Vol. 746 Tuesday No. 19 18 June 2013

PARLIAMENTARY DEBATES (HANSARD) HOUSE OF LORDS OFFICIAL REPORT

ORDER OF BUSINESS

Questions Badgers...... 131 Gaza ...... 133 Education: Sex and Relationship Education...... 135 Kenya: Kenyan Emergency...... 138 Child Support and Claims and Payments (Miscellaneous Amendments and Change to the Minimum Amount of Liability) Regulations 2013 Motion to Approve ...... 140 Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Referral Fees) Regulations 2013 Motion to Approve ...... 140 Offender Rehabilitation Bill [HL] Order of Consideration Motion ...... 140 Procedure of the House Motion to Agree...... 141 Energy Bill Second Reading...... 141

Grand Committee Intellectual Property Bill [HL] Committee (3rd Day)...... GC 41

Written Statements...... WS 7 Written Answers ...... WA 29

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panel that contributed the assessment—shows that House of Lords culling badgers has a modest effect in reducing the incidence of TB in cattle; it is estimated to be 16%. Tuesday, 18 June 2013. Does the Minister agree that rolling out culling as a national policy to control TB in cattle is not really 2.30 pm credible? Furthermore, will she tell us what assessment Defra has made of the reasons why 40% of farms in Prayers—read by the Lord Bishop of Liverpool. the highest-risk areas of the country do not get TB in their cattle? Badgers Question Baroness Northover: The noble Lord has, of course, huge expertise, having been such a power behind the earlier, randomised controlled trials into this, which 2.37 pm established the 16% figure that he has just talked Asked by Lord Hoyle about. That is why, faced with this enormous challenge, we are taking a range of measures, including more To ask Her Majesty’s Government whether they cattle testing, greater biosecurity and investing in research still plan to carry out their proposed cull of badgers. in vaccines. I noted his point about the herds that do not seem to be suffering from TB yet are in TB Baroness Northover: My Lords, we are using badger hotspots. I point him to the £250 million fund for new culling as part of a package of measures to tackle vaccination projects. It is undersubscribed. I suggest bovine TB. Two pilots will be undertaken this summer that he directs his research students to it, and I look to assess the methodology for delivering an effective forward to the enlightenment that he and his students cull. This year there will be intensive monitoring of bring on bovine TB, in the UK and around the world. the effectiveness and humaneness of controlled shooting. A panel of independent experts will review the resulting Baroness Parminter: Will the data from these trials, report once the pilots have concluded. Only then will alongside the criteria against which free shooting will Ministers decide whether the policy should be rolled be judged humane or not, be published at the same out more widely. time that the Secretary of State announces whether badger culling will be allowed in future? Lord Hoyle: I thank the Minister for that reply, but will she go a little further and say more about the Baroness Northover: The Government expect to be criteria which the Government are using? Why does able to announce a decision on the reports in the early she believe that it is effective, humane and safe, and part of next year, when the information is in. I can when exactly will the culls take place? assure my noble friend that the outcome of the monitoring of the pilot culls will be published. In the mean time, Baroness Northover: The noble Lord will know of course, other measures to seek to control bovine TB the scale of the problem that we seek to tackle and the will also be taken. difficulty of using the various measures that we have. That is why we are using a range of measures. The Lord Taylor of Blackburn: My Lords, when the open season dates take account of the breeding season, animals are killed, will there will be post mortems on so the assessment could happen any time from the their carcasses to see whether they are carrying TB or beginning of this month on. Operators will be required not? to follow best practice guidelines, and it will be very carefully monitored. A number of organisations are Baroness Northover: There will be post mortems on involved in this. the carcasses.

Lord Elton: Will my noble friend remind us how Lord Soulsby of Swaffham Prior: My Lords, following many cattle have had to be slaughtered because of what is now known as the Krebs trial, it is quite clear bovine tuberculosis in recent years? Is the number that alternate approaches are now necessary. What are growing and what has been the cost of compensation? some of these alternate approaches to controlling tuberculosis in wildlife and domestic livestock? This Baroness Northover: My noble friend is absolutely country is well known for its ability to sedate wildlife, right to highlight this. Last year 28,000 cattle had to take samples and all the rest of it. An approach based be put down. Through this cull, we are looking at on the sedation of badgers, for example, would be a reducing the number of badgers by 5,000, so noble good way in which to approach this issue. One could Lords can see the scale of this. The cost to the taxpayer take samples, vaccinate and all the rest of it. Has the over the last decade was £500 million for the cattle Minister considered any of the approaches that I have destroyed, and that could reach £1 billion in the next mentioned? decade. Baroness Northover: I can assure the noble Lord Lord Krebs: My Lords, as the Minister will be that the Government have considered all approaches, aware, the scientific assessment published on Defra’s welcome all suggestions and welcome research. Cattle website—I declare an interest as I was part of the measures are the foundation of our control programme, 133 Badgers[LORDS] Gaza 134

