said, within the next two or three years, we will need more confidence than we have at the moment.”

Our proposals are entirely consistent with his advice. Again, in his evidence to this Committee, he said:

“The fundamental aspect of the Bill is the introduction of long-term contracts that provide revenue certainty to investors who have to put in very large amounts of money in sunk costs. We agree with that. We think that is the right model”.––[Official Report, Energy Public Bill Committee, 17 January 2013; c. 92-94, Q262 and 270.]

The Committee on Climate Change understands, appreciates and values the concentration that this Bill gives and that this Government have engineered in that kind of investment certainty.

Our proposals are consistent with the evidence.

Albert Owen (Labour, Ynys Môn)

The Minister is right to read back to us what was said. We do not know the question, but we got Mr Kennedy’s answer. It is clear, is it not, that the Climate Change Committee has supported a 2030 decarbonisation target?

John Hayes (Conservative, South Holland and The Deepings)

It has supported it. As I said earlier, our amendments, by their very nature, are not inconsistent with that. We are not making an argument that there should not be a power in the Bill to do just that. We are arguing, are we not, about how that power is expressed and when that target is set? There is a debate about not the fundamental matter of a target but the detail of the Bill.

Let me say, without wishing to delay the Committee for too long, that this has been a helpful debate. We are as a Government taking a critical step of establishing the legal authority for setting a future decarbonisation target range for the power sector. It is right to do that in line with the fifth carbon budget. We understand the arguments that have been put by the Committee, and I welcome the way in which they have been put. We feel that the certainty that the Bill provides in all kinds of other ways—entirely consistent with our determination to deliver energy security and to do so in a way that is compatible with our ambitions for carbon reduction—means that the Opposition amendments are unnecessary, and that the Government amendments are efficacious. On that basis, I am happy to bring the debate to a conclusion. I shall move the amendments that stand in my name at the appropriate time, and I advise the Committee to reject the amendments tabled by the Opposition.

Robert Smith (Liberal Democrat, West Aberdeenshire and Kincardine)

On a point of order, Mr Leigh. In light of the discussion, I should remind the Committee of my entries in the Register of Members’ Financial Interests to do with the oil and gas industry, and in particular, a shareholding in Shell.

Edward Leigh (Conservative, Gainsborough)

I am grateful.

Alan Whitehead (Labour, Southampton, Test)

I am a little puzzled by the debate this morning. Clearly, as a leading Aquinian, Mr Leigh, you will know that Thomas Aquinas said:

“A man has free choice to the extent that he is rational.”

In this morning’s debate, a number of Members have argued, on one hand, that they wish to explain how they can adapt rationally to not exercising free choice as far as the Bill is concerned. A number of other arguments have put forward the idea that we all want a target, after all, and how we go about it is only a marginal difference of view, when the amendments that have been put forward for debate—I imagine on Thursday—actually say no such thing. They do not say that there should be a target. They say that the Secretary of State might think about whether there should be a target, and if he does, there might be. That seems a very different proposition from what we have in front of us this morning.

I have heard no arguments—I hoped I would have—about why we should not proceed with the idea in the amendments that a target should be in the Bill. I have not even heard a convincing argument that the Committee on Climate Change really has resiled from its position that there should be a target for 2030. It is true that evidence provided to us by the Committee on Climate Change suggested that there should be something in secondary legislation. That, again, is not the same as what the Government suggest in their amendments. The Committee on Climate Change said that there should be something now in secondary legislation—not that there might be something in 2016, if someone decides to get round to it, maybe.

The fundamental proposition that there should be something in the Bill now—I think we all know that that is supported by the vast majority of people on the Committee—has in no way been undermined by what we have heard today. Not only that, but it is clear, from a number of contributions, that hon. Members whom I greatly respect for their commitment and contribution to the low carbon energy debate, are wrestling with their better feelings in this debate. I understand why. I hope in relation to the debate that there is clear and straightforward understanding that the Bill may require a little surgery to ensure that all the provisions go in the correct place, although my reading is that clause 109 onwards links in well with part 1—that is perhaps another matter.

John Hayes (Conservative, South Holland and The Deepings)

To be absolutely straightforward, why is the hon. Gentleman against setting out in secondary legislation, as the Committee on Climate Change suggested in its letter of 13 September, a range that would allow sufficient flexibility and responsiveness to deal with circumstances as they occur? What on earth is wrong with that as a concept?

Alan Whitehead (Labour, Southampton, Test)

The amendments would give the flexibility to do exactly that in relation to what circumstances might arise before 2030 to cause the Secretary of State to take a view that, for electricity, the targets may not be met, while allowing the Secretary of State some flexibility on what measures to take.

The amendments are bang in line with what the Committee on Climate Change—and, indeed, the Climate Change Act—recommends about how to reach the overall 2050 target. Everyone recognises that we will not rigidly make the case that every single sector has to stick to a rigidly pre-determined target, because one sector need not stick to such a target provided that others make up the ground towards the overall target. That is exactly what the amendments would do and it is exactly in line with what the Committee on Climate Change envisages for its budgetary mechanism.

John Hayes (Conservative, South Holland and The Deepings)

I think I am gaining a better insight into the difference between us. That difference is not about the principle, the signal we intend to send to the sector or the ambition to include a range in line with the proposal from the Committee on Climate Change; it is solely and wholly about the mechanism. Are we really having a debate, which has now lasted so long, about the mechanism dressed up as something more significant?

Alan Whitehead (Labour, Southampton, Test)

I might put exactly the same question to the Minister. If that is the case, what on earth is the problem with accepting the amendments? It seems to me that the mechanism in the amendments, which conforms with what has been suggested by the Committee on Climate Change, should be dealt with now—whether in the Bill or through secondary legislation—but the Minister appears to be moving away from his own suggested amendments in relation to the process. There is every argument for getting on with the mechanism and doing so today, by making sure that the mechanism is in the Bill.

Barry Gardiner (Labour, Brent North)

Surely the difference is simply that the amendments tabled my hon. Friend the Member for Southampton, Test are a way of ensuring that there is a 2030 target and that that be done now, while the Minister’s amendment is a way of ensuring that there will be an excuse not to have a 2030 target and that that will not have to be justified until at least 2016.

Alan Whitehead (Labour, Southampton, Test)

My hon. Friend is absolutely right, and we may debate that in some depth on Thursday.

John Hayes (Conservative, South Holland and The Deepings)

I simply affirm that the reason for not accepting the amendments is that they are in the wrong place in the Bill. I again quote precisely the Committee on Climate Change, which suggested setting

“a 2030 carbon intensity target in secondary legislation with a reference to this in the next draft of the Energy Bill.”

