Energy Bill [Lords]

Public Bill Committee, 15 June 2023.

Rupa Huq (Labour, Ealing Central and Acton)

Before we begin, although officially Members have to go through me to take their jackets off, I am happy to say that everyone can have it off today—you all have my permission to remove your jackets. Hansard colleagues would be grateful if Members would email speaking notes to hansardnotes@parliament.uk. As usual, please switch electronic devices to silent. Tea and coffee are not permitted, but there is ample water.

Clause 221 - Interpretation of Part 10

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

It is a pleasure to serve yet again under your chairmanship, Dr Huq. The clause—the final clause in part 10—simply sets out the interpretation of terms used in the clauses on the energy savings opportunity scheme, which we discussed at length on Tuesday. It also explains where provisions fall within devolved competence for the purposes of this part of the Bill.

Alan Whitehead (Labour, Southampton, Test)

Welcome to the Chair again, Dr Huq; it is a pleasure to serve under your chairmanship. The clause concerns just the interpretation of previous clauses—I am sure that they are great interpretations and will go down in history as such—and I have no comments on it.

Clause 222 - General objective

Rupa Huq (Labour, Ealing Central and Acton)

With this it will be convenient to discuss clause 223 stand part.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

The clause marks the start of part 11, which concerns core fuel sector resilience. By “core fuels” we mean the essential liquid and gaseous fuels used for transport and other purposes, whether derived from crude oil or renewable transport fuels.

Ensuring resilience and security of supply for such fuels has become even more critical given the change that we are experiencing in the energy sector globally. Although renewable technologies are making inroads—electric cars, for example, are of growing importance—core fuels still account for more than 95% of the energy used for transport, and over 1.5 million households use heating oil or liquefied petroleum gas for heating. The Government are determined to reduce our dependence on fossil fuels, but that will take time, and it will be a challenging time for the industry.

Analysis by His Majesty’s Government has shown that there are already single points of failure in the fuel system that are critical to regional fuel supply, and those risks require better management. Recent events, such as covid-19, the tanker driver shortages of 2021 and protest activities at oil terminals, have demonstrated the level of risk to fuel supplies. It is therefore a responsible approach for the Government to take powers to ensure that fuel supplies remain secure.

Existing powers are available to Ministers under the Energy Act 1976; however, those are essentially reactive and may be used only when a disruption to fuel supplies is an actual or threatened emergency. The purpose of these measures is to enable us to mitigate risks before they develop into actual disruptions to supply.

Risk management is at the heart of these measures. Not all risks can be eliminated, but a resilient system is more likely to withstand shocks and to recover from them faster. The Government seek to strengthen the resilience of the sector, now and through the net zero transition, and to proactively minimise and address risks that could cause disruption to the supply of fuel.

Clause 223 provides clarification on the scope of the powers and who they can be applied to. The intention is to cover all the critical operators in the supply chain for core fuels, including refiners, infrastructure operators, suppliers, hauliers and wholesalers. The clause sets out which products are considered core fuels, including conventional transport fuels from oil—such as petrol, diesel and jet—heating oil, liquefied petroleum gas and renewable transport fuels.

Alan Whitehead (Labour, Southampton, Test)

We have reached an important part of the Bill, concerning core fuel sector resilience. As the Minister stated, we need to ensure that our core fuel supplies are not cut or interrupted by external circumstances, that we have resilience in our supplies, and that we can be assured at all times that petroleum and so on is getting to and from refineries, and to where it is supposed to go. The Minister has reflected already on past disruption to fuel supplies, which hon. Members will recall. It is understandable that we wish to be assured that supplies are secure.

The Minister also stated that we have powers already to ensure that, where disruption takes place, action can be taken to secure resilience. However, these measures on the principle of core fuel resilience go further than that. As the Minister says, this is about trying to anticipate potential disruption and problems as far as core fuel sector resilience is concerned, and then providing the Government with powers to respond proactively, rather than reactively, to the anticipated issues.

I suggest that one needs to be very careful in how one drafts something for that purpose. I assume that what we do not want, although perhaps the Government do, is to get into the situation in the film “Minority Report”, quite a while ago, in which the lead actor, who happens to be Tom Cruise—not that I regularly watch Tom Cruise films—

Olivia Blake (Labour, Sheffield, Hallam)

Why not?

Alan Whitehead (Labour, Southampton, Test)

Oh, all right. We can have a debate about whether Tom Cruise makes good films or not, but I think the general consensus would be no. The point about that film is that he was, as I recall, a detective who had to go round anticipating crimes before they were committed. Indeed, he did not just anticipate crimes—I think my hon. Friend the Member for Bristol East is looking this up on her iPad—

Kerry McCarthy (Labour, Bristol East)

I have no idea what you are talking about. I am not sure I have ever seen it.

Alan Whitehead (Labour, Southampton, Test)

In that film, people were profiled in case they might commit crimes in later life, and they were arrested well before they could commit a crime, or because their profile suggested that they might do so in the future. That is the problem that we may come across with these clauses.

As we will unpack when we come to later clauses, the way the Bill is drafted puts the onus on suppliers and the owners of undertakings that relate to possible disruptions to do “anything”—that is the word in the Bill —to secure core sector resilience. As we will see, if the people in those sectors fail or fall short of doing “anything”, there are penalties: they can be imprisoned, and they can be fined at the discretion of the Secretary of State.

I am interested to hear what the Minister has to say about that, but it seems to me that that gets rather close to the “Minority Report” line about anticipating offences and, as it were, taking people out before they have committed an offence. Furthermore, it puts an enormous onus on the people carrying out those activities to do things that perhaps ought to be for the Government to undertake and enforce, as the Minister said earlier, at the time that a disruption takes place. It could be said that these clauses are about anticipatory activity. The Government quite properly have powers under previous environmental legislation to deal with disruption.

Clause 222 sets out the general objective for core fuel sector resilience and states that the Secretary of State’s functions must be exercised with a view to

“ensuring that economic activity in the United Kingdom is not adversely affected by disruptions to core fuel sector activities, and…reducing the risk of emergencies affecting fuel supplies.”

That is a very wide brief.

Although we do not have any objections to the clause, I note that it is very widely drawn and presages some of the things later in part 11 that, in the light of the clause, put particularly onerous responsibilities on core fuel sector participants to do “anything”. If we look at the cumulative effect of the various bits of wording in part 11, we see that this is a very wide power indeed, and one that might lead industry to question the balance of responsibilities in the core sector responsibility arrangements.

I am just trying to flag the position concerning part 11 as a whole. I am sure the Minister will have things to say about that as we progress through the clauses, but I hope the Committee will bear that general picture in mind when discussing later clauses.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

I do not want to stray into Captain Mainwaring and Lance Corporal Jones territory, but I think we have been delving into the realms of fantasy. Just for the record, I should state that Tom Cruise is a fine actor and director. The “Top Gun” films, the “Mission: Impossible” series, “Jerry Maguire” and “Minority Report” are all excellent films that I enjoy watching, and Tom Cruise does a very good job acting in them.

The hon. Gentleman is right to mention the existing powers, but those are reactive; we are seeking to be proactive in order to mitigate the risk to the supply of fuel. Some of us—I was still at school—remember the fuel crisis of 1999 under the last Labour Government. Of course, we would not like to see anything like that happen again. There have been disruptions more recently, and we need to take action to mitigate them.

The power in part 11 allows the Government to regulate the sector, but the intention is to have an effective power to preserve fuel supply for end users. A narrower power would risk missing the next unexpected event, and we would end up with an extensive list of possible risks and actions, which we do not want. The hon. Gentleman is right to say that, in most circumstances, the sector acts voluntarily. However, we must remember that such companies are commercial entities and will always act in their interest. Therefore, it is the Government’s role to ensure that there is a protection in place nationally to support the supply of fuel and ensure that this essential service continues for the British people.

Clause 224 - Directions to particular core fuel sector participants

Alan Whitehead (Labour, Southampton, Test)

I beg to move amendment 116, in clause 224, page 191, line 17, at end insert—

“(9) The Secretary of State may not issue directions to core fuel sector participants that are in contravention of the Trade Union and Labour Relations (Consolidation) Act 1992.”

This amendment sets in legislation the need for the Secretary of State to act in accordance with the Trade Union and Labour Relations (Consolidation) Act 1992 when dealing with core fuel sector participants.

Rupa Huq (Labour, Ealing Central and Acton)

With this it will be convenient to discuss clauses 224 to 226 stand part.

Alan Whitehead (Labour, Southampton, Test)

The amendment is, I hope, germane to the general picture that I have painted of the purport of part 11, which places an onus on companies and those engaged in core fuel sector activity to undertake activity—quite often anticipatory activity—that will ensure that the Government’s aims for core fuel sector resilience are achieved.

We saw in clause 223 the range of activities that are envisaged as being covered by part 11: storing oil, handling oil, the carriage of oil or renewable transport fuel by sea or inland water, transporting oil by road or rail, conveying oil or fuel by pipes, processing or producing oil or renewable transport fuel, and so on. That covers a huge range of industrial concerns, companies and undertakings, and all those companies and undertakings will effectively be bound by clause 224. That means that those companies and undertakings can have directions given to them to do various things, on a substantial anticipatory basis, that are necessary for core fuel sector resilience.

Clause 224(4) states:

“If the Secretary of State considers that there is a significant risk of disruption to, or a failure of, continuity of supply of core fuels, the Secretary of State may direct a person to whom this section applies to do anything in relation to the person’s relevant activities or assets which the Secretary of State considers necessary or expedient for the purpose of…reducing the risk, or…reducing the potential adverse impact of the disruption or failure.”

That is not a very closely specified list of things that the participants in core fuel sector resilience—those people who are doing all those activities—may be directed to do. The Secretary of State can direct those companies to do “anything”.

The amendment seeks to clarify one particular area of what “anything” might mean. The clause could be construed as saying that, in doing “anything”, the Secretary of State could assume—again, on an anticipatory basis as far as core fuel sector resilience is concerned—that the companies concerned may or should start to infringe the rights of their employees in relation to employees’ activities in those companies. That is a pretty wide-ranging power. It suggests that, if it is thought that there might be disruption, the onus is on the companies to take actions that might infringe other established provisions in our legal system in order to carry out what the Secretary of State directs them to do in relation to resilience.

From the structure of the clause, it certainly looks as though the Secretary of State might assume—again, at arm’s length—that those companies could, for example, take actions in relation to their employees not because the employees had done something, but because they might do something in the future that affects core fuel sector resilience and therefore means that the companies would be in breach of the Secretary of State’s directions. Of course, the things that might be done include the company’s employees exercising their trade union rights. As we set out in our amendment, those rights are established by the Trade Union and Labour Relations (Consolidation) Act 1992, which governs and regulates the sort of actions that are reasonable for employees to undertake in respect of their trade union and workplace rights. We do not think they should be thrown away on the basis of an anticipatory direction requiring companies to do things in relation to the Secretary of State’s concerns about fuel sector resilience.