[BARONESS NORTHOVER] that last year alone 43 children were killed, 18 of them and ultimately we wish to be able to use vaccination under nine years old? Is she also aware that over 10% for cattle and badgers. As I mentioned, there is much of under-five year-olds in Gaza suffer from malnutrition investment into research. The problems lie in the challenges and stunting, and that a child in occupied Palestine as with the vaccinations; the research that is being conducted a whole is five times more likely to die before the age of at the moment has not produced a vaccine that can five than an Israeli child? I am anxious to know from be used in the immediate term, either for cattle or for the Minister whether the plight of these children and badgers. the illegal occupation of Palestine are now to be forgotten as the West concentrates on the tragedy Lord Knight of Weymouth: My Lords, it is vital that unfolding in Syria. we find a workable solution to the spread of TB from badgers to cattle. The science strongly suggests that a Baroness Warsi: The simple answer to my noble cull is not workable, even if this pilot to test whether friend’s question is no. I am aware of the statistics a cull is humane is successful. In Wales, an intensive that she quotes and, indeed, have responded to the effort to vaccinate badgers looks more hopeful, because many Written Questions that she has submitted vaccination does not risk spreading the disease through on this issue. The UK is deeply concerned by the the perturbation effect of culling. Given that the humanitarian situation in Gaza, which is both a tragedy vaccination trials in Gloucestershire are being carried and unsustainable. It is for that reason that the Foreign out at a third of the cost of vaccination in Wales, is it Secretary has made it clear that the Middle East peace not time for Defra to reduce the cost of mandatory process is a priority for 2013. Noble Lords are aware training for vaccination, so that it is at least as cheap that I have previously said from this Dispatch Box that as the training needed to shoot badgers? this is an important—a decisive—year. That is why we continue to support Senator Kerry in his efforts—he Baroness Northover: I will, if I may, follow up my has made five visits, I think, in the past two months—to previous answer. There is an injectable badger vaccine, move this forward. to which the noble Lord has referred, which is being used in Wales. He will also know that this has a lot of Lord Davies of Stamford: My Lords, is it not the practical difficulties. It has no effect on already infected case that, any day that it wished, the Hamas regime in badgers, it requires the annual trapping of new cubs to Gaza could lift the blockade and bring to an end the vaccinate them, and so on. We therefore look with terrible purgatory under which the people of Gaza interest at what the Welsh Government are doing. We have been living for so long, simply by following the note the enormous cost of that and are aware that an example of the Fatah Administration in the West oral badger vaccine, if there was one, would indeed be Bank and accepting the quartet principles, including quicker and easier to use. I therefore refer back to the abjuring violence? Should we not be urging the Hamas noble Lord, Lord Krebs, and his students and hope regime to do just that? that there will be further research. Baroness Warsi: I hear what the noble Lord says Gaza but I think that he would agree that nothing in the Question Middle East peace process can be resolved by one group alone or by addressing only one issue, and that 2.46 pm nothing there is simple. Asked by Baroness Tonge Lord Wright of Richmond: My Lords, have the To ask Her Majesty’s Government what discussions Government taken note of the statement yesterday they have had with European partners regarding made by a Minister in Mr Netanyahu’s Government the right to security for Palestinian children living calling on Israel to annex as soon as possible all the in the Gaza Strip. territories not handed over to the Palestinian Authority in Oslo, and also describing the two-state solution as The Senior Minister of State, Department for Communities dead? How do Her Majesty’s Government propose to and Local Government & Foreign and Commonwealth react to that? Office (Baroness Warsi): My Lords, the EU Foreign Affairs Council discussed the situation in Gaza on Baroness Warsi: Her Majesty’s Government’s position 10 December 2012. In addition, officials from the UK on this matter is very clear. We of course continue to representative to the EU and our consulate-general in support a negotiated settlement, leading to a safe and Jerusalem regularly discuss the situation in Gaza with secure Israel living alongside a viable and sovereign their European counterparts. Those discussions cover Palestinian state based on 1967 borders with agreed the security and human rights of Palestinians living land swaps, with Jerusalem as the shared capital of in Gaza, including children. Our consul-general in both states and a just, fair and agreed settlement for Jerusalem visited Gaza with other EU heads of mission refugees. That is HMG’s position. on 26 February. Baroness Falkner of Margravine: Can the House Baroness Tonge: I thank the Minister for that response. look forward to a statement on the G8 that addresses Is she aware that 1,519 Palestinian children have been the issue of Israel/Palestine, given that my noble friend killed by Israeli action since September 2000, 109 of says that the peace process is a priority for the Government them during extrajudicial assassination attempts, and in 2013? Can she tell the House what discussions the 135 Gaza[18 JUNE 2013] Sex and Relationship Education 136