That is precisely what the Government amendments will do.

I think that the issue is about process. We have had a good run, but now that we know that the debate is only about process, we can divide the Committee, if the hon. Gentleman so wishes, on exactly that basis. Let us be clear what we are debating.

Alan Whitehead (Labour, Southampton, Test)

I am not sure that I am happy with the idea that the Minister is simply objecting to the amendments on the basis that they are in the wrong place in the Bill; I think that, as he has set out, he has other arguments to make against accepting them. I am not convinced, in terms of the drafting of the amendments, that that is entirely the case—they would work perfectly well in the context of the Bill—but even if it is the case, it would be perfectly possible to draft amendments on Report that would place these proposals in the Bill correctly, if it was felt that that was the right thing to do.

We are not talking about principle, we are talking about a real difference between these amendments and what is put on the table for us to discuss as an alternative. My amendments suggest that we should have a clear target in the Bill now. Even if there was a proposal that a target should be defined in secondary legislation, that proposal would need to suggest that such legislation would be enacted within a certain time after the passing of the Bill and therefore as close as possible to now. Such targets would effectively be within the compass of the Bill.

However, opposed to that is the suggestion that the Secretary of State may think about having targets, and therefore that there may not be targets if the Secretary of State thinks that there should not be any. That is my understanding of the uncertainty introduced by the alternatives to my amendments being put forward today. My amendments introduce certainty one way or another; that is a key difference between them and the alternative proposals. For that reason, although I would be happy to withdraw some of my amendments if it is felt that they might be better rewritten into other parts of the Bill, as far as the central principle of the difference is concerned, I would like to push amendment 119 to a vote. I beg to ask leave to withdraw amendment 118.

Robert Smith (Liberal Democrat, West Aberdeenshire and Kincardine)

I beg to move amendment 132, in clause 109, page 81, line 35, at end insert—

‘( ) The strategic priorities and policy outcomes set out in subsection (2) must include proposals that ensure the use of biomass for the purpose of generating electricity meets the sustainability criteria in Article 54 of the Renewables Obligation Order, RO 2009, as amended or as directed by the Secretary of State.’.

Amendment 132 was tabled under my name and that of my hon. Friend the Member for North Devon (Sir Nick Harvey), and it highlights the importance of sustainability criteria in the use of biomass. It provides an opportunity for the Minister to outline for the Committee how sustainability will be improved as a condition of obtaining CFDs.

Biomass obviously has an important role to play in our energy mix. In the long run, it is carbon neutral, because the biomass acquired is re-grown and the carbon emitted through combustion is re-sequestrated by the next growth. However, because it takes many years to sequestrate back, there are concerns, especially if large logs are used in biomass, that sustainability and our commitment to reducing carbon emissions in the short term will be undermined.

There is also a concern that biomass will be displacing wood that should be going to construction. Carbon sequestration via wood and then into construction permanently locks away that carbon and makes an even better use of the material. The important thing for biomass is to be using up the waste woods, thinnings, branches and by-products of the timber industry.

Michael Weir (Scottish National Party, Angus)

The hon. Gentleman continues to talk about wood, but does he accept that biomass is also waste from crops and stocks of wheat and so on? There are many examples in my constituency, and I am sure in his, of small-scale generation through the use of waste from farming.

Robert Smith (Liberal Democrat, West Aberdeenshire and Kincardine)

Yes. Such use of biomass is extremely positive. Small-scale schemes can provide a local outlet and a market for products that would otherwise have no use. There is also an ability to generate power from them. Biomass is at its most effective if it is used to generate heat as well as electricity. Dispersed small-scale generation with combined heat and power plants is the most effective way of using biomass. It is a win-win, because the farmer gets something for the waste products that are not normally used up, and the forestry gets better managed as a commercial outlet is found for the thinnings.

Michael Weir (Scottish National Party, Angus)

I agree entirely with what the hon. Gentleman is saying. On the subject of heat and power, farmers in my area often use small-scale biomass, for example, to provide the energy to run grain dryers, which means there is a reduction in the cost to the farmer and in the use of other energy sources.

Robert Smith (Liberal Democrat, West Aberdeenshire and Kincardine)

Biomass is particularly important at a time when the energy and input costs of farming are so high and punitive. It is also important not to see the large-scale biomass plants diverting good quality timber from a construction industry that employs many people in the woodchip and wood board sector. Will the Minister indicate how we will take forward sustainability criteria to protect the wood industry and also to ensure that biomass generation is sustainable and effective?

Graham Jones (Labour, Hyndburn)

I want to briefly make some comments, primarily because I have a huge furniture industry in my constituency and in the surrounding areas, as well as training colleges. They continually approach me to raise concerns about biomass. I noted the hon. Gentleman’s suggestion that we should consider waste wood being used in biomass plants. Such wood is valuable as fresh timber for the furniture industry. It is not only fresh timber but recycled timber. In both commodity markets we have seen exceptional rises in the cost of purchasing such timber and that has impacted considerably on the furniture industry.

Dan Byles (Conservative, North Warwickshire)

I agree with what the hon. Gentleman says. It sounds as though a number of us have been approached by the woodchip industry and others who have concerns about the unintended consequences of some policies. Does he agree that there is a wider point and that sometimes when we are looking at something that in itself looks like a very good idea for all sorts of reasons, we need to be mindful that it can have unintended consequences on existing industries?

Graham Jones (Labour, Hyndburn)

I am grateful for that support. The hon. Gentleman is absolutely right. I would not say that there are unintended consequences. I would say that it is blindingly obvious that if we increase demand for wood, wood prices will go up. It is blindingly obvious that we have got a market in which the state is intervening by subsidising biomass, and that is an added distortion. That needs due consideration in any action that any Government take.

Hugh Bayley (Labour, York Central)

Order. The Committee is back in session, and I am back in the Chair. I am pleased to be here. Thank you for leaving a little of the Bill for me to preside over.

John Hayes (Conservative, South Holland and The Deepings)

What a pleasure it is to have you back with us, Mr Bayley. We had an exciting and, I hope, productive time in your absence. As you noted, we have made considerable progress.

I am delighted that my hon. Friend the Member for West Aberdeenshire and Kincardine has brought this matter to the Committee’s attention by tabling an important amendment. We take very seriously the sustainability criteria for the use of biomass in generating electricity. We want to evaluate closely what Members on both sides have said about the consequences of policy and to make adjustments to deal with any unintended elements.