I can see the pretty good labour relations with those engaged in fuel sector resilience, which exist in most circumstances in the sector, turning into very bad relations if there is a sort of undefined onus on the companies, at the direction of the Secretary of State, to do something— anything—about something that may or may not happen. Even though there are rules and regulations governing the companies’ relations with their employees, the temptation—in fact, the rational response—will be for them to say to the trade union representatives, “We are going to make sure you cannot exercise your rights in our firm because we are worried that we might fall under this direction in the future.” If an employer were to do that, even though nothing had happened but something might happen in the future, that would be a guaranteed way to break down labour relations, and might quite possibly precipitate the sort of crisis that the Minister is seeking to deal with on an anticipatory basis.

It is therefore conceivable that the very existence of these arrangements could precipitate crises of fuel sector resilience rather than prevent them. I think all hon. Members would agree that we would not be very happy to have that on the statute book, so we want to add a clear understanding that the Secretary of State’s directions should not imply or direct that the companies should act in contravention of the 1992 Act. That is an attempt to clear up a little this series of very vague and far-reaching powers and arrangements.

The amendment would not, of course, impede the force of the Secretary of State’s directions to ensure that the companies involved in core fuel sector resilience are doing everything they can to ensure resilience, but it would framework the circumstances under which they and the Secretary of State act so that the anticipatory arrangements are within reasonable bounds. I am sure the Minister will see the force of the issue: we may conceivably make anticipatory arrangements into real arrangements if we are not careful about how we go about it. I therefore think that the amendment is a protection not just for those who are employed in core fuel sector resilience areas, but for their employers and for the Secretary of State, such that what the Secretary of State is anticipatorily doing has some clear boundaries as far as what that activity may mean.

I personally think the amendment would be a good addition to the Bill. It has been put forward in a spirit not of animosity but of trying to ensure that we make the best sense that we can of a series of wide-ranging powers. As I said, Tom Cruise or no Tom Cruise, we should not stray completely into the area of trying to anticipate crimes and misdemeanours before they are undertaken, but take proper, proportionate action to ensure that the sector is able to work properly under possible disruption and that everyone works together to ensure that that resilience is as good as it can be.

Olivia Blake (Labour, Sheffield, Hallam)

It is a pleasure to serve under your chairship, Dr Huq. I should say that I am a member of the GMB union.

I rise to support the amendment, which is very reasonable and is an attempt to help the Minister. I am sure he will stand up and say that the Secretary of State would never knowingly try to give directions in contradiction to the measure that we have tabled, but the point of the amendment is to get that on the statute book and make it clear to the industry, and those who are employed in it, that that safety net would be there, because “anything” is a very broad word, as outlined by the shadow Minister, my hon. Friend the Member for Southampton, Test.

There have been great relationships within the industry for many years, and as it is such a critical industry when it comes to health and safety, the working rights of those employed in it are critical to maintaining that safety. I hope the Minister will look on the amendment kindly and understand the reasons for it.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

The powers in the clause are important to ensure resilience and address disruption in the core fuel sector. I thank the hon. Member for Southampton, Test for his amendment and reassure him, and the hon. Member for Sheffield, Hallam, that the powers are not intended to interfere with any rights to industrial action or any other employee rights. The Government have maintained a good working relationship with the industry over the years and aim to be aware of proposed industrial actions and to work collaboratively, as we have in the past, to understand the impact and potential mitigations for the risks that might arise.

Clause 224 enables directions to be issued for particular purposes only: to improve and maintain resilience, to restore continuity of supply or to reduce the risk or impact of a disruption. In a situation in which a proposed industrial action is assessed to cause a significant risk of disruption, the direction power could be used to ask core fuel sector participants to make contingency plans to mitigate the risk. It is not intended to cut across the rights in the legislation that the hon. Members have highlighted.

I emphasise that the Government will always seek a voluntary solution in the first instance before issuing a direction and, of course, we believe that industry participants will have a chance to make representations before a direction is made and to appeal a direction when issued. I therefore ask that the hon. Member withdraw his amendment.

Kerry McCarthy (Labour, Bristol East)

Will the Minister clarify what he means by “industry participants”?

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

Industry participants would be companies, the industry as a whole, trade union bodies and so on. They are absolutely part of the entire process and, of course, if any of them had an issue with the direction being issued, they would have the right to appeal such a decision.

Clause 224 gives the Secretary of State the power to issue directions for the purpose of maintaining or improving core fuel resilience or to recover from or reduce the risk of a disruption to continuity of core fuel supplies. The past few years have demonstrated that the resilience of the core fuel sector needs to improve significantly. We have seen queues at pumps and stock-outs at petrol stations more often than we should. The supply of fuel remains critical to the operation of the country’s economy and essential services.

The individual companies in the supply chain are flexible and manage their own risks. In extreme cases that are out of these companies’ control, it is likely that they can declare force majeure, meaning that because of the extenuating circumstance, they will not be held liable for their failure to perform contractual obligations. It is therefore crucial that the Government have the power to direct key players in the sector to take actions necessary to manage the risk of disruption to fuel supply that could arise.

The clause gives the Secretary of State the power to issue a person carrying on core fuel sector activities, or a facility owner in the core fuel supply sector, with a direction in three different circumstances. The first is to maintain or improve resilience. It is important to note that this power can be used only if the Secretary of State considers that insufficient progress has been made by the proposed recipient to take the steps necessary to address the issue.

A direction can also be issued to restore continuity of supply or to reduce a significant risk of disruption to supplies. Such directions can be issued without waiting for the sector to make progress voluntarily, given the impact that a disruption or significant risk might have on the public. A direction will be issued only if circumstances mean that it is not practicable to make regulations. That could be because of the urgency of the issue or because of the number of cases—if they are not sufficiently numerous to justify making regulations.

A direction can be issued only to persons carrying on core fuel sector activities in the course of a business with capacity in excess of 500,000 tonnes or to a facility owner if the facility has capacity in excess of 20,000 tonnes. That will cover refineries, terminals, pipeline operators and hauliers when a disruption associated with an individual company could have a significant impact on the continuity of supply of core fuels in our United Kingdom. The direction might be to take an action or to stop the recipient doing something that could have an adverse impact on the resilience of the sector. There is a requirement to provide written notice to the recipient and the reason for the direction, so the sector should be reassured that the recipient will be duly informed and will have the opportunity to make representations regarding such a decision.

The power is designed to cover a broad range of scenarios, because the range of conceivable risks is wide and inevitably uncertain. For that reason, we are unable to provide guidance as to the circumstances in which the power will be used. However, I emphasise that His Majesty’s Government intend to work with industry on a voluntary basis whenever possible and that the power can be considered as only a backstop power where a voluntary approach is not effective.

Clause 225 sets out the procedure to be followed before issuing a direction. The recipient of the direction must be given a written notice that sets out the proposed direction, the reason why the direction is being issued and when the direction is intended to come into effect. They will also get an opportunity to make written representations in respect of the proposed direction.

Given that directions will relate to sites covered by regulations for the control of major accident hazards, it is also appropriate that the relevant competent authorities —such as, in England, the Health and Safety Executive and the Environment Agency—are consulted to ensure that the direction does not inadvertently compromise safety. There is also provision to consult other persons whom the Secretary of State deems appropriate. The Secretary of State will consider any representations from the recipients, or those authorities, when deciding whether to issue the direction.

Clause 226 sets out the consequences for failing to comply with a direction. There could be severe impacts to the security of supply if there is non-compliance. It is therefore essential that there are criminal as well as civil sanctions to deter businesses from failing to comply. The offences set out in this clause are criminal offences and they serve as a deterrent measure so that they can provide credibility to the direction power.

The clause sets out both summary and indictable offences for either imprisonment or a fine, or both. The severity of the offence will determine whether it will be a summary conviction or a conviction on indictment. There has always been a history of compliance in the sector. Our hope is that the provisions will be a strong deterrent to future non-compliance and that businesses will realise that it is cheaper and more responsible to comply.

Alan Whitehead (Labour, Southampton, Test)

I put what I hoped was a fairly reasoned case for amendment 116. I understand what the Minister has said about the circumstances in which directions would be given and the aim of working on a voluntary and collegiate basis with the industry and ensuring that things proceed, as far as possible, on a voluntary basis. However, the circumstances about which we are talking may tempt the Government to remove themselves from that principle. The Minister may say that is his aim, but I always think that we have to legislate for the worst circumstances, not the best.

It would be a good idea to have the requirement in the amendment in the part of the Bill that talks about directions. I am not particularly satisfied by what the Minister has said about how the clause will work generally and would like a Division on the amendment, because we want it on the record that we think it is important. It is not because we wish to undermine the Bill’s progress in any way, but the amendment relates particularly to what the Minister said about the circumstances under which he thinks directions should or should not be made. We may discuss some of those things in the debates on other clauses as they come up, but at this point I wish to press the amendment to a Division.

Clause 227 - Corresponding powers to make regulations

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

The aim of the clause is similar to that of the power of direction in clause 224, which is to maintain or improve core fuel resilience or to counteract a fuel-supply disruption or its potential adverse impact. The regulation-making power is designed to be used when a larger class or category of operators and owners need to be directed to take certain actions. The clause may also be used to direct action by smaller businesses and operators such as petrol stations.

Before making any regulations under the clause, the competent authorities for health and safety and environmental protection must be consulted. Subsection (8) sets out that regulations made under the clause will be subject to the affirmative procedure because the potential interference to businesses if the powers are used means that it is only reasonable that Parliament has a say on how the powers are exercised. The powers to make regulations can also make non-compliance with the regulations a criminal offence because of the potential impact of any failure to act. I therefore commend to the Committee this great clause of this great Bill.

Alan Whitehead (Labour, Southampton, Test)

The clause further underlines what I said about this part as a whole. It relates to the powers of the Secretary of State to make regulations and to the circumstances in which those regulations may be made. As hon. Members will have read, subsection (4) states:

“If the Secretary of State considers that there is a significant risk of disruption to, or a failure of, continuity of supply of core fuels, the Secretary of State may by regulations require persons of a class or description specified in the regulations to do anything in relation to their relevant activities or assets which the Secretary of State considers necessary or expedient for the purpose of…reducing the risk, or…reducing the potential adverse impact of the disruption or failure.”

Once again, we have the word “anything”, which should trouble considerably hon. Members in Committee and, rather more so, the employees and companies involved in core fuel activity.

What discussions and consultations has the Minister had with the industry involved in the resilience of the core fuel sector? What was the response, formally or informally, to the provisions that the Secretary of State will be enabled to put in place under this clause? Did the sector react favourably or unfavourably to the clause? If it reacted unfavourably, was anything done about further discussion with the companies involved—or, by the way, the trade unions at those particular companies—to address such concerns?