Government are having within the EU, as we heard in The Parliamentary Under-Secretary of State for Schools media reports of the EU wishing to support Palestinian (Lord Nash): My Lords, sex and relationship education statehood in UN agencies, should there be no progress is compulsory in maintained secondary schools. As in 2013? part of that education, we expect that pupils will learn to develop positive values and a moral framework that Baroness Warsi: My noble friend always comes at will guide their decisions, judgments and behaviours these matters with a huge amount of knowledge. I in all areas of life. The Government agree that responsible thinkthatitwouldbeinappropriateformetopre-empt use of the internet is very important. We are introducing what may be in a G8 statement but I understand that e-safety as part of the national curriculum in primary discussions are ongoing. I think my noble friend would schools and this will be reflected in the new computing agree that, although of course the EU has a position programmes of study at both primary and secondary on this matter, ultimately it will be the United States levels. that is able to move this forward. With a President in a second term, the US is presented with just such an Baroness Jones of Whitchurch: My Lords, I thank opportunity, and we are seeing positive signs from it. the Minister for that reply. I am sure that we all share the growing alarm at the evidence of young people Lord Turnberg: My Lords, the situation in Gaza is using illegal internet pornography sites to learn about tragic but, as always, there are two sides to every story. sex and then attempting to replicate it, including using Is the noble Baroness aware, for example, of the very social media, to put pressure on young girls to act out large number of Gazan children sitting in Israeli hospitals those roles, sometimes with absolutely devastating with their families and receiving treatment for their consequences. Obviously, this needs a cross-departmental severe cardiac disease and cancers? Is she also aware approach in, for example, persuading the internet that Hamas tends not to publicise this and, indeed, providers to behave more responsibly. However, does has tried to stop it in the past? the Minister accept that the department needs to give more urgent leadership to schools on this matter? Does he, for example, accept that sensitive and personal Baroness Warsi: I agree with the noble Lord that issues around internet safety cannot be taught effectively there is a very human story. Nothing is as clear as the in IT classes and that it needs specifically trained top headlines, and of course there are fantastic stories teachers? Does he also accept the need for all young of the two communities working together in the way people, from an early age, to learn about peer pressure that the noble Lord describes. and how to resist it, as well as how to have a positive body image, and to understand what makes a healthy Baroness Afshar: My Lords, are the Government relationship so that they can avoid exploitation and aware that abuse of human rights by one Government abuse in the future? in the Middle East being disregarded and tacitly supported by the West makes other transgressions against human rights by other Middle Eastern countries the norm, Lord Nash: I certainly share the concern of the and that therefore it is dangerous for the whole of the noble Baroness. Young people should not be using Middle East? pornography to learn about sex. Pornography does not place sex in the context of relationships. I can assure her that the Government are taking a very firm Baroness Warsi: I agree with the noble Baroness. stance on this issue. The commitment to human rights must be the same We have been working across the department since for every member state. That is why the Human Rights 2010 with internet businesses, charities and other experts Council has the concept of the universal periodic through the UK Council for Child Internet Safety review, under which every state presents itself to other to find the best ways to minimise children’s access nations and is tested against its human rights record. to potentially harmful online content and very good We are concerned that Israel has not engaged with the progress is being made. Trained teachers should be universal periodic review. We see some signs of movement able to teach issues of internet safety effectively in but we urge Israel to come back, like the other member computing classes, and there will be resources to support states, and to engage with the UPR. them in this. There are also organisations—such as CEOP,the PSHE Association and Teen Boundaries—that can provide resources and advice. However, I agree Education: Sex and Relationship that we need to improve the focus on this area through Education teaching, schools and ITT providers, and I agree with Question her last point that the statutory guidance on sex and relationship education makes absolutely clear that schools 2.52 pm must focus on these areas. Asked by Baroness Jones of Whitchurch Baroness Walmsley: My Lords, is my noble friend To ask Her Majesty’s Government what steps aware of the link that Ofsted identified in its report they are taking to ensure that all children have last year between bullying—in particular, internet access to sex and relationship education, focusing bullying—and the success of a school’s PSHE programme? particularly on the responsible use of the internet Given that link, and given the duties that schools, as and social media. public bodies, have in relation to the Equality Act, 137 Sex and Relationship Education[LORDS] Kenya: Kenyan Emergency 138

[BARONESS WALMSLEY] Lord Nash: Nobody wishes to deny the importance does not my noble friend think that PSHE should be of the points that the noble Baroness makes. I will be compulsory in the national curriculum and not just delighted to meet her, and I would like to understand advised? more about this issue.