On the use of fuel, we held a consultation from 7 September to 30 November 2012 to look at sustainability and at improving the criteria for the renewables obligation. That included a proposal that, for generators of 1 MW of electrical capacity and above using solid biomass or biogas, support is linked to meeting the amended criteria. We are analysing the responses to the consultation, and we plan to announce the results around the end of March.

In addition, I have met representatives of the timber industry and, in particular, the wood panel industry, which the hon. Member for Hyndburn mentioned. I appreciate their fears that the additional demand that biomass might produce for timber could have an unhelpful effect, from their point of view, on price and availability. It is therefore important that we carefully watch any such impact, and work with the industry to gauge the effects of biomass and to take action, as necessary, to ensure that sources of timber are sustainable in terms of not only biodiversity, but their effect on local economies. As the hon. Gentleman made clear, the wood panel industry and the wood products sector are important parts of the UK economy.

Graham Jones (Labour, Hyndburn)

Will the Minister also include the recycled wood industry, the woodchip industry and any other wood industry? The furniture industry—he did not mention it, but I am sure he intended to—is also part of that timber economy, and it will be equally affected.

John Hayes (Conservative, South Holland and The Deepings)

I take the hon. Gentleman’s point. The analysis my Department carried out showed the UK is a price taker in the global market for wood, with UK prices reflecting global prices generally. That is expected to continue in the future. Therefore, prices in the UK will probably be affected by interventions by other countries to a greater degree than interventions by the Government. Nevertheless, when I met representatives of the industry, I committed to a closer working relationship between my Department and the industry, better comparison of their data and ours, and a determination to monitor the effects of the extra demand for bioenergy on the price of wood.

Graham Jones (Labour, Hyndburn)

The Minister’s comments are helpful, and I hope my intervention is equally helpful. He is correct about the impact of global prices, but there is also pressure from within the EU single market, particularly in terms of timber coming from the east and the south-east, because it is expensive to transport timber. That is where the price pressures are coming from, in particular in the furniture industry—not necessarily global, hardwood timber, but softwood from Europe and Scandinavia. Will he be price-sensitive to those regions, as well as to the global price?

John Hayes (Conservative, South Holland and The Deepings)

Yes. That is another good point. The hon. Gentleman is absolutely right to separate the softwood price from the price of hardwood timbers, typically grown further afield and used in a different segment of the sector. The softwood industry, which makes up a significant proportion of the wood panel market, as well as a range of other segments of the sector, could be affected by competing demands for softwood products.

Softwood is used in bioenergy for many reasons, but price and availability are two. The fear is that specific competition around the softwood element could be significant. In our further discussions, we want to establish greater clarity about other variables that might affect the price, about broader trends in the cost and price of wood and about the specific impact of bioenergy in the demand for biomass. I have made the point before but, to be frank, in the initial discussion there was some difference between the industry’s analysis and the Department’s. That was brought to my attention, not least by the all-party group, which asked to see me. At our meeting, I made it clear that we needed to establish a trusting relationship with the sector representatives so that we could compare our data and look at why, where and how they were different and how they might be reconciled.

Graham Jones (Labour, Hyndburn)

Where this may bear progress is in the contracts for difference. One of the CFD elements that I am keen to see is not only considering the financial equation between the various parties, but where the demand for trees is so great, in looking sideways—laterally—at the expected 50 million tonnes per annum required while we are only growing 14 million. I can be corrected on the figures, but there is a huge difference between where we are now in production and where we need to be. Does the Minister accept that is where we should be looking in the CFD? Not only financial relationships should be in the CFD, but the more renewable and responsible issues, because they would help to lower the price in the long term.

John Hayes (Conservative, South Holland and The Deepings)

The hon. Gentleman again shows diligence in and understanding of these matters. I simply allow what he said to stand on the record, because it is an important contribution to the debate. By the way, I am pleased we have had the opportunity for this short debate, and I once again thank my hon. Friend the Member for West Aberdeenshire and Kincardine for stimulating it with the amendments.

I will simply make two further points and then perhaps conclude, with the indulgence of the Committee. First, we prioritise large-scale coal conversion over dedicated biomass. Our information is that dedicated biomass is more likely to use domestic supply, mainly because large-scale conversion projects require such volumes that they simply cannot be satisfied by domestic supply. That will have a direct effect on demand and supply.

Secondly, we decided to cap further the technology at 400 MW. Again, that is because we do not want biomass to become a dominant element, although we see it as an important part of the mix. All this desire to maintain a mixed economy requires the Government to use the right catalysts and to understand what they can do to incentivise and disincentivise certain activities, to maintain a healthy balance. That policy instrument was precisely for that purpose.

I said I would make two points but now I am moving to my third, so perhaps I can regard it as merely a suffix to the two. We have also put in place arrangements to predict and monitor the use of domestic wood. At the moment the arrangement is voluntary. We have asked the industry to provide information from their organisations about feed stock supply intentions over the next five years. I am happy to look at that more regularly. I am prepared to go further if the information suggests the need to do so, and I have made that very clear to the timber industry, particularly the wood panel industry. We will monitor that information closely and we expect to be able to publish our first response to it in the spring. The first tranche of information will give us the opportunity to provide a more detailed analysis of the circumstances that have been raised in this debate. However, we are absolutely determined not to produce an unintended consequence, in terms of either the supply route or the effects of the cost and price of supply. The Government are prepared to use the necessary levers to ensure that.

I happily give way to the hon. Gentleman one last time, and I will then move to my exciting conclusion.

Graham Jones (Labour, Hyndburn)

I thank the Minister for these exchanges; he has been very helpful. Would he go on the record and say whether he thinks that the capacity market auction and the contracts for difference would allow the Government to negotiate and implement a policy in which we would see greater production of wood—greater plantation of trees—that would meet future capacity and lower prices? In short, does he see tree production as an element in the capacity market auction and in contracts for difference, so that we can ensure a lower price for consumers through biomass, and perhaps lift that 400 MW of biomass production to a much higher figure, given that we will have increased production of wood?

John Hayes (Conservative, South Holland and The Deepings)

I think the hon. Gentleman is skilfully—perhaps even a little playfully—trying to extract an on the record commitment from me on a very specific series of measures, which I am too wily to make. One can be wily and straightforward; that is not a paradox.

I am prepared to look at all those things. If we are to have a proper debate about the consequences of the demand for fuel and the need for timber, it is absolutely right that we consider it in the round. We would not be asking for evidence if we were not going to consider that evidence, having consulted and reported on our considerations. I am not prepared to make any commitments, but I am certainly prepared to retain an open mind about these matters. They are complex, and as with any policy, it is right to say that there can be unintended consequences of a range of kinds. Building policy is not about denying that; it is about being willing to respond appropriately when the consequences become clear, having measured them closely. That is precisely what I intend to do.