If the Minister is proceeding without such a consultation, that rather calls into question what he has said in the past about the good relationship with the industry. Bearing in mind that the Minister and the Secretary of State are asking the industry to do some potentially onerous things—we cannot get more onerous than “anything”—it would be of relevance to the Committee to hear, whether now or in future, what employees and companies think about it. How easy do they think it will be possible to make arrangements that comply with the directions? After all, as we will come to, it is a question not just of their being subject to the directions, but of them actually going to prison if they do not get it entirely right—rather an important point for employers to consider when responding to the clause. If the Minister has useful information to convey to the Committee, that would be helpful to our considerations.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

Happily, the Government and the industry have ongoing positive relations, and open dialogue and discussion on multiple issues. The Secretary of State and the relevant Minister in the Department for Energy Security and Net Zero meet the sector regularly. We have conducted extensive discussions with the industry on the issue over several years. Indeed, as far back as 2017 there was a consultation on this matter, which had heavy industry engagement, so I hope that that allays the fears of the hon. Gentleman and sets his mind to rest.

Clause 228 - Power to require information

Rupa Huq (Labour, Ealing Central and Acton)

With this it will be convenient to discuss clause 229 to 233 stand part.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

Clause 228 introduces a power for the Secretary of State to require information from individuals or companies in the core fuels supply sector. It will enable the Government to have an accurate picture regarding the resilience of the sector.

Currently, the Government rely on the sector to voluntarily provide the information necessary to assess, mitigate and respond to any disruption to the core fuels sector. Although most companies comply with requests, some do so only partially and there is a lack of consistency in the quality of some information collected. There is a risk that that leaves the Government unprepared and unable to assess a situation that might impact security of supply.

Clause 228 will apply to operators with throughput in excess of 1,000 tonnes, which encompasses the majority of key sector players. The type of information requested can vary given the circumstances. It may include information around site infrastructure, operations, supply capacity and volume supplied.

The notice to require information specifies the way that the information must be provided, ensuring that the quality of information provided is consistent. The Secretary of State must notify the proposed recipient of the notice in advance to allow them to make representations, and must consider any such representations before deciding whether to issue such a notice.

Clause 229 places a duty to report a notifiable incident and outlines a clear protocol for businesses to inform the Government, should they identify or suspect a potential risk of disruption. It is expected that businesses should be required to report only a notifiable incident relating to an incident that disrupts or causes failure to—or, indeed, creates a significant risk of the same—the continuity of supply of core fuels.

Guidance is currently being developed, following engagement with industry representatives, to set out the parameters for incident reporting. Examples of the sorts of incidents or risks that might be included are physical and operational issues with infrastructure, industrial action and insolvency. The duty is imposed on core fuel sector players with throughput in excess of 500,000 tonnes, such as refineries, major oil terminals and oil hauliers, but that list can be expanded through regulations.

Clause 229 also permits the Secretary of State to seek further information from the person who has reported the incident. That will aid the Government in identifying supply issues before they develop into emergency situations and in taking appropriate action when necessary. The Secretary of State must notify the proposed recipient of the notice in advance to allow them to make representations and must consider any such representations before deciding whether to issue a notice.

Clause 230 creates an offence where there has been a failure to comply with the requirement to provide information when notice has been given to do so. It also creates an offence when there has been a failure to report incidents and a failure to provide further information about a reported incident on request. The Secretary of State has the right to request information from the sector by written notice for the purpose of ensuring resilience. Failure to comply with those requirements without reasonable excuse means that an offence has been committed. Similarly to clause 226, the offences are criminal offences and are designed to act as a deterrent.

Clause 231 allows the Secretary of State by regulation to require information to be provided at specified intervals. The Government currently conduct periodic reviews of resilience in the system through a voluntary approach. The current reporting scheme does not provide sufficiently detailed information to allow the Government to understand fully the risks and capabilities of the sector, and the voluntary nature of the approach carries the risk that the industry could stop providing the information needed at any time, without notice.

The provision of information at specified intervals—for example, annually—will allow the Government to monitor the supply chain, anticipate pinch points in the system and identify any potential issues. The information provided will then be used by the Government to better monitor resilience and to support decision making in relation to determining whether further action, such as issuing a direction, should be taken. Much like other clauses in this part, there are powers to create criminal offences relating to non-compliance with any regulations.

Clause 232 sets out the circumstances in which the Secretary of State may disclose information provided under clauses 228, 229 or 231 to any Government Department or devolved Administration for the purposes of maintaining sector resilience or restoring a disrupted supply, or, if necessary, for the purpose of a criminal proceeding. The clause does not give the Government the right to contravene the Data Protection Act or certain limits under the Investigatory Powers Act 2016.

Clause 233 sets out that His Majesty’s Revenue and Customs has the power to disclose information to the Secretary of State solely for the purpose of facilitating the Secretary of State’s functions relating to core fuel sector resilience. HMRC currently collects data from core fuels operators on the volume of fuel sold to customers, which provides information on their market share and is important in the assessment of their resilience. The power would allow HMRC to disclose that information when needed for the purpose set out in the clause. That will help to ensure that the Department has a robust and reliable understanding of the state of fuel supply and resilience across the sector and can take appropriate action if needed.

The power is important in ensuring that the Government do not seek the same information from the sector twice, and helps to reduce any administrative burden imposed by His Majesty’s Government. It is also worth noting that protections are in place to prevent the disclosure of information if it breaches provisions under Data Protection Act and certain parts of the Investigatory Powers Act 2016. I commend the clauses to the Committee.

Alan Whitehead (Labour, Southampton, Test)

I have no further comments on the clauses; we are happy for them to proceed.

Clause 234 - Appeal against notice or direction

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

The clause sets out the appeal options available to a person who has been issued with either a notice under clause 224 or, under clauses 228 and 229 respectively, a notice to provide information or a notice to provide further information about a reported incident. I commend the clause to the Committee.

Rupa Huq (Labour, Ealing Central and Acton)

Is anyone else up for a bit of a debate on this one?

Alan Whitehead (Labour, Southampton, Test)

I think I come under the category of “anyone else”, Dr Huq.

I may be wrong, but the clause appears to be about appeals against a notice or direction that relates not just to the immediate clauses we have discussed but in particular to clause 227, on the power to make regulations and, as I have said previously, direct

“persons of a class or description specified in the regulations to do anything in relation to their relevant activities”.

If we set that against clause 234, on the authority to undertake an appeal against a direction, it is noticeable that an

“appeal to the First-tier Tribunal against the direction or notice”

can be made on the ground that the decision is

“based on an error of fact...is wrong in law, or...is unfair or unreasonable”.

Does the Minister consider that the extremely vague wording of the requirement to do “anything” could give rise to a lot of income for lawyers, shall we say? Employers could go along to a tribunal and say, “We were required to do ‘anything’ but do not think that is particularly fair or reasonable under the circumstances, because we could not understand what ‘anything’ constituted.” Employers may be under a direction to do things that they are not clear about and, indeed, that could require them to do something they consider to be directly against the interests of the companies they run and, indeed, the broader question of good relations and so on in respect of energy sector resilience.

I wonder whether the word “anything” may be a bit of a hostage to a tribunal in those circumstances, or whether the Minister considers that there are sufficient brakes in this legislation to ensure that an appeal to a tribunal would not necessarily easily succeed. Are there sufficient definitions in the Bill about unfairness and unreasonableness to ensure that something going to a tribunal would not necessarily have a guaranteed passage through and success at that tribunal? I am talking about a situation in which an employer might go to a tribunal to dispute a direction or notice.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

I thank the hon. Gentleman for his question. His mention of lawyers of course brought to mind another very good Tom Cruise film: “A Few Good Men”. I believe that members of this Committee, unlike what was said in that film, can handle the truth. That is why I am pleased to say that the Government will ensure that any notice given to a person will be based on discussions with the company in question and give them time to make progress to resolve the issue. Given our preference for a voluntary approach, we do not expect a high number of directions in the first place.

Safeguards such as issuing a draft notification and seeking representations from the recipients before making a decision will ensure that decisions are not disproportionate, which I know the hon. Member for Southampton, Test is worried about, or unfair. For that reason, the number of appeals is expected to be extremely low.

Clause 235 - False statements etc

Rupa Huq (Labour, Ealing Central and Acton)

With this it will be convenient to discuss clauses 236 to 238 stand part.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

Clause 235 creates an offence of knowingly making a materially misleading or false statement when providing information or giving further information about a reported incident. It is important that the information received from the sector under the information powers is as accurate as it can be, given the potential detrimental impact of false information. If a business knowingly provides false or misleading information, that will be considered an offence, which is subject to criminal and/or civil penalties. That also applies to any other statement made to the Secretary of State under this part of the Bill.

Clause 236 sets out the scope of offences that can be made under the regulation powers and how they are punishable. Non-compliance with regulations such as those made under clauses 227 and 231 could seriously impact the Government’s ability to assure the continuity of fuel supply. Therefore, it is of the utmost importance to have the ability to create offences as a deterrent to potential future breaches.

Clause 237 sets out a requirement to seek the consent of the Secretary of State or the Director of Public Prosecutions in England and Wales before proceedings may be brought for offences under this part of the Bill. For Northern Ireland, there is a requirement to seek the consent of the Secretary of State or the Director of Public Prosecutions for Northern Ireland.

Clause 238 sets out that when an offence has been committed by a body corporate or a Scottish partnership with the consent or neglect of an officer or partner, the officer or partner will also be held to have committed an offence and can be prosecuted accordingly. That includes directors and managers, or people acting in that capacity. That will ensure that seniors are encouraging compliance and considering the impact of decisions, as they may be held accountable for non-compliance.

Clause 239 - Enforcement undertakings

Rupa Huq (Labour, Ealing Central and Acton)

With this it will be convenient to consider that schedule 18 be the Eighteenth schedule to the Bill.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

The clause sets out the civil sanctions available to Government as an alternative to prosecution when the Secretary of State has reasonable grounds to suspect that one of the listed offences has been committed. Civil sanctions are effective in ensuring compliance, allow flexibility and are much more cost-effective for Government, industry and taxpayers.

The Government have had a consistently strong relationship with the sector, as I have said, and we do not expect compliance or support to diminish. Enforcement undertakings have been used successfully as a main form of enforcement by environment agencies and the Health and Safety Executive, so there is precedent. Given the impact of non-compliance, it is important to have these provisions as well as criminal sanctions, so that proportionality and severity can be assessed, and the right sanction applied.

Schedule 18 places an obligation on Government to have a procedure in place for entering into an enforcement undertaking. It encourages transparency on the part of the Government by requiring the procedure to be published so that both parties are clear on what is needed. It includes a process to make changes to the procedure and puts safeguards in place to ensure that consultation has been carried out before the changes are made and published. It allows variation of the terms of the enforcement undertaking provided that both parties agree in writing.