Baroness Brinton: My Lords, given that, it seems, Lord Nash: I know that the noble Baroness and everyone who has asked a question today agrees that I appreciate the importance of PSHE, but it is not teachers are the best people to deliver specific sex and this Government’s intention to make it compulsory. relationship advice to their pupils, when were the This Government trust schools and teachers to tailor guidance notes on best practice in schools updated? their PSHE support to the particular circumstances in a school, which vary enormously. There are plenty of resources to enable them to do this, and all good Lord Nash: The most recent guidance is from Ofsted, school have an excellent PSHE programme. which recently introduced a very good report. Part B of that report contains some excellent recommendations on best practice. They flag up a number of very useful Baroness Massey of Darwen: Does the Minister resources available to teachers, including the Sex Education agree that giving advice about where to get help is Forum. important in health and relationship education? What support is being given for access to school counselling and to organisations such as Brook and the FPA, Kenya: Kenyan Emergency which give advice to young people? I declare an interest Question as president of Brook. 3pm

Lord Nash: SRE guidance makes clear that pupils Asked by Lord Steel of Aikwood should know how to access support, counselling and To ask Her Majesty’s Government what discussions advice, and we will expect all schools to ensure that they have had with the Government of Kenya following pupils are aware of the available health services and their decision to compensate victims of torture and expert organisations, such as Brook and the FPA. ill treatment during the Kenyan emergency. We acknowledge the value that these organisations contribute. The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Baroness Farrington of Ribbleton: My Lords, will Office (Baroness Warsi): My Lords, the UK high the Minister go a little further in explaining why the commissioner to Nairobi raised the prospect of a Government believe that, in terms of the curriculum, settlement with senior members of the Kenyan a very heavy top-down approach is okay in teaching Government in April and May, highlighting our wish history, but PSHE is seen as optional? Surely the to promote reconciliation. This included discussion Minister could talk to, for example, the Lords spiritual with President Kenyatta during his introductory meeting about the way that church schools in counties such as on 30 April and with Foreign Secretary Mohamed on Lancashire view PSHE as being even more important 30 May. than the bits of detail in history education? Lord Steel of Aikwood: My Lords, I welcome the Statement that was made in the other House but not Lord Nash: I am aware that church schools are very in this one. In view of the fact that the High Court good at pastoral care. However, this Government take knocked on the head the argument of successive the position that being a child in the modern world is a Governments that this was a matter for the Kenya very complicated situation. For some children in some Government, will the Minister say whether there has schools, gang issues are very important. In other schools been any reaction from the Kenya Government since it may be forced marriages. We trust our teachers to the welcome Statement was made? tailor their advice to the particular circumstances of their pupils. Baroness Warsi: I am not sure whether there has been any reaction but it would be inappropriate for us Baroness King of Bow: I understand the Minister to to comment on their behalf as to what their reaction be saying that he wants to put trust in schools, and I should be. They, of course, were given prior notice of agree with that. Will he also trust the experience of the announcement and we have secured their buy-in young girls? One third of British girls between 16 and for a memorial to the victims. 18 experience unwanted sexual touching at school, and 80,000 British women a year are raped. Will the Lord Morgan: My Lords, is it not the case that Minister not agree, therefore, with the view that this information on these terrible atrocities was concealed subject should not be optional and that it must be by the custodians of the public archive over many decades? studied at school? At the very least, will he agree to Will the Minister kindly, on behalf of the Government, meet with me and members of the Everyday Sexism make some pronouncement on the responsibility of Project, which has documented the scale of this terrible successive British Governments for this appalling problem? falsification of our history? 139 Kenya: Kenyan Emergency[18 JUNE 2013] Offender Rehabilitation Bill [HL] 140

Baroness Warsi: I think the noble Lord will accept troops and a home for refugees from Somalia. In that by acknowledging the wrongs and expressing terms of development, we have a relationship that will deep regret for what happened during that period, the probably amount to about £143 million this year. Government have gone much further than previous Some 20,000 Brits live in Kenya and 200,000 Brits Governments. I am not aware of the answer to the travel to Kenya. We have a broad relationship and it is noble Lord’s specific question on archives but if there important that we can now focus on that. is an answer I will certainly write to him.