With that, I conclude my remarks on the basis that I believe that biomass is an important part of what we can do to build a more sustainable generating capacity. I accept that, as with each technology, there will be specific challenges associated with it, but the Government are ready for these challenges. We will move forward in a measured way. True courage is cool and calm. Those are the words of the great Tory social reformer, Lord Shaftesbury.

Barry Gardiner (Brent North) (Lab) rose—

John Hayes (Conservative, South Holland and The Deepings)

I give way to the hon. Member for Brent North. I will then have to move to another exciting peroration, but it will be a very brief one.

Hugh Bayley (Labour, York Central)

Mr Gardiner, display true courage.

Barry Gardiner (Labour, Brent North)

True courage, indeed Mr Bayley. I will try to make my peroration short as well.

Hugh Bayley (Labour, York Central)

As this is an intervention, that is a very good idea.

Barry Gardiner (Labour, Brent North)

Yes. Will the Minister simply address the question of how his Department will deal with the information provided in the searching report? I refer to the information that shows that whole-life trees are more polluting of the atmosphere until we get to the 100-year payback point. Given that we are trying to meet 2050 targets—some of us would like to meet 2030 targets as well—whole-life tree biomass might not be a suitable way of doing so, so how does the Minister propose to incorporate that in his thinking?

John Hayes (Conservative, South Holland and The Deepings)

I had not expected to be obliged to speak about trees. I am rather interested in trees, for we plant trees for those born after us, and we plan energy for them, too.

In response to the hon. Gentleman, who is probably the only member of the Committee and one of the few Members of the House who believes that an intervention should have a peroration associated with it, I say this: a sustainably managed forest will produce whole trees that vary in size and quality, as he knows. It is common in the United Kingdom, when establishing new standards for trees, to plant in relatively high densities. Over time, a proportion of the young small trees will die due to competition, or will be thinned out to allow the best to thrive. The whole trees, particularly the earliest, can be beneficially used for energy generation, and that might be the only available use for them.

The whole trees might, therefore, play a part, but we must look at delivering the policy sustainably. If indeed that route provides a source of fuel that does not create the competitive pressures that understandably have been raised in the Committee, it might prove a useful element in satisfying need.

With that peroration, I draw my remarks to a close. I suggest to my hon. Friend the Member for West Aberdeenshire and Kincardine that he withdraw the amendment, but I thank him for raising the matter and I assure him that we take it seriously and will take further steps, as they become necessary, along the lines that I have outlined.

Robert Smith (Liberal Democrat, West Aberdeenshire and Kincardine)

I thank the Minister for his reply. In the context of the ongoing consultations, I beg to ask leave to withdraw the amendment.

Clause 113 - Procedural requirements

Michael Weir (Scottish National Party, Angus)

I beg to move amendment 18, in clause 113, page 85, line 14, after ‘Parliament’, insert

‘and the Scottish and Welsh Ministers’.

Hugh Bayley (Labour, York Central)

With this it will be convenient to discuss amendment 19, in clause 113, page 85, line 18, after ‘Parliament’, insert

‘and the agreement of the Scottish and Welsh Ministers’.

Michael Weir (Scottish National Party, Angus)

In many ways, amendments 18 and 19 mirror earlier amendments of mine, the fate of which means that it would be a triumph of hope over expectation if they were agreed to. None the less, I move amendment 18.

The amendments relate to the process by which the strategy and policy statement prepared by Ofgem is approved. In essence, they seek to strengthen the role of the devolved Administrations in Scotland and Wales in the process. Northern Ireland is excluded as it is in a separate all-Ireland grid system.

I have indicated previously that I appreciate that progress has been made on some of the issues that I have had with Ofgem over many years, but concerns remain in some areas. Scotland’s grid system was separate from that of the rest of the UK until the new electricity trading arrangements—NETA—became the British electricity trading transmission arrangements—BETTA—and the Scottish system was incorporated in that new GB-wide system. There has since been a long, ongoing argument, particularly about transmission charges. The point, put simply, is that the issue had huge implications for Scotland and our wish to push ahead with the development of renewable energy, particularly in the highlands and islands, but that was hampered by the ideological bent of Ofgem, which was in thrall to the locational charging model. That might have been suitable for the days of huge-scale coal stations, for example, but it failed to meet the needs of a more diffuse renewable energy system.

Ofgem already delivers a highly regulated framework of capital investment and revenue recovery for individual developers on individual reinforcement and connection projects, and also must take note of the consumer interest. However, that approach can work against a more strategic approach to network development and reinforcement need, as can the focus on encouraging lowest-cost network development. The process can also be lengthy, leading to developer and supply chain uncertainty, which is damaging in the longer term. A good example of that is the current discussions on the need to deal with the transmission charging regime for offshore islands, which Ofgem sees in terms of capacity need. The real issue should be to consider the longer-term energy potential in subsea connections to the islands. We debated that previously.

The key to future energy policy is to ensure that we deliver the right framework, and that there is close co-operation between the various Governments who have an interest. I accept that the Bill would take us forward, by its recognition of the need for greater Government involvement in the process. The strategy and policy statement is a good way forward in ensuring that Government can set the policy objectives for Ofgem. Clearly, it will be subject to a periodic review. No one chose to debate the various clauses, and there is general agreement on that.

I believe that the measure will deliver better clarity on the roles of Government and the regulator, with Ofgem being given strategic direction, and work toward policy goals. The difficulty I have with the process, however, is that Scotland may have different policy goals from, say, England—and if my hon. Friend the Member for Ynys Môn is successful with new clause 7, so might Wales in future. The present process will mean that Ofgem will have to report to Parliament annually on how it works to achieve the policy goals of Government, but it will not have to do so in respect of the policy goals that may be set by the Scottish and Welsh Governments.

Ofgem is a Great Britain-wide regulator and, it seems to me, must appropriately reflect the specific needs of the individual parts of the network, as well as the overall network. There have been clear areas in the past of mismatches between the regulatory approach of Ofgem and Scottish Government policy and aims. One example was the Ofgem proposal in 2009 to target the costs of balancing system constraints at Scottish users, at the very time when we need to grow renewable energy.

The planning, regulatory and economic development responsibilities of Scottish Ministers, with respect to energy, are crucial. They need to be balanced through an appropriate responsibility for, and effective representation of, Scottish interests in the systems for influencing and developing market regulation, which have, as indicated in the examples given, often ignored specific Scottish interests. Ofgem should be accountable with respect to those policy aims, too.