Schedule 18 also states that a compliance certificate must be issued when the Secretary of State is satisfied that there has been compliance with the undertaking, and it sets out the process for that. The Secretary of State may treat a person as having failed to comply with an undertaking and revoke any compliance certificate where inaccurate, incomplete or misleading information has been provided. A person has the power to appeal decisions regarding the refusal or revocation of compliance certificates on the grounds that the decision is based on an error of fact, wrong in law, unfair or unreasonable, or wrong for any other reason.

Alan Whitehead (Labour, Southampton, Test)

I am a little puzzled by what the Minister has said previously about the extent to which there has been consultation and discussion with industry and employers in this area. The Committee needs to be clear that he is now advocating Ministers undertaking enforcement of directions that, as we have discussed, apparently have sanctions, certainly for conviction on indictment, of imprisonment for a term not exceeding two years—or 12 months in Scotland and six months in Northern Ireland, given the respective general limits in magistrates courts.

In other words, we are discussing sanctions on employers—one might say that is an interesting turnaround from sanctions on employees—that could lead to their being imprisoned for a time. That appears to be disproportionate to what is suggested as far as enforcement undertakings are concerned, in particular in view of the arrangements that we have already agreed on regarding the circumstances of a direction and the situation that an employer may or may not find him or herself in as far as trying to comply with those directions is concerned.

Certainly, were I an employer or a company engaged in this area, I might well say to the Minister or the Secretary of State: “Yes, we understand that you may be placing on us particular actions in relation to anticipated disruption, but we would be pretty unhappy if failure to comply with a direction, which might not be entirely in our own hands as a company, could result in us as the directors going to prison for two years.” I would not like that to be a consideration were I a director of such a company.

I am therefore a little surprised, because either those companies have perhaps not read the detail of the Bill—although this bit has been around long enough—or the Government simply have not drawn their attention to it, or consulted them, or discussed the circumstances under which such exist. Have the Government just conjured up these important undertakings and the penalties attached to them as a list in the Bill, or was it the result of iterative discussions with the industry as to what is and is not proportionate for the industry?

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

I do not wish to go over the same ground in too much detail, but a consultation took place in 2017 and an open discussion and debate continues with the industry on this and many other issues. I know the hon. Gentleman speaks with the best of intentions, but he did mention the detail of the Bill, and it is in that detail that there is a choice to enforce either criminal offences or civil sanctions. In many cases, it is in the interests of both parties and the public to use civil penalties to guarantee enforcement, and that would be appropriate. However, there will be cases in which criminal offences are better for enforcement. The Department will consult on guidance and sanctions, which are also subject to parliamentary scrutiny after Royal Assent, so we will have another chance to debate this. The best way to avoid a sanction or, indeed, going to prison is not to break the law.

Alan Whitehead (Labour, Southampton, Test)

That’s what Tom Cruise says. [Laughter.]

Clause 240 - Guidance: criminal and civil sanctions

Rupa Huq (Labour, Ealing Central and Acton)

With this it will be convenient to discuss clause 241 stand part.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

I have to say that I never thought we would be debating Tom Cruise at such length. Clause 240 sets out the Government’s duty to publish guidance on the criminal and civil sanctions associated with the offences listed in this part of the Bill. The purpose of the guidance is to set out the approach to enforcement for offences I set out earlier. The guidance will provide clarity and further information on how offences will be enforced and what actions the Secretary of State may take. The clause sets out the process that the Secretary of State must follow before they can publish guidance around criminal and civil sanctions. That includes consultation requirements and to lay a draft of the proposed guidance before both Houses of Parliament in line with clause 241.

Clause 241 states that the guidance cannot be issued until 40 days after the day on which it is laid in both Houses, or the later of the two days if laid in the Houses on different days. It is certainly not a “Mission: Impossible”.

Clause 242 - Financial assistance for resilience and continuity purposes

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

I beg to move amendment 22, in clause 242, page 203, line 35, leave out from beginning to “financial” in line 1 on page 204 and insert—

“The Secretary of State may, with the consent of the Treasury, provide

This amendment ensures consistency with the approach taken in clauses 103 and 134 in relation to powers to provide financial assistance. It does not alter the substantive effect of clause 242(1).

Rupa Huq (Labour, Ealing Central and Acton)

With this it will be convenient to discuss clause stand part.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

The amendment ensures consistency with the approach taken in clauses 103 and 134 in relation to powers to provide financial assistance. Clause 242 sets out the financial assistance power, which is intended to be used when direct financial intervention is considered the most appropriate way to preserve resilience or secure continuity of core fuel supply. Such financial intervention is to be strictly for the resilience of the core fuel sector and for securing or maintaining the continuity of fuel supply, for which the Government currently do not have explicit powers.

Financial assistance can be in different forms, some of which have been included in the Bill. Treasury consent will be required for any expenditure by those means, ensuring that the funding provided meets the appropriate controls for value for money. I reassure the Committee that any financial assistance provided will be subject to subsidy control requirements. That addresses concerns with the provision regarding the distortion of competition. We do not want businesses thinking that this is a bail-out scheme. That is why the Government intend to publish guidance on how the power will be used. The power will be used only in exceptional circumstances.

Alan Whitehead (Labour, Southampton, Test)

I hear what the Minister says. It is certainly a balanced approach that the power should be used only in exceptional circumstances, and is not a general bail-out or financial handout. I still have some residual concerns about the way the clause was originally worded. As a result of the amendment, it is to be worded marginally differently. The explanatory statement states that the amendment

“does not alter the substantive effect of clause 242(1).”

I am reminded of the following statement by an analytical philosopher whose name escapes me:

“A difference which makes no difference is no difference at all.”

I did not get a clear answer when we talked about clauses 103 and 134. The Minister moved an amendment to clause 103 to take out the words

“out of money provided by Parliament”,

leaving the clause to state that financial assistance may be provided in general. Is there a difference to clause 242 as a result of this similar amendment? If the Government may draw on moneys that have not been provided by Parliament for the purpose of financial assistance, where are they likely to come from, and what controls would Parliament have?

The present wording of clause 242 provides control, inasmuch as if moneys are provided by Parliament, Parliament has the ability to scrutinise and account for them. If removing that element of the clause gives rise to moneys provided not by Parliament but by, say, the Government of Kazakhstan, might that not worry us a little, or is there no need to worry because the Government’s ability to raise money by non-parliamentary means is tempered by other things?

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

There is absolutely nothing for the hon. Gentleman to worry about. That is what I say in response to his question on parliamentary oversight and ensuring that there is scrutiny of where the money comes from. We are currently in the process of agreeing a protocol with the Energy Security and Net Zero Committee. We propose that the Secretary of State will write to the Chair of the Committee to notify them of instances where the Department has provided financial assistance under the power, so there will be parliamentary scrutiny throughout the process. I am reliably informed that this is a consistent point with respect to Bill drafting.

Clause 243 - Power to amend thresholds

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

The clause contains a power for the Secretary of State to amend or modify the threshold for capacity in excess of which these measures can be applied. Capacity refers to the tonnage of oil that the operator has handled in the previous calendar year. This would not change the person to whom the powers under this part could apply.[Official Report, 22 June 2023, Vol. 734, c. 6MC.]

The core fuel sector is dynamic, and our net zero goals may change the landscape of the sector in the future. We therefore need to future-proof the legislation to account for potential changes that may occur in the sector such that the thresholds may need to be changed over time. It is important to stress that any regulations made under the power are subject to the affirmative procedure.

Alan Whitehead (Labour, Southampton, Test)

I have no particular comments on the clause, although my hon. Friend the Member for Bristol East has reminded me that the philosopher was William James.

Rupa Huq (Labour, Ealing Central and Acton)

Fastest finger first—Kerry McCarthy.

Clause 244 - Interpretation of Part 11

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

The clause identifies several key terms that are used throughout part 11, and lets readers know which sections contain the corresponding definitions. It is therefore intended solely as an aid in interpretation.

Alan Whitehead (Labour, Southampton, Test)

I have no comments other than that the word “anything” does not appear in the definitions. That is a minor observation.

Clause 245 - Meaning of “relevant offshore wind project”

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

I beg to move amendment 135, in clause 245, page 206, line 13, leave out from “wind” to end of line 18 and insert “activity” means—

(a) the planning, construction, operation or decommissioning of offshore wind electricity infrastructure, or

(b) the identification of an area for activity within paragraph (a) (whether or not any particular offshore wind electricity infrastructure is in contemplation).”

This amendment widens the definition in clause 245 to cover the identification of an area for offshore wind development. The amendment also changes the definition to “relevant offshore wind activity”.

James Gray (Conservative, North Wiltshire)

With this it will be convenient to discuss the following:

Amendment 164, in clause 245, page 206, line 18, at end insert—

“(c) any development listed in Section 66 of the Marine and Coastal Access Act 2009 that is connected to the construction, operation, maintenance or decommissioning of a generating station within paragraph (a).”

This amendment would extend the fast-track consenting process for offshore wind to supporting marine development necessary to support the offshore wind project.

Government amendments 136 and 137.

Clause stand part.

Government amendments 138 to 141.

Clause 246 stand part.

Government amendments 142 to 145.

Clause 247 stand part.

Government amendments 146 to 152.

Amendment 166, in clause 248, page 210, line 7, leave out paragraph (i).

This amendment, together with Amendment 167, would remove the ability to disapply certain environmental protections when making regulations relating to the assessment of the environmental effects etc of relevant offshore wind projects.

Amendment 167, in clause 248, page 210, line 12, leave out subsection (5).

See explanatory statement to Amendment 166.

Amendment 165, in clause 248, page 211, line 38, at end insert—

“(10A) When making regulations under this section the appropriate authority must have regard to the particular importance of furthering the conservation and enhancement of biodiversity.

(10B) The appropriate authority—

(a) may make regulations under this section only if satisfied that the regulations do not reduce the overall level of environmental protection or the level of protection for individual sites and species, and

(b) before making regulations under this section, must publish a statement explaining why it is so satisfied.

(10C) Before making regulations under this section, the appropriate authority must seek advice from persons who are independent of the authority and have relevant expertise.

(10D) A statement published under subsection (10B)(b) must include an explanation relating in particular to protection provided by—

(a) the Marine and Coastal Access Act 2009, the Marine Act (Northern Ireland) 2013 or the Marine (Scotland) Act 2010 (as the case may be),

(b) the Conservation of Habitats and Species Regulations 2017,

(c) the Conservation (Natural Habitats, &c.) Regulations 1994 or the Conservation (Natural Habitats, etc.) Regulations (Northern Ireland) 1995 (as the case may be), and

(d) the Conservation of Offshore Marine Habitats and Species Regulations 2017.”

This amendment would apply certain conditions to the making of regulations relating to the assessment of the environmental effects etc of relevant offshore wind projects.

Government amendment 153.

Clause 248 stand part.

Government amendments 154 and 155.

Clause 249 stand part.

Government amendment 156.

Clause 250 stand part.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

What a pleasure it is to serve under your chairmanship yet again, Mr Gray, as we plough on through this immense Bill.

Clause 245 is the first in a series of clauses relating to offshore wind infrastructure projects that will provide new approaches to delivering compensatory measures for environmental impacts and speed up and simplify the consenting process for offshore wind projects. They will do all that while continuing to protect and enhance our marine environment. The clause sets out some key definitions for the purposes of the subsequent new clauses relating to offshore wind infrastructure projects.

I will now briefly set out the Government amendments tabled last week. Government amendments 136 and 137 define “offshore wind electricity infrastructure” to ensure the offshore wind clauses capture all infrastructure in the UK marine area used or intended for use in connection with an offshore wind farm.

Government amendments 135 and 138 to 156 widen the definition of “relevant offshore wind activity” in clause 245 to cover the identification of an area for offshore wind development. That ensures all the clauses relating to offshore wind infrastructure projects apply to offshore wind spatial plans, as well as to individual projects. The amendments also change the definition to “relevant offshore wind activity”.

Clause 246 will allow strategic compensatory measures to be used to fulfil duties under the habitats regulations, the Marine and Coastal Access Act 2009 and the Scottish and Northern Irish equivalents. That should speed up decision making on offshore wind farm development consents while protecting and enhancing our marine environment. For some offshore wind projects, all feasible options to avoid, reduce or mitigate adverse impacts on protected habitats and species will be exhausted. Where that happens, the public authority must satisfy itself that sufficient compensatory measures for these impacts are secured before granting development consent.

The devolved Governments are responsible for consenting to some offshore wind projects in their areas. These provisions ensure that the appropriate public authority can consider applying strategic compensatory measures to offshore wind projects.

Clause 246 will enable public authorities to use strategic compensatory measures that have already been delivered or will be delivered in the future to fulfil their compensation obligations. As strategic compensatory measures could be delivered away from the site affected by the development, the Government are committed to working with devolved Administrations to agree how to manage such measures with cross-border implications.

Clause 247 enables the establishment, operation and management of one or more marine recovery funds. It allows the Secretary of State to delegate functions connected with the marine recovery fund, including to a public authority under a devolved Administration. It is our intention to delegate the functions necessary for devolved Governments to operate their own funds as appropriate. That will mean their marine recovery fund may deliver compensatory measures for the projects they consent. It will be an optional route for offshore wind developers or plan promoters to discharge requirements on them to compensate for damage to a marine protected site.

The Department for Environment, Food and Rural Affairs is leading work with the offshore wind industry and other stakeholders to develop a library of ecologically robust and commercially feasible strategic compensation measures. The marine recovery fund will deliver only measures that have been approved through this process. That will help to reduce time spent considering compensatory measures during the consenting process. It provides a mechanism to deliver approved compensatory measures strategically, using financial contributions from one or more developers or plan promoters.

Clause 248 will help speed up the consenting process for offshore wind projects. It will allow the habitats regulations assessment and marine conservation zone assessment processes to be adapted and streamlined. These changes will apply to offshore wind development in the UK marine area only. The clause will enable the modification of existing, and the creation of new, legislation for the assessment of the environmental effects on protected sites caused by the development of offshore wind. We intend to make regulations that ensure that environmental protection of protected sites is addressed earlier in the pre-application planning process. That should speed up the consenting process by providing greater certainty and reducing statutory nature conservation body resource spent on examination of well-understood mitigations.

The powers also allow for the development of guidance to outline how assessments of the effects on protected sites should be undertaken. We also intend to make regulations that provide clarity on compensatory measures, which should make it easier for developers and regulators to offset damage to protected sites, and to secure such solutions at an earlier stage.

Clause 248 will also allow the Government to consider enabling developers to provide broader compensatory measures, rather than so-called like-for-like measures, that improve wider marine ecosystems but are not targeted at specific impacted habitats, species or protected areas. I must emphasise, however, that a broader approach should be considered only where like-for-like measures are not the most effective compensation. We intend for consent decisions to remain subject to advice from statutory nature conservation bodies.

Clause 249 will help to maintain consistency in environmental assessment processes across the United Kingdom marine protected areas network. To balance that with our offshore wind ambition, we recognise the importance of engaging relevant parties on those important issues. Clause 249 will therefore ensure that the Government and the devolved Administrations work closely with each other, as well as with statutory nature conservation bodies and marine regulatory bodies, on any changes to the process, and consult on issues relevant to their waters. In addition to clause 245, clause 250 sets out some key definitions for the clauses relating to offshore wind infrastructure in this chapter.

With that, Mr Gray, I beg to move that clause 245 and Government amendment 135 stand part of the Bill.

James Gray (Conservative, North Wiltshire)

That is not quite actually what the Minister should be moving. The Minister is moving amendment 135, proposed to clause 245, as on the amendment paper; the question is that the amendment be made. The Minister does not move clause stand part. I move stand part; the Minister doesn’t.

Alan Whitehead (Labour, Southampton, Test)

As the Minister has said, we are making progress with this enormous Bill, part of which is the enormous clause 245 and everything that goes with it. Hon. Members will see that Mr Gray has undertaken a difficult task in accommodating these clauses, which cover various factors, and a considerable number of amendments in a single group for debate. I am afraid that that means that a considerable amount of unpacking is necessary, so I hope that hon. Members will forgive me for spending a little time doing so.

To put the Government and Opposition amendments in context, I will reflect briefly on how part 12 seeks to better incorporate in planning arrangements a combination of circumstances relating to offshore wind electricity generation. The reason for that is to ensure that those planning arrangements proceed much more efficiently, including by reducing the time spent getting consent for offshore wind developments. It also proposes bringing a number of other things into the zone—I will give one or two examples in a moment—in order to make the offshore wind planning process much more holistic, as opposed to current approach of wind farm by wind farm, and device by device. It is about making sure that the process can be carried out much more efficiently by speeding it up and redefining it. We must also try to ensure—and we will come to this in a moment—that we take a balanced approach towards speeding up the process, by considering environmental and conservation issues both offshore and in the North sea.

Various clauses in this group deal with different aspects of what we are trying do with offshore wind. Hon. Members will see that both the Bill and the Government amendments suggest doing so via particular routes. The purport of the Government amendments, as far as I understand them, is mainly to ensure that issues wider than just wind farms are included in the whole planning discussion.

Government amendment 136 states that “offshore wind electricity infrastructure” means

“a generating station, in the UK marine area, that generates electricity…or infrastructure, in the UK marine area, used or intended for use in connection with—

(i) an offshore wind generating station, or

(ii) the conveyance of electricity generated by an offshore wind generating station.”

That includes not just the generating stations themselves, but the cables, wires and other arrangements going to and from the stations, including to the point where they are landed onshore.

That is particularly important, given that it is inevitable—indeed, this should have been the case a long time ago—that offshore generation will be undertaken not by point-to-point arrangements with cables to individual wind farms, but by cabling systems that will, for instance, connect wind farms with nodal points to collect their power at sea and then convey that power via one common cable, perhaps to a particular landing station, as opposed to our current point-to-point arrangements.

The development of a grid highway in the North sea—or, indeed, in the Celtic sea—will be integral to the future operation of those wind farm arrangements. It is, therefore, quite proper that that should be considered in the overall planning arrangements. Government amendment 136 allows for that and also very helpfully states in its explanatory statement that it also covers bootstraps. I am sure that everybody knows what a bootstrap is. In a sense it has nothing to do with offshore wind. It is actually an interconnector cable that is anchored at one point on the shore—on land in the UK—and conveys a high-voltage current, via the seabed, to another land point, particularly to get around constraints of onshore cabling congestion.

Inevitably, we will need to develop more bootstraps to make sure that our generating system on the land side of the UK performs its function well. However, as I understand it, bootstraps are currently regarded as being onshore installations that have no effect offshore, other than the fact that they run partly on the seabed. Making bootstraps part of the offshore planning arrangements will ensure that they are considered in conjunction with offshore arrangements, but it is also possible for bootstraps to become an integral part of the circuits necessary for future offshore generation. As the regulations stand, we cannot interrupt a bootstrap and adapt it so that it becomes useful in landing energy from an offshore farm. The proposed changes will make it possible for those bootstraps to perform a function as part of the strategic grid that we are going to have to put in the North sea and elsewhere in order realise our offshore wind ambitions. That brings me to the question of interconnectors and median interconnectors, which we have discussed. I assume—indeed, I am pretty certain—that the Government amendment will result in such devices being included in future planning arrangements.

So far, so good, as far as the Government amendments and the Bill are concerned. These are things that we substantially support, particularly given the increasingly necessary holistic view that we need to take of planning, and given the speed with which we need to get it in place for the future underpinning of offshore wind development.

Now, however, we come to the rather more difficult bit. It is assumed that offshore wind activity will increase enormously. Indeed, the Government and the Opposition share similar ambitions for the development of offshore wind, though perhaps we differ in our approaches to the top end and to timescale. Basically, we would use our immense natural resources, particularly those in the North sea—since the demise of Doggerland, we have had the emergence of Dogger Bank, which is a very nice shallow bit right in the middle of the North sea—for our wind power in the future.

The second part of our discussion about planning for North sea wind relates to environmental protection, to consideration of the right and wrong areas for siting, and to the compensation or other measures that will be put in place as part of our overall planning system. What really concerns me about the approach to environmental consideration and protection set out in clause 246 is that the underlying principle is about compensation for adverse environmental effects, rather than about considering the potential such effects and ensuring that they are avoided in our planning, where possible, or mediated within a framework that allows them to be minimised.

The principle of compensation is much more familiar in land planning arrangements. For example—I am thinking of an episode that occurred fairly near my constituency—the extension of a port facility might propose to take some estuarial wetland within its boundaries. The planning arrangements might well say, “Yes, the port extension can take up this piece of estuarial wetland, provided that someone creates another piece of estuarial wetland just down the way, with equivalent environmental benefits.” That is a reasonably well-established principle in onshore planning. There are circumstances in which it applies very successfully; it has allowed development to take place while ensuring that environmental protection is well managed.

With a stretch of open sea and the seabed that lies under it, however, it is fairly difficult to see how the compensation principle can easily be applied. We cannot say, “We’ll have a great extension of offshore wind farms that will disturb a precious part of the seabed, but we’ll create another precious part of the seabed to compensate.” All we can say is that perhaps we will not go into a certain part of the seabed, but that is not like-for-like compensation; it is just saying that we will not make things worse than they might otherwise be.

We cannot really apply the same principle of compensation to seaward planning arrangements as to landward planning arrangements, but a lot of these clauses appear to be trying to do just that. Clause 246 includes a definition of “environmental compensation obligation”; it also defines “adverse environmental effect” as

“anything that hinders the achievement of the conservation objectives stated for a protected marine area.”

If someone is thinking of siting an offshore wind farm in a protected marine area, there really is no such thing as compensation. In the end, either they will site it in that protected area, degrading its environmental quality, or they will not.