In addition, therefore, to making a report to the Westminster Parliament Ofgem should make an annual report and be accountable to the Scottish and Welsh Governments for what it has done and proposes to do. That would provide an appropriate and effective representation of Scottish and Welsh interests in systems for influencing the development of market regulation.

As I have said, I move the amendment without much hope, but the issue is none the less important. I appreciate that there are difficulties about it, but Ofgem should reflect the interest of all the parties that have some duties for energy within these islands.

John Hayes (Conservative, South Holland and The Deepings)

I thank the hon. Member for Angus for tabling the amendment, which, again not surprisingly, raises the issue of work with the devolved Administrations. We regard that as significant, of course. I recognise the importance of Ofgem’s work to Scottish and Welsh Members. However, as the hon. Gentleman knows, energy policy, including Ofgem’s performance, is a reserved matter. The Ofgem strategy and policy statement will apply across the whole of Great Britain, and we have included a procedural requirement for the draft statement to be laid before the UK Parliament before the Secretary of State may designate it.

Earlier in our proceedings—I am not sure whether you were in the Chair at that juncture, Mr Bayley—the hon. Gentleman raised the issue of the role of the devolved Administrations in electricity market reform. I made it very clear then that there would of course be collaborative work with those Administrations, as well as the extensive discussion that that kind of reform requires. That happened during the preparation of the Bill and applies to this aspect of the Bill as well. The changes that we seek, which will arise from and be stimulated by this legislation, will of course necessitate a whole-kingdom application, which will require discussions of that kind. In recognition of the interest in Scotland and Wales in the strategy and policy statement, the Scottish and Welsh Ministers are listed as statutory consultees and, of course, will have an opportunity to comment on the statement before it is circulated for wider consultation. That applies both to the first SPS and to any future revisions.

For that reason, the Government do not consider it necessary to require the strategy and policy statement to be laid before or agreed by Scottish and Welsh Ministers. As I described in our earlier debate, the use of the word “agreement” is, in such terms, assumptive, so requiring their agreement would, in effect, give Welsh and Scottish Ministers a veto power. I am sure that is not what the hon. Gentleman would want. Having said that he agrees with the general purposes of the Bill, he would be the last person to want to damage its chances of success, and there is no implication of that. However, requiring that the SPS be agreed by Scottish and Welsh Ministers would give them an unhappy and unhelpful veto power over the application of the SPS across Great Britain. That would not be in line with either common sense or the devolution settlements that we enjoy.

I therefore respectfully request that the hon. Gentleman withdraw his amendment.

Michael Weir (Scottish National Party, Angus)

I understand what the Minister is saying and where he is coming from. Although I fully accept that DECC has had a lot of discussions with Scottish—and no doubt Welsh—Ministers on these matters, I still have a grave concern about the fact that, in the past, there have been specific conflicts with Ofgem, which were not resolvable. I do not think there is a case for a veto, but perhaps there is one for greater discussion.

Having said that, I am a realistic man and I feel that the Committee is probably not with me on this issue, so I will not press my amendment to a vote at this stage. I beg to ask leave to withdraw the amendment.

Clause 116 - Consequential provision

Tom Greatrex (Labour, Rutherglen and Hamilton West)

I beg to move amendment 125, in clause 116, page 87, line 39, at end insert—

‘(4) This section shall take effect on that day on which the first strategy and policy statement comes into effect.’.

It is good to have you back, Mr Bayley. You have missed some entertaining sittings of the Committee, but I am sure that we still have some to go. Amendment 125 is very limited in extent. I wish to raise a couple of brief points with the Minister. As Members will be aware, clause 116 repeals the existing guidance on social and environmental policies that Ofgem has regard to, effectively because that guidance will be replaced by the strategy and policy document to which the provisions of part 4 of the Bill relate.

There is, however, a possibility—indeed, I think it is probably a near certainty—that the first strategy and policy statement will not be published until 2015, yet the guidance on social and environmental policies to be repealed by clause 116 will be repealed immediately. Will the Minister give us clarification about that anticipated gap and what will fill it? Although it makes sense to codify existing guidance into a single policy document, there could be a lag between that happening and the first strategy and policy statement coming into effect, which could cause uncertainty. This minor, technical, amendment seeks to ensure merely that when the new strategy and policy document comes into effect it replaces the existing social and environmental policy so there is not a gap.

John Hayes (Conservative, South Holland and The Deepings)

I thank the hon. Gentleman for raising this issue. The amendment is designed to improve the drafting of the consequential provisions and, in particular, to bring them into effect once an SPS is in place. The amendment is unnecessary because clause 125(2)(e) already provides that the social and environmental guidance will only be repealed by a commencement order on a date appointed by the Secretary of State. I think that is sufficient to deal with the matter that he raised. Our intention is that a commencement order repealing the social and environmental guidance would not be made until an SPS is in place.

Clause 125 also provides that clause 116 (2) and (3) will come into force two months after Royal Assent. This is appropriate for these provisions, which simply add references to the duty to further the SPS policy outcomes into the principal objective and general duties in the Gas and Electricity Acts. That is my understanding and it is confirmed by my own sight of the Bill, but I will look at that again because I want to be absolutely confident that the point that the hon. Gentleman has made does not have greater weight than it first appears to do. To that end, given that I will consider further the general issues he raised, I respectfully request that he withdraws the amendment.

Tom Greatrex (Labour, Rutherglen and Hamilton West)

I beg to ask leave to withdraw the amendment.

Schedule 14 - Consumer redress orders

Tom Greatrex (Labour, Rutherglen and Hamilton West)

I beg to move amendment 126, in schedule 14, page 178, line 42, leave out subsection (4).

Hugh Bayley (Labour, York Central)

With this it will be convenient to discuss the following:

Amendment 127, in schedule 14, page 179, line 7, after ‘turnover’, insert

‘unless one or more consumers have suffered loss or damage greater than this value.’.

Amendment 128, in schedule 14, page 179, line 13, after ‘turnover’, insert

‘unless one or more consumers have suffered loss or damage greater than this value.’.

Amendment 129, in schedule 14, page 185, line 20, leave out subsection (4).

Amendment 130, in schedule 14, page 185, line 29, at end insert

‘unless one or more consumers have suffered loss or damage greater than this value.’.

Amendment 131, in schedule 14, page 185, line 35, at end insert

‘unless one or more consumers have suffered loss or damage greater than this value.’.

Tom Greatrex (Labour, Rutherglen and Hamilton West)

Amendments 126 and 129 have a similar impact on parts 1 and 2 of schedule 14. Part 1 relates to gas consumers and part 2 relates to electricity consumers. The consumer redress powers in the Bill are welcome but they do not go far enough to protect consumers who have been ripped off by energy companies. As the Bill stands the consumer redress powers will not apply to investigations currently undertaken by Ofgem. Those consumers who have been the subject of unsatisfactory practice by their energy suppliers could therefore miss out on compensation simply because of the time that the investigations take.