Katherine Fletcher (Conservative, South Ribble)

While I understand the argument that the hon. Gentleman is trying to prosecute, surely we should not let the perfect be the enemy of the good. We are talking about how to sensibly protect the environment while establishing a broader regime for offshore wind, which has huge benefits for the environment. Can he understand that what he proposes might tip the balance towards making the perfect the enemy of the good?

Alan Whitehead (Labour, Southampton, Test)

The hon. Member makes a valid point. Certainly, we do not want to effectively veto the development of offshore wind by putting restrictions on it place by place, scheme by scheme, in such a way that those schemes cannot go ahead. However, the North sea and the Celtic sea, for example, are very large places. They have a great many sites that can be used for offshore wind development in a perfectly good and environmentally conscientious way, which allows for enhanced development to take place without trashing the marine environment. The issue is not whether we make the best the enemy of the good, but how we pursue the good in tandem with environmental considerations, while not stopping the progress of that enhanced development.

Katherine Fletcher (Conservative, South Ribble)

I am grateful to the hon. Gentleman for giving way again, and I will make this my last intervention. He has just described offshore wind as trashing the marine environment. I really do not think that we can leave that on the record. In fact, we could highlight the good about offshore wind development. One of the most destructive marine practices is bottom trawling, which is made much more difficult with wind turbines in place. Once installed, wind turbines actually create nursery environments for the marine life that I was so fortunate to study at university.

Alan Whitehead (Labour, Southampton, Test)

The hon. Member would be absolutely right again, had I said that offshore wind was trashing the environment. I think that when we get the record back we will see that I said, “so that we can proceed without trashing the environment.”

Katherine Fletcher (Conservative, South Ribble)

There is an implication there.

Alan Whitehead (Labour, Southampton, Test)

Okay. What I was trying to convey—perhaps I did not do so in quite the pellucid way I might have—was what we want to achieve with offshore wind development. As I have said, the Opposition are committed, along with the Government, to a huge increase in offshore wind, which we think can be achieved, most importantly, while taking proper note of the environmental considerations that surround those sites. As the hon. Member for South Ribble says, in the right places and under the right circumstances offshore wind can be, in the end, a substantial enhancement of the underwater habitat and environment.

Kerry McCarthy (Labour, Bristol East)

I think my hon. Friend made it perfectly clear that some places are appropriate for offshore wind and some are not because of the nature of the marine environment. Does he share my concerns about existing protections? A lot of marine protected areas are described as little more than “paper parks” because they are not achieving what they are meant to. We need to enhance the protections for those designated areas. Just as in some places it is appropriate to fish and in others not, we ought to respect the fact that in some areas, marine protection has to be the No. 1 priority.

Alan Whitehead (Labour, Southampton, Test)

My hon. Friend is quite right. She will no doubt be thinking back to the Marine and Coastal Access Act 2009, which started to develop exactly the concept that she sets out—that there are right and wrong places for development. There are places that we should seriously ensure are protected as much as possible—marine conservation zones—and it would be really quite a sin to put development on those. There are also places where there are known marine traffic routes, and siting an offshore wind farm right in the middle of a major offshore traffic route would not be a good idea either. There are other areas where the communications required for offshore wind farms could themselves be subject to environmental considerations, and those need to be taken into account too.

After the 2009 Act was passed, a number of marine conservation areas were supposed to be set up. Many of them have not been, and those that were have not had the level of policing and enforcement that they should have had.

Kerry McCarthy (Labour, Bristol East)

As Labour left government, we had plans for an ecologically coherent network of, I think, 113 marine conservation zones. Does my hon. Friend share my disappointment that we are now 13 years on and still far from achieving that? It is important that we do not go backwards on the issues that we are discussing today. Obviously, we need to go forwards, but going backwards would be even worse than remaining in the same place.

Alan Whitehead (Labour, Southampton, Test)

My hon. Friend is right again, and she recalls the exact number of conservation zones, which had escaped my memory. We might say that if we had those marine conservation zones in place now, we would be much clearer today about exactly what we will be doing as far as planning in the North sea and Celtic sea is concerned.

Lyme Bay fairly near me, which should be a marine conservation zone—I am not sure that it is—has cold-water coral features, and it would be quite lethal to those formations were we to develop offshore activities there. That is why that zone should be protected. Other areas further down—

James Gray (Conservative, North Wiltshire)

Order. I am reluctant to interrupt the hon. Gentleman because he is a great expert on these matters and I greatly enjoy his expositions. However, marine conservation zones do not come into this part of the Bill. If he could tether his remarks to the question of offshore wind, they might be more within scope.

Alan Whitehead (Labour, Southampton, Test)

Yes. I think, Mr Gray, you are drawing an analogy between floating offshore wind and tethered offshore wind and saying that I should restrict my remarks to tethered offshore wind rather than free-floating.

James Gray (Conservative, North Wiltshire)

Yes, be tethered.

Alan Whitehead (Labour, Southampton, Test)

Indeed. I will endeavour to tether my remarks to the offshore wind in the North sea that we are thinking about.

What I was trying to get clear is not that Labour Members want to restrict unnecessarily or negatively the development of offshore wind—we want it to go ahead as quickly as possible and on as many sites as possible in the North sea—but that we want it go ahead on the basis of a proper regime that ensures that we equate environmental protection with the development that goes ahead. We are not at all sure that the compensation principle, which appears to be applied here substantially, is the best way to do that.

Amendment 164 very much goes along with what the Government have now put in their own amendment, so amendment 164 is probably pretty redundant. It seeks to bring in a more holistic picture of what it is to develop offshore activities and would, according to our explanatory statement,

“extend the fast-track consenting process for offshore wind to supporting marine development necessary to support the offshore wind project.”

The Minister might want to comment, but I think that is pretty much covered by the Government’s amendments, so I am happy about that.

Amendments 165 to 167 get rather more to the heart of what I have been talking about. Clause 248, which concerns the assessment of environmental effects, allows the Minister by regulation, among other things, to switch off a number of environmental protections—I will not read them all out because it would take a very long time—that are already in place and replace them with the compensation arrangement. We do not think it is right that those protections should be switched off, and with amendments 166 and 167 we seek to switch off the switching off. Amendment 166 would leave out subsection (4)(i), which refers to

“any relevant Habitats Directive rights,”

and amendment 167 would switch off subsection (5), which lists the provisions set out in subsection (4)(i)(i). As I said, it is a long list of sections of Acts and regulations that very much underpin marine environmental protection.

Having done that, we want to replace those provisions with a positive alternative, set out in amendment 165. As I said, we want the appropriate authority to

“have regard to the particular importance”—

I emphasise “have regard”—

“of furthering the conservation and enhancement of biodiversity.”

The amendment also states that the appropriate authority

“may make regulations under this section only if satisfied that the regulations do not reduce the overall level of environmental protection or the level of protection for individual sites and species, and…before making regulations under this section, must publish a statement explaining why it is so satisfied.”

The amendment would also require the appropriate authority to

“seek advice from persons who are independent of the authority and have relevant expertise,”

and to

“include an explanation relating in particular to protection provided by”

measures such as the Marine and Coastal Access Act, the Conservation of Habitats and Species Regulations 2017 and the Conservation (Natural Habitats, &c.) Regulations 1994. The positive alternative we have put forward is that the Secretary of State should have regard to all those things.

As underlined by the brief exchange between myself and the hon. Member for South Ribble, I mean not that the environmental regulations have a veto on progress, but that the Secretary of State should have regard to them and should make regulations that are compatible with them as far as possible. If they are not compatible, the Secretary of State needs to provide a good explanation as to why, and the circumstances under which that projected development has gone ahead. The development arrangements should work with provisions such as the Marine and Coastal Access Act, rather than against them. That is a much more sensible way to proceed, with a combination of proper and rapid planning consideration and proper environmental protection.

As the hon. Member for South Ribble said, the ultimate outcome should be one where we have a settled marine environment, which is beneficial overall. That includes, for example, the additional assistance that fish conservation may receive from wind farms being in particular places, allowing species to flourish and expand out of the range of fishing vessels, under the shelter of the turbines and so on. The possibility of producing a beneficial outcome overall for marine environments as a result of our trying to develop these new sources of low-carbon power need not be an oppositional activity. It is not a zero sum game; we can have the two together. We think our amendments set out the right way of doing that.

I look forward to the Minister defending the alternative way, as set out in the clauses. The extent of what he has to say will determine whether we decide to divide on any of the amendments. It is important that we get this right together. Ideally, the Minister would come at least some way towards encompassing our alternative method, rather than that which is presently set out in the clauses.

Alan Brown (Scottish National Party, Kilmarnock and Loudoun)

It is a pleasure to serve under your chairmanship, Mr Gray. You must be delighted to have the Thursday afternoon shift this week. I agree with the Government amendments on the expansion of definitions and capturing other infrastructure required to facilitate service offshore wind generation, especially given the scale of the build-out still required and the renewable energy offshore wind targets that we want to see.

I agree with the principles of strategic compensation for adverse environmental effects in clause 246. Such considerations have been a stumbling block for Berwick Bank offshore wind farm, for example, so having regulations that provide clarity on environmental considerations and possible compensation for other projects is certainly welcome. The key test will be whether sufficient clarity is provided and workable. If we want to deploy renewable energy at a much quicker rate to achieve cheaper bills and eliminate reliance on fossil fuels, we need to be able to look at the environmental impacts in the round and come to sensible, balanced solutions. That means creating environmental equivalence or improvements elsewhere by implementing solutions away from sites if it is deemed that they cannot mitigate the environmental impacts of the site of infrastructure construction.

I have one word of caution; I may not be quite as concerned as the shadow Minister, the hon. Member for Southampton, Test, but we need to ensure that these regulations and processes do not become an avenue or vehicle for developers to choose a much easier, cheaper financial solution for them, rather than looking at all avenues to mitigate the environmental impacts at the construction sites. It is critical that robust analysis is undertaken by the relevant regulatory bodies. I realise that subsection (4) is not intended to ensure that everything is looked at and worked through to the nth degree, but we need to ensure that that analysis is not overlooked in the dash for renewable energy and that no shortcuts are taken that allow developers to choose an easy financial solution.

I turn to clause 247. I am sure the Minister is aware that the Scottish Government have concerns that the clause gives the Secretary of State the powers to operate a marine recovery fund in Scottish waters without the consent of Scottish Ministers. Indeed, the Secretary of State will have the powers to completely bypass the Scottish Government and appoint another person or authority, and that is replicated for other devolved Administrations. I understand that the Minister has had ongoing discussions with Gillian Martin MSP—the Energy Minister at the Scottish Government—and other officials on these matters, but as far as I know nothing has been agreed yet. That is why I tabled amendments 176 to 180 to outline my thoughts and put down a marker. Clearly, my amendments were not selected for debate and cannot be voted on, given when they were submitted, but they put down a marker. There is still a window in which the Minister can come to some sort of agreement with the Scottish Government on amendments. It would be good if he could provide the Committee an update on how close we are to a solution. Some form of amendment is still required to subsection (8) in that regard.

There may be issues with clause 247(4), which gives the Secretary of State broad regulation-making powers that could be used in a highly prescriptive manner to direct Scottish Ministers as to how they determine that a compensation condition has been discharged. Again, it should not have been too controversial to agree a way forward. That should be done with the consent of Scottish Ministers before implementation.

I hope that the Minister will acknowledge the collegiate working with the Scottish Government and officials. Nobody is trying to being awkward or territorial for the sake of it, nor are they trying to introduce arbitrary red lines. That is why we are giving the Government a bit more time, rather than pushing votes and extending the debate on this; we are trying to find a collegiate way forward. Again, I hope the Minister can give some insight about a solution with regards to subsection (4).

Finally, in relation to devolution, clause 247(9) allows the Secretary of State to cancel functions that Scottish Ministers have consented to under that clause, which seems anomalous. Again, I am looking for some sort of compromise to protect devolved functions in that regard.

Clause 248 does not provide sufficient certainty that Scottish Ministers will retain consenting functions in the Scottish offshore region or waters beyond 12 nautical miles. I understand that the Scottish and UK Governments have discussed this, but what is the timescale for a possible agreement? I believe that the Scottish Government have suggested draft amendments, so what is the UK Government’s view on them?

Subsections (7) and (8) of clause 248 are too broad. They could alter executively devolved powers and fundamentally shift existing arrangements for the consenting and licensing of offshore wind projects in the Scottish offshore region. Does the Minister appreciate those concerns, and does he have a plan to resolve the situation?

Olivia Blake (Labour, Sheffield, Hallam)

It is a pleasure to serve under your chairship again, Mr Gray.

I declare an interest, given that we are now talking about renewables: my husband is a company secretary of an organisation called Sheffield Renewables, which is a community benefit society that funds, develops, owns and operates renewable energy systems in Sheffield. Although I hope that Sheffield will not become the coastline—if we do everything right so that vast swathes of east Yorkshire, including Selby, are not under water—I thought that it would be prudent for me to declare that interest at this stage.

As a former shadow Minister for nature, this part of the Bill strikes a chord with me. There are things to welcome in the clauses, but I share some of the concerns that have been outlined by my hon. Friend the Member for Southampton, Test. In fact, I agree with the words of an Environment Audit Committee report in relation to the development of offshore wind: we should

“be extremely sensitive to biodiversity considerations given the obvious risks of disrupting important habitats”.

That is important because the Bill represents an attempt to tackle not only the carbon crisis, but the nature crisis. What is bad for one is bad for the other, so it is important that we bear biodiversity in mind with every step we take through the Bill, not least because nature is a massive carbon sink. The UK already faces massive nature depletion—we have has some of the worst nature depletion in Europe—so it is right that we debate how the Bill takes such considerations into account.

I fear that clause 248 provides wide powers to ignore habitat regulations, marine Acts and general duties around assessment, which is problematic. There is also something of a misalignment between some of the wording in the Bill and that in the Environment Act 2021. When that Act seeks to alter habitat regulations, there are a lot of caveats, and it might be worth the Minister considering whether it would be right to have those caveats in the Bill, given that both measures represent Government policy and strategy.

I hope that the Bill does not conflict with 13 by 2030, which we have had a conversation about, and the protection of marine areas. I also hope that we will discuss protections. I particularly support our amendments 166 and 167, because it is important to have that switch-off or death switch, I suppose—I am trying to think of a way of phrasing it. We need to keep those protections in place where we can. If we allow ourselves to be deluded into thinking that the impact on the environment off-sea will not affect us, we are really missing the point. It would have been nice if there had been a reference to blue carbon in the Bill. Obviously, that has not materialised—I understand why, because the Bill is predominantly to do with energy—but we are missing measures in that space as well.

It is incredibly important that the Minister considers amendment 165, particularly as it outlines some of my concerns about the Bill’s alignment with the Environment Act. It is quite clear that the Bill could do more to ensure that environmental protections exist and that we are not cutting our nose off to spite our face with some of our activity.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

I thank the hon. Members for Southampton, Test, for Kilmarnock and Loudoun, and for Sheffield, Hallam for their comments.

The hon. Member for Kilmarnock and Loudoun made some pertinent points, and I understand his concerns around consult and consent throughout the Bill, especially in regard to consent for licences for offshore wind, but I would just say that negotiations are ongoing. There has been very good discussion and work between UK and Scottish Government officials. That is all part of the wider legislative consent motion negotiations, which are ongoing, so I cannot go into the specifics of each case that he mentioned. There are ongoing discussions about these specific clauses with the Scottish Government. By the time of Report and Third Reading, we will hopefully—well, certainly—have more to say about how those discussions have proceeded.

I turn to the comments made by the hon. Members for Southampton, Test and for Sheffield, Hallam—we are seeing so much of each other that perhaps we are becoming hon. Friends. I understand the concerns around whether marine protected areas will be substantial enough to protect the areas of sea that we are discussing. Now that we have established the MPA network and it is substantially complete, DEFRA is working very quickly— as we speak—to implement management measures to deliver protections in the marine environment.

We heard a question of whether we are just watering down the environmental assessment process and if we will cause further damage. Absolutely not—I give my guarantee. The Government are committed to the environmental protection of the marine environment, and developers and the relevant public authorities will continue to be required to undertake environmental assessments ahead of consent being given. That will ensure that developments are located where there are low environmental sensitivities and where impacts can be avoided, reduced or mitigated; or, where that is not possible, that suitable compensatory measures are identified early in the processes. I hope that that addresses some of hon. Members’ concerns.

I thank the hon. Member for Southampton, Test for tabling amendment 164, because it is important. We recognise the importance of extending the fast-track consenting process to offshore wind, as he recognised. We have proposed a substantial amendment with the Bill’s offshore wind environmental improvement package. The Government will support accelerated offshore wind deployment and reduce consenting time while protecting the marine environment, all of which the hon. Member was calling for. His amendment is therefore sadly redundant, as he said, so I hope that he will find it within himself not to press it.

I turn to amendment 165. The Government are committed to ensuring high standards of environmental protection and the offshore wind environmental improvement package seeks to ensure that the acceleration of offshore wind can be delivered in a way that continues to protect the environment and to meet our ambitious net zero targets. Through the offshore wind environmental improvement package, we intend to enable the environmental protection of protected areas to be addressed sufficiently early in the pre-application planning process to inform adequate and ecologically robust mitigation and compensatory measures. That in turn should improve the quality of the information coming into the examination stage of an application. The package will enable the Government to improve environmental assessments for offshore wind projects to ensure that we have a consenting system that works for our marine environment.

The new powers to amend environmental assessments will enable us to consider moving away from the EU’s case law and interpretation of these measures, and to tailor the approach to the United Kingdom’s circumstances, while maintaining important environmental protections. Development consent decisions will also remain subject to advice from DEFRA’s statutory nature conservation bodies.

The amendment would impose a requirement on the appropriate authority to seek independent advice before making regulations under clause 248, but clause 249 already requires the appropriate authority, before making such regulations, to consult statutory nature conservation bodies and such other persons as they consider appropriate.

Turning to amendments 166 and 167, the Government intend to amend only those elements of the process that we identify as complicating decision making on offshore wind consents and/or hindering contributions to marine environmental recovery. Clause 249 contains a requirement on the regulation-making authority to consult with statutory nature conservation bodies, the devolved Administrations and such other persons as the regulation-making authority considers appropriate, before making any regulations. The amendments seek to remove the appropriate authority’s powers to make regulations that disapply or otherwise modify certain primary and secondary legislation relating to the environmental assessment process.

If the powers were to be removed from the appropriate authority, the other powers in clause 248(4) to alter the assessment process would be made redundant. For example, under clause 248(4)(c) the appropriate authority will have the power to make regulations which specify

“the person by whom an assessment…must be carried out”.

The appropriate authority will need to be able to disapply or modify current legislation relating to the assessment process in order to make such changes. The power to disapply or modify current legislation through regulations will also enable the environmental protection of protected areas to be addressed early enough in the pre-application planning process to inform adequate and ecologically robust mitigation measures.

His Majesty’s Government want to enable the assessment of mitigation effectiveness and, without prejudice, compensation proposals at an earlier stage during pre-application. This would also reduce the resources required to undertake more detailed assessments later in the habitat regulations assessment process. The power to disapply or modify current legislation through regulations is required to bring about these changes. I therefore hope the hon. Member for Southampton, Test will find it within himself to not press his amendments.

Clause 246 - Strategic compensation for adverse environmental effects

Clause 247 - Marine recovery fund

Clause 248 - Assessment of environmental effects etc

Clause 249 - Regulations under section 248: consultation and procedure

Clause 250 - Interpretation of Chapter 1

Clause 251 - Arrangements for responding to marine oil pollution

James Gray (Conservative, North Wiltshire)

With this it will be convenient to discuss clause 252 stand part.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

Clause 251 enables the Secretary of State to make regulations for the purpose of setting our arrangements for emergency planning and response to marine oil pollution incidents. Currently, the emergency oil pollution planning and response regime applies to offshore oil and gas activities as well as harbours and onshore handling facilities. In recognising the energy transition and progress towards net zero, the clause will enable a pollution planning and response regime for emerging offshore technologies such as offshore carbon dioxide storage, combustible gas storage, and hydrogen production and storage.

Similar to offshore oil and gas activities, emerging technologies such as offshore hydrogen production and storage will require infrastructure such as subsea pipelines, surface installation and wells. Infrastructure of that kind may act as a pathway to causing oil pollution in the marine environment during its installation, operation or indeed decommissioning stage. Persons responsible for such infrastructure will be required to have an emergency plan in place.

In recognising the importance of ensuring that such a plan remains valid and effective, provisions may be made in relation to the implementation, maintenance and review of such a plan. Reporting requirements of any marine oil pollution incident may also be set out under the clause. Such regulations may provide for the circumstances in which a report must be prepared, and by whom and to whom such a report must be submitted. The content and format of such a report may also be set out in regulations.

To ensure compliance with emergency marine oil pollution planning and response requirements, the clause makes provision for allowing the inspection of infrastructure to take place. An example of the types of provision such regulations can make is provided in the clause. Regulations may make provision for the meaning of any terms or expressions used, for how functions can be conferred on any person, for the charging of fees in relation to matters set out in regulations, for the management of information, for criminal offences and civil sanctions, and for the purpose of securing compliance with the requirements set out in regulations. Criminal offences may not be punishable with imprisonment, nor shall any civil penalty exceed the sum of £50,000. Regulations that contain aspects in relation to the creation of new criminal offences or revisions to existing criminal offences, the imposition of civil penalties or the setting of a civil penalty amount shall be subject to the affirmative procedure.