The Bill gives the energy regulator the power to order companies to compensate consumers who have been mistreated or misled about their energy deal, their tariffs and the arrangements under which they are put on those tariffs. Under the deal struck between the Government and the big energy companies, the powers will not cover any of Ofgem’s current eight investigations. As I am sure the Minister is aware, the regulator is currently investigating each of the big six energy companies for a range of different issues: an investigation into SSE, ScottishPower and npower on door-to-door selling started in September 2010; an investigation into EDF on handling of customer complaints started in December 2010; investigations into ScottishPower on discrepancies in its terms and conditions for customers and misleading online tariff information started in March and June 2011 respectively; an investigation into British Gas on blocking business customers from switching providers began in January 2012; and an investigation into E.ON on door-to-door selling commenced in April 2012.

A range of different issues are subject to investigations. I do not wish to second-guess their outcome, because they are investigations at this stage, but that list indicates the time it can take for investigations to be completed. Any investigation that begins today, tomorrow, next week, next month or until the Bill receives Royal Assent will not be bound by the consumer redress powers set out in schedule 14. That is unfair to customers who have been subject to unfair practice, particularly where the investigations have yet to be concluded. The sums involved could be significant; as Members will be aware, after EDF was found to have misled consumers last year, Ofgem imposed a nominal £1 fine and the company agreed to pay back £4.5 million to its customers.

Many consumers will be concerned that the schedule, while introducing consumer redress powers, will leave out the findings of significant investigations that I have just listed, if any of them report before the Bill receives Royal Assent. They will be concerned that they will not be awarded the redress set out in the Bill.

The Minister may well argue that I am suggesting retrospective legislation, but I do not agree. The amendment is not retrospective in the sense of punishing companies for something that was not against the rules at the time the contravention happened, but would simply force the companies that had broken the rules, which remain the same regardless of the amendment, to compensate consumers appropriately for the investigations that conclude within the time scale we are talking about. I hope that the Minister will join us in supporting consumers.

Amendments 127, 128, 130 and 131 seek to ensure that consumers are compensated fully when it has been found, after investigation, that they have not been treated fairly. The Bill will limit compensation to 10% of the turnover of an energy company. What would happen if the value of the loss suffered by consumers was greater than that? Should consumers not receive pound-for-pound compensation when they have been subject to mis-selling or have not been treated fairly? Why should a consumer lose money so as to protect the balance sheets of the company? Will the Minister clarify the rationale behind capping compensation at 10% of turnover?

I completely accept that the chances of the value of any compensation package exceeding 10% of the company’s turnover are relatively slim, but it is still a possibility. The Government must prepare for that. In the event that compensation exceeds 10%, there would have had to have been a significant number of cases of customers being ripped off—indeed on a grand scale—making the need for consumers to be fully compensated even greater.

An important point of principle is at stake. The Government have said a number of times that they want to be on the side of consumers and that the point of such powers is to ensure that consumers receive redress when they have been treated poorly. Rather than capping the amount energy companies can be forced to pay to consumers in compensation, consumers should be able to get back what they are rightly due. Although it may well be a relatively unusual occurrence and a slim possibility, there is a point of principle here that it is important that the Minster and the Government are able to defend.

Gregory Barker (Conservative, Bexhill and Battle)

I am grateful to hon. Members for tabling these amendments. Amendments 126 to 131 seek to amend schedule 14 to allow energy companies to face both retrospective and unlimited liability. That would not only create considerable regulatory uncertainty—it has been a consistent theme in this Committee that that is something all Members are at pains to avoid, mitigate and diminish—but would be likely to have a detrimental effect on the very consumers we are seeking to protect through consumer redress order powers. I know that that is not the intention of the amendments, and I very much understand where the hon. Gentleman is coming from, but we have considerable concerns about the amendments.

First, amendments 126 and 129 are designed to allow Ofgem, as the regulator, the power to require energy companies to pay compensation for regulatory breaches that occurred prior to the enactment of the Bill. I have some sympathy with the intention behind the amendments, as I can see that they are designed to ensure that consumers do not lose out when companies have broken the rules in the past. However, there is a bigger principle at play here, and I am troubled by the both the effect of setting such a precedent in the energy market and the consequential impact on all consumers.

The presumption in all legislation is that powers should not be applied retrospectively. That is for very sound reasons and goes way beyond the energy market. Whenever Parliament seeks to apply its law retrospectively, it invariably concerns a very, very serious issue on which Ministers could get into significant deep water. Those arguments particularly apply in this case, namely the likely effect of regulatory uncertainty on markets and the cost of capital, which in turn impacts on consumer bills. There are other unsettling consequences that would affect consumer bills.

In practical terms, such uncertainty would be manifested in many ways, including likely impact on: the cost of capital for market players, particularly smaller suppliers and new entrants that may be deterred; the cost of insurance premiums, not only to cover the extension of liability for past contraventions, but to take into account the possibility of further retrospective changes to the regulatory framework once the principle of retrospectivity has been conceded; the bills consumers face as energy supply companies pass on the direct costs that they face as a result of the changes; and the costs of network companies, which could also be caught by these provisions.

Over and above the very real unintended effects I have outlined, which would obviously not be in the forefront of the hon. Gentleman’s mind, allowing retrospective application of these powers would create financial and regulatory uncertainty for all energy companies, including small suppliers and the new entrants to the market that we are all seeking to encourage. This would happen at a time when we are trying to encourage the necessary investment required to get that transformational shift to a low-carbon economy. I fear that it would set a precedent, and we should seek to balance the risk of that against the likely benefit to individual consumers.

We should also be mindful that these important powers are intended to be used by the regulator only when it is unable to negotiate redress when assessing penalties. The potential for consumer benefit seems slight, while the regulatory risk and consequential effect on company and consumer costs seem likely to be great.