Clause 252 enables the Secretary of State to make regulations for the purpose of ensuring consideration of implications for sites designated for protected habitats and species when making decisions in relation to offshore oil and gas activities. Such activities include emerging technology types, such as hydrogen production and storage. As with the existing regime, regulations may be made to make provision for obtaining consent from the Secretary of State prior to undertaking a geophysical survey in relation to the activities mentioned.

Furthermore, the regime will be enhanced by an ability to attach conditions to consents, to ensure that the potential impact of such activities is minimised. For activities that are linked to specific licences issued by the North Sea Transition Authority—the NSTA—for reserved matters, or to a licence issued by Scottish Ministers for devolved matters, regulations may provide that the activity cannot be granted a specified licence without a habitats assessment being undertaken by either the Secretary of State or a Scottish Minister.

Subsection (4) contains a power to enable regulations that provide for directions to be given. Where it becomes apparent that an offshore activity has or may have an adverse effect on a relevant site, the power will enable the Secretary of State to give directions to the consent holder to take mitigating steps. That also applies where the deterioration or disturbance of habitats or species within an offshore site could be significant in relation to the conservation objectives of the relevant site. The consent holder will have to comply with any direction issued.

This delegated power may be used only when the Secretary of State considers that it contributes to the protection of relevant sites, to ensure continued high standards of environmental protection. The meaning of the term “relevant site” is to be set out in regulations, but it is intended to be framed in a way that encapsulates sites designated under other UK regulations for protected habitats and species. Further examples of how the powers in the clause may be exercised are provided for in the clause.

Regulations may make provision for the meaning of any terms or expressions used, for how functions can be conferred on any person, for the revocation of survey consents, for the charging of fees in relation to matters set out in regulations, for the management of information, for criminal offences and civil sanctions, and for the purpose of securing compliance with the requirements set out in regulations. As with clause 251, criminal offences committed under clause 252 may not be punishable with imprisonment or a fine exceeding the statutory maximum, nor shall any civil penalty exceed the sum of £50,000.

In recognising the nature of the provisions included in the clause, regulations shall be subject to the affirmative procedure. I beg to move that clause 251 stand part of the Bill.

James Gray (Conservative, North Wiltshire)

Technically, the Minister does not actually move clause stand part. I move clause stand part; the Minister merely speaks to the debate. However, I am being a bit picky, just for the sake of it. Does the shadow Minister wish to take part?

Alan Whitehead (Labour, Southampton, Test)

Yes, Mr Gray, I intend to take part—briefly, the Committee will be relieved to hear. As the Minister has mentioned, the clause concerns the development of new forms of activity in the North sea that might be seen as analogous to those involving oil and gas, but are actually not. However, the activities might share quite a lot of infrastructure and other things, so it is appropriate that the arrangements for responding to such circumstances are analogous to the arrangements for oil and gas.

This part of the Bill is very different from the last one, in that it tries to ensure that developments go ahead in a safe and reasonable way, that we have plans in place should there be problems, and that those plans are based substantially on the plans that are in place already for oil and gas. That is my understanding of the clause, and I hope the Minister can confirm that. Other than that, I do not have anything much to say about clause 251, which seems sensible for the future.

It is noted that in clause 252, on the effects on habitats of offshore oil or gas activities—new things such as carbon capture and storage—no one is switching anything off in that area, which is also something that the Opposition support.

Clause 253 - Charges in connection with abandonment of offshore installations

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

The clause amends existing powers to allow for the making of a charging scheme in respect of decommissioning functions, under part 4 of the Petroleum Act 1998, to charge for regulating decommissioning of offshore oil and gas. The decommissioning of offshore oil and gas installations and pipelines on the United Kingdom continental shelf, or UKCS, is regulated through the 1998 Act, and the responsibility for ensuring that the requirements of that Act are complied with rests with my Department.

Owners of oil and gas installations and pipelines are required to decommission their offshore infrastructure at the end of a field’s economic life. The current powers allow us to charge for regulating offshore oil and gas decommissioning activity at only two fixed points in the regulatory process. The existing charging framework is no longer fit for purpose. Currently, the Government are unable to recover the full costs of undertaking the regulatory functions from industry, leaving the taxpayer liable for the shortfall. Furthermore, the current regime is too inflexible and will be unable to recover the full costs of decommissioning the offshore carbon storage infrastructure of the project.

Clause 253 will amend the 1998 Act to allow for the establishment of a new charging regime for activity related to the regulatory functions for the decommissioning of offshore oil and gas installations. The clause will also make amendments to future-proof the cost recovery mechanism in line with the “polluter pays” principle of environmental law, as already established. Maximising our cost recovery will enable us to ensure a sufficiently resourced regulator. That will ensure that we do not cause the industry to delay decommissioning projects, which would adversely affect the industry’s contributions to reducing emissions and achieving their net zero ambitions.

Further details of the new charging regime, including how it works and what rates will be charged, will be set out in the scheme itself, which will be established administratively and then published. The charging scheme is intended to be in line with other charging schemes operating for complex regulatory functions within my Department and elsewhere across the Government.

Alan Whitehead (Labour, Southampton, Test)

I have a question on clause 253, which makes provision for decommissioning where, clearly, the decommissioning of new forms of offshore installation cannot be undertaken. When the well is exhausted—obviously there is not a well to exhaust under these circumstances—the decommissioning has to be under other circumstances. An example would be when the carbon capture and storage site has been agreed to be full, and is capped off.

On traditional oil and gas decommissioning, there are provisions for sanctions on companies that have responsibility for decommissioning but do not actually carry out the decommissioning. Does that carry across to the new forms of offshore activity? Or should there be legislation to ensure that when someone is up for decommissioning, they really do it and do not abdicate their responsibility? That is not just a question of charging; it is a question of responsibility for the future.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

In answer to the hon. Gentleman’s important question, it is the intention, through this regulation and the existing regulations, that those who are responsible follow through with their commitments to decommission—the “polluter pays” principle has been well established. Nothing in this regulation would stand in the way of that. Nor, we hope, would it put barriers in the way of that. What the regulation seeks to achieve is a new updated charging regime to enable the decommissioning to take place in such a way and in such a fashion that it does not leave the taxpayer liable for any shortfall from the operator who is liable for the decommissioning of an asset in the North sea.

Clause 254 - Model clauses of petroleum licence

James Gray (Conservative, North Wiltshire)

With this it will be convenient to discuss the following:

That schedule 19 be the Nineteenth schedule to the Bill.

Clause 255 stand part.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

Currently, the North Sea Transition Authority can only retrospectively challenge a change in control of a petroleum production licence. Clause 254 will allow the NSTA to consider a proposed change of control of a petroleum production licensee before it takes place, to ensure that the governance, technical and financial capability of a licensee in possession of a such a licence remains appropriate.

Companies that wish to drill and extract petroleum must do so under a petroleum production licence granted by the NSTA to the licensee under the Petroleum Act 1998. Prior to issuing these licences, the NSTA satisfies itself that the prospective licensee company and any parent company are fit to hold the licence and will meet their obligations.

At times during the life of a licence it may be the case that the ownership and control of a licensee should pass to a new parent company or person. An undesirable change of control could undermine investor confidence in the commercial environment, making the United Kingdom continental shelf a less attractive place for investment. The NSTA is currently able to take remedial action to a change of control of a licence holder only after such a change has occurred. This is seen by both the NSTA and industry as being inefficient and of limited effectiveness in preventing harms, both to wider industry and the Government.

Clause 254 sets out the amendments that schedule 19 will make to the model clauses in the Petroleum Licensing (Production) (Seaward Areas) Regulations 2008 and the Petroleum Licensing (Exploration and Production) (Landward Areas) Regulations 2014. The changes will introduce new before-the-event powers for the NSTA regarding the change of control of a licensee in possession of current and future seaward or landward petroleum production licences. The clause also sets out how provisions inserted into a petroleum production licence by schedule 19 may be altered or deleted.

Schedule 19 amends existing legislation to replace the current after-the-event powers in relation to a change of control of petroleum production licensees with powers intended to apply before a change of control has taken place. The schedule has a similar effect to that which schedule 6 has in relation to carbon storage licensees.

The schedule will introduce a requirement for licensees to apply in writing to the NSTA for consent to a change of control at least three months before the planned date of the change. Following receipt of an application, the NSTA may give unconditional or conditional consent, or refuse consent to the proposal. Conditions imposed may be financial and/or relate to the timing of the change of control and/or relate to the performance of activities permitted by the licence.

In the case of conditional consent or refusal, the NSTA must give the licensee the opportunity to make representations and must consider those representations. The NSTA must decide an application within three months of receiving it, unless it writes to interested parties to notify them of a delay in its decision making. The NSTA’s decision on an application and any conditions must be given in writing.

The schedule also introduces amendments in respect of the NSTA’s powers of revocation and partial revocation of a licence, intended to replace the existing after-the-event powers with before-the-event powers. The NSTA will be able to revoke a licence if its prior consent has not been obtained for a change of control. The NSTA will therefore be able to regulate the suitability of petroleum production licensees in a more robust and timely manner. This will reduce risk and boost confidence in a sector that will play a key part in helping the UK to achieve its net zero goals.

Clause 255 introduces information-gathering powers in relation to a change or potential change of control of a petroleum production licensee in the same way that clause 101 does for carbon storage licensees. Currently, the NSTA does not have information-gathering powers to assist it in considering a change of control in respect of a petroleum production licensee. In some instances, the NSTA is therefore limited in conducting proper due diligence to determine whether a change of control of a licensee is undesirable.

Clause 255 will allow the NSTA to request that a relevant company or person provide it with any information it may require in exercising its functions in relation to a change or potential change of control of a licensee. The information will help the NSTA to consider the financial and technical capability, operational and commercial plans, and governance and fitness of the licensee in relation to its proposed controlling entity. This will provide the NSTA with the necessary information to appropriately consider an application for consent, or when considering whether to revoke a licence where a change of control has occurred without consent.

Information that would be protected from disclosure or production in legal proceedings on grounds of legal professional privilege or, in Scotland, confidentiality of communications is not included under clause 255.

Alan Whitehead (Labour, Southampton, Test)

I do not have much to say about the detail of the clauses, inasmuch as they appear to be sensible measures, but I gently point out to the Minister that when he presented the clauses he referred repeatedly to the NSTA as the authority, but of course the NSTA does not exist other than as a trading name. Indeed, clause 254 specifically mentions the Oil and Gas Authority, which is of course the real name of the organisation, as opposed to its trading name. We will come to that later in our deliberations, but I highlight to the Minister that issue or problem, which may be germane to his thoughts when we get to that discussion. Other than that, I have no issue with the substance of the clauses.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

We have already debated this matter in Committee and I am sure that we will come back to it in greater detail. Of course, when I refer to the North Sea Transition Authority I am, legally speaking, referring to the Oil and Gas Authority.

Written evidence reported to the House