Amendments 127, 128, 130 and 131, too, have a potentially negative impact on market certainty and costs to consumers. Again, I have sympathy with the intention of the amendments—that compensation to consumers should not be capped by legislation—but consumers continue to be able to obtain redress through the courts under existing arrangements in the unlikely event that they suffer losses on a scale that exceeds the cap set in legislation. The processes and likely length of time that that may take are, of course, proportionate to the potential sums at stake. Similarly, when setting up a regulatory regime, powers and safeguards need to be proportionate and balanced, not only to enable consumers to get their due compensation rapidly, but to provide appeal mechanisms proportionate to the potential liability faced. That is reflected in the procedures in place for the existing penalties capped at 10%, and for the new redress orders set out in schedule 14. For example, our proposed appeal mechanism mirrors that in place for the penalty and is limited in scope and proportionate to the potential liability which is capped at 10%. If we provided for unlimited compensation, as set out in the amendments, we would be increasing the scale of liability without reflecting that change in the scope for appeal. We would therefore also need to look carefully at the arguments to provide more extensive merits-based appeals, which might result in lengthy legal cases and deny consumers timely compensation.

In addition, as with the amendments I discussed previously, we should be mindful of the unintended consequences of unlimited redress orders. A legal remedy already exists, and no penalty awarded by Ofgem to date has come anywhere near to the 10% cap that we propose. To be clear, 10% of annual turnover would mean penalties and compensation of nearly £1 billion for the largest domestic energy suppliers; the largest penalty imposed by Ofgem for any transgression to date has been £15 million—a tiny fraction of that £1 billion potential. While allowing unlimited redress orders is unlikely to benefit consumers, therefore, it would risk increase pricing in an increased cost of capital and or an increased cost of insurance premiums for energy companies. Those increased costs could then only be passed on to consumers. The impacts would not only be on the large, vertically integrated companies; an unlimited cap would disproportionately affect smaller energy suppliers and network operators, as their capital costs are proportionately higher. That might negatively affect the likelihood of new entrants coming into the market, which all in the Committee are keen to see and encourage. To clarify further, the combined 10% cap on penalties and redress in schedule 14 applies to each separate regulatory breach, so companies that commit multiple breaches face commensurately larger compensation payouts. Finally, for cases already under way—an important point made by the hon. Member for Rutherglen and Hamilton West—Ofgem will continue to negotiate compensation on behalf of the consumers affected. Companies that fail to negotiate and agree satisfactory redress can expect Ofgem to reflect that lack of co-operation in the level of the fine.

I hope that the hon. Gentleman is satisfied with my answers. I fully understand why he is so concerned and appreciate that he is putting the interests of consumers high on his agenda. For the reasons I have set out, however, I hope that the hon. Members will agree to withdraw their amendments.

Tom Greatrex (Labour, Rutherglen and Hamilton West)

I listened carefully to what the Minister said and, in his response to amendments 127, 128, 130 and 131, on the 10%, he seems to want it both ways—things are unlikely because of what, first, 10% of turnover would be and, secondly, the highest level of redress has been. This amendment therefore should not really present difficulty, because it is only if the consumer detriment is above that level that this protects them. So it is not in that sense an unlimited liability.

Gregory Barker (Conservative, Bexhill and Battle)

But it would price in a risk. There would be a cost to that risk and that cost of capital or of insurance premium would be reflected in the costs to the company of their finance and insurance, however remote.

Tom Greatrex (Labour, Rutherglen and Hamilton West)

But the Minister made the point that he thought that this was very unlikely. Therefore I would suggest that the cost of that risk would be relatively small in that case, if he says that it is relatively unlikely in the figures that he cited in terms of what 10% of turnover would be and what the highest level of redress currently has been.

Gregory Barker (Conservative, Bexhill and Battle)

I am not an expert in insurance, despite having some City background in finance. I pass on to him in good faith our best market intelligence that there would be a material impact on consumer bills if this unlimited cap had to be priced into the cost of finance, insurance and liability.

Tom Greatrex (Labour, Rutherglen and Hamilton West)

In response to the other points that the Minister made in relation to the earlier set of amendments, amendments 126 and 129, I seek clarification of what I thought he said about the breaches currently under investigation. I read out a list and there are some significant ones. It suggests that some are taking quite a long time—some are getting on for two and a half years since investigation was started—particularly in relation to door-to-door selling. These could be significant in terms of the level of detriment to consumers. Did the Minister say that while in those cases Ofgem would continue to negotiate to reach a settlement, it would effectively bear in mind the level of redress that there would be in the future as, if not quite a benchmark, a comparison as to the level of compensation that would be or could be appropriate in those cases?

Gregory Barker (Conservative, Bexhill and Battle)

I think I am clear in saying that the overall cap does not change 10% of turnover, but Ofgem will bear in mind the willingness of companies to negotiate in good faith. If they are obstructive to seeing consumer redress, that will be reflected in a steeper fine for those found to be at fault.

Tom Greatrex (Labour, Rutherglen and Hamilton West)

I thank the Minister for that response and his response to the other amendments. As he acknowledged, these amendments are designed to ensure that consumers who are ripped off are not then in a position where they are not compensated adequately. While I said at the outset that we welcome the consumer redress powers, there is a legitimate concern, given the number of investigations that are ongoing. However, given the Minister’s response, I am content to withdraw these amendments at this stage, although I reserve my right possibly to come back to some of these points on Report. I beg leave to withdraw the amendment.

Clause 118 - Offshore transmission systems

Hugh Bayley (Labour, York Central)

I invite the Minister to propose an intriguingly worded amendment.

John Hayes (Conservative, South Holland and The Deepings)

I beg to move amendment 98, in clause 118, page 88, line 36, leave out ‘by, or by’ and insert ‘by or on behalf of, or by or on behalf of’.

“Intrigue” is my middle name. I believe the amendment brings clarity and transparency in the area which requires it, as I shall explain by saying a word about the purpose of clause 118, which is to give confidence to offshore generators so that they can lawfully commission the transmission assets that they build back to shore.

The reason why I say the amendment adds clarity is that the clause creates an exception to the prohibition on participating in the transmission of electricity offshore without a licence during a commissioning period in certain circumstances, by amending section 4 of the Electricity Act 1989.

We have previously given developers the option to build their own transmission infrastructure, on the basis that they require it to get their power back to shore. That important flexibility allows offshore generators to progress in the manner best fitted to their circumstances. Clause 118 will enable developers to take that option to test and commission their transmission assets without risk of falling foul of the law. The fact that they could fall foul of the law is not our intention. In fact, it is the opposite of what we intend. However, it could occur. The clause will facilitate the timely acceptance of the assets by an offshore transmission owner, and allow the flow of renewable electricity during commissioning of the asset.

The amendment recognises that when developers make use of that flexibility to build their own transmission assets, it may be the developer or their associate who undertakes construction of the assets, or a contractor or subcontractor may do so on their behalf. The wording of the clause as currently drafted would arguably not cover assets built by a contractor or subcontractor and would thus fail to give many developers the legal confidence that the clause was originally designed to provide. In essence, the clause deals with an unintended consequence; one could call it a loophole in the existing legal and regulatory regime. The amendment identifies a possible further loophole in our plan to close the first. This minor, technical amendment will add greater clarity, certainly and transparency to the clause, principles which underpin the whole of the Bill.

Clause 121 - Interpretation of Act

Tom Greatrex (Labour, Rutherglen and Hamilton West)

I beg to move amendment 72, in clause 121, page 92, line 32, at end insert ‘and any successor authority’.

This is a simple amendment. Much as we have all enjoyed the past few weeks of detailed discussion in the Committee, I am sure we do not have any great desire to do it again too soon. Hypothetically, after an election and a change of Government, the incoming Government may wish to dispense with Ofgem. Were they to do that, the amendment would ensure that any successor authority to Ofgem continues to take forward the responsibilities described in the Bill. That is all the amendment seeks to do.

John Hayes (Conservative, South Holland and The Deepings)

I am slightly surprised by the hon. Gentleman’s brevity. However, I am delighted because it allows us to make the progress we all seek. I found out a lot about the hon. Gentleman today. He revealed, in what he described as a confession, that he spends his leisure hours watching Liberal Democrat speeches on television.

Tom Greatrex (Labour, Rutherglen and Hamilton West)

Only once.

John Hayes (Conservative, South Holland and The Deepings)

That is beyond the call of duty for even the most diligent of shadow Ministers. It is certainly not something that I would have done. Today we also learned that he can make his argument with impressive brevity. I am not sure I can match that. I would not want to raise expectations and then thwart them. The debate about regulation is important; I will not make it a particularly long one. Amendment 72 would prepare the ground for a new energy regulator and is therefore essentially about Ofgem and its future. It would be unhelpful as it would create doubt and uncertainty in the sector and the market and therefore runs entirely contrary to the intentions of the Bill.

I do not say, and Government Members have never said, that the matters should not be looked at closely. We, indeed, at an early stage of our Government instituted a review of Ofgem, its role and responsibilities and its performance against purpose. The hon. Gentleman will be familiar with that review, which was conducted under the previous Secretary of State for Energy and Climate Change. It has an important role in shaping Ofgem’s renewed mission. That mission is in essence about ensuring that public interest lies at the heart of the delivery of energy policy. I have no doubt, having read the hon. Gentleman’s party’s thoughts on the subject—so I do have leisure habits I keep quiet—that they want much the same. They want a regulator fit for purpose that acts in the national interest and has at its heart defence of the public interest. I could hardly be expected to demur, given that I have been described in the national press as the people’s Minister. [Hon. Members: “ Who?”] Channel 4 described me as that but I do not want to dwell on it. Modesty forbids me to say more, although I am prepared to wear the badge that I have been offered.

Therefore, there is not much gap about the need for effective regulation. We have little doubt about the essence and purpose of it, and the Government have reviewed these matters because it is important to ensure that Ofgem is fit for purpose and doing what it was designed for. The Bill would also provide a range of additional powers to step in if necessary in all kinds of ways. We have talked at length about a more plural and liquid market that creates greater certainty by creating resilience through diversity. We have had extensive, exciting—enthralling even—debates on the subject in Committee. Given all that, I am not sure that the amendment is necessary. The Government have no plans to dissolve Ofgem, which we regard as an important part of the regulatory framework.

The review to which I have drawn the Committee’s attention took on board a wide range of views. We listened to the views of consumer groups, and we continue to do so. We identified, as a result of the review, a need for greater clarity between Ofgem and the Government through the establishment of a new statutory strategy and policy statement, about which we have already spoken. The statement is given life by the Bill, and it will set out the Government’s strategic policy goals for the gas and electricity markets and describe the role of the Department and Ofgem in ensuring that that strategy is not only fit for purpose but implemented effectively.

So this is about using the Bill to provide the means by which the regulatory framework matches the Government’s strategy and protects public interests accordingly.

I acknowledge, in the spirit I have adopted throughout our consideration, that there is room for greater clarity. As I have said repeatedly, there is room for greater consideration of the lines of accountability between the Department and Parliament. As we go through the cathartic process of radical reform, there is a need to measure the effect of that reform with diligence. And, indeed, it may be necessary for us to return to these matters as we do so. The hon. Member for Southampton, Test said, and I quickly captured his remarks and repeated them as though they were my own, that this is the beginning of a journey, not the end. The destination we seek is the more effective, better regulated market that I believe the Bill can produce.

I do not say that we have all the answers. What politician or Government Minister would say that? I do not for a moment believe that. The hon. Gentleman was kind in highlighting that approach.

How shall I put it? I am trying to think of a more elegant metaphor—or is it a simile?—than throwing the baby out with the bathwater. Any interventions on a more elegant turn of phrase would be welcome, but I see that no one can think of anything better, so throwing the baby out with the bathwater is probably not the right route, and it is certainly not the route that we are choosing to take. I say this with charity and a degree of paternal concern, but, on reflection, I think the Opposition will realise that this policy is not the best in their portfolio. On reflection, other parts of their critique of the Bill, particularly on the more plural and liquid market and on clarity and accountability, are more persuasive.

On that note and in that spirit, paternal but never patronising, we should move swiftly on. I note from the brevity of the hon. Member for Rutherglen and Hamilton West that he thinks so, too. I invite him to withdraw his amendment.

Tom Greatrex (Labour, Rutherglen and Hamilton West)

I made a number of confessions this morning, which is good for the soul, and I will confess again that my brevity may have been influenced by my anticipation of the Minister’s seeking to quote various things at me this afternoon.

The amendment is designed purely to account for a particular set of circumstances. The Minister said that the amendment would create uncertainty, but I think it would do the opposite, because it states that the responsibilities that the Bill assigns to Ofgem may be transferred to a new regulator. That is a bit more certain than the uncertainty he suggested.

John Hayes (Conservative, South Holland and The Deepings)

The amendment would create certainty if we knew what the Opposition were going to put in Ofgem’s place. If the Opposition had come with a well worked-up plan for what an alternative regulator might look like and the ways in which it would differ from Ofgem, certainty might have been the result. Given that that is not the case, and given that the Government have already shown both a determination to review Ofgem and a willingness to do so further should that become necessary, I think we stand on the side of certainty, and the hon. Gentleman stands on the side of doubt.

Tom Greatrex (Labour, Rutherglen and Hamilton West)

I advise the Minister not to get too far ahead of himself, because on Report there may be opportunities to discuss some of these things a little further. The amendment would insert a safeguard into the Bill were a new regulator to happen. I have not been convinced by his elegant and extended contribution that that should not be the case. Therefore, I do not intend to withdraw the amendment.