Lord Hamilton of Epsom: Does my noble friend Child Support and Claims and Payments accept that during the emergency tens of thousands of Africans were killed by the Mau Mau, many of them (Miscellaneous Amendments and Change for not joining the Mau Mau? Are the Kenya Government to the Minimum Amount of Liability) doing anything to pay compensation to the victims Regulations 2013 who were tortured by the Mau Mau? Motion to Approve

Baroness Warsi: My Lords, I do not intend to answer this question with a view to reopening the debate 3.05 pm about the rights and wrongs of that period. Nor do I Moved by Baroness Stowell feel that it is appropriate for me to comment on how the Kenyan Government should respond to this. That the draft regulations laid before the House on 20 May be approved. Lord Luce: My Lords, since the Government have Relevant document: 2nd Report from the Joint decided to contribute to a memorial in Nairobi to the Committee on Statutory Instruments, considered in victims of torture during the Mau Mau emergency, Grand Committee on 12 June. would it not be best to put this whole historic tragedy behind us by contributing to a memorial to all those who suffered—Africans and Europeans alike—during Motion agreed. that emergency?

Baroness Warsi: I know that the noble Lord comes at this with great experience. If I am correct, he was Legal Aid, Sentencing and Punishment of there during the emergency period. It is something Offenders Act 2012 (Referral Fees) that I can take back but at this moment the commitment Regulations 2013 that has been made has been for this particular memorial. Motion to Approve

Lord Anderson of Swansea: My Lords, has this 3.05 pm welcome decision led to any similar claims from other victims of our colonial past—sometimes glorious, Moved by Lord Newby sometimes less glorious—and do we anticipate, following the precedent of this decision, any similar claims? That the draft regulations laid before the House on 21 May be approved. Baroness Warsi: It is important to understand that Relevant document: 2nd Report from the Joint this was not compensation agreed: it was an out-of-court Committee on Statutory Instruments, considered in settlement in a specific case involving specific claimants. Grand Committee on 12 June. I do not believe that it sets a precedent but, of course, Motion agreed. anyone who believes that they have a case can bring it.

Lord Triesman: My Lords, I share the views of many noble Lords about this very regrettable and sad Offender Rehabilitation Bill [HL] part of our history. Noting that a successful election Order of Consideration Motion has been authenticated by all the judicial bodies in Kenya, does the noble Baroness feel that this might be a moment for a deeper and more significant conversation 3.05 pm with President Kenyatta, with a view not just to rectifying Moved by Lord Ahmad of Wimbledon what went wrong in the past, which we plainly must do, but to building a much more successful future with That the amendments for Report be marshalled that country? and considered in the following order: Clauses 1 and 2, Schedule 1, Clause 3, Schedule 2, Baroness Warsi: I agree with the noble Lord; it is Clauses 4 to 7, Schedule 3, Clauses 8 to 12, Schedule 4, a moment for the relationship to move on. We have a Clause 13, Schedule 5, Clauses 14 to 17, Schedule 6, huge amount of bilateral interest, including our Clauses 18 and 19, Schedule 7, Clauses 20 to 22. commitment to regional security. Kenya is, of course, a vital partner for us on Somalia, providing both Motion agreed. 141 Procedure of the House[LORDS] Energy Bill 142

Procedure of the House need to meet our obligations to reduce carbon emissions, Motion to Agree as agreed in the ground-breaking, cross-party Climate Change Act 2008. 3.06 pm To achieve both security of supply and decarbonisation, we need to attract substantial investment in our energy Moved by The Chairman of Committees infrastructure, particularly in low-carbon technology That the 1st Report from the Select Committee such as renewables, nuclear and low-carbon fossil fuels (Backbench Questions for Short Debate: Grand such as gas. We need to do this at a price that consumers Committee Sitting Hours) (HL Paper 19) be agreed can afford by helping to keep costs as low as practical to. and making sure that the market works for the people who pay the bills. The Chairman of Committees (Lord Sewel): My The Energy Bill will enable us to do this. It is a Bill Lords, this report follows on from the decision on for growth, and one that will support as many 250,000 jobs Back-Bench debates taken by the House in April. At in the energy sector alone. It will provide the security that time, the Leader of the House proposed an increase of energy supply that British consumers need. It will in the number of Back-Bench QSDs. The report enables help to reduce electricity demand and to deliver affordable this intention to be implemented. It recommends that energy for consumers, with fewer, simpler domestic on days when a Grand Committee sits solely to consider tariffs. It will ensure that we meet the ambitious climate Back-Bench Questions for Short Debate, the duration and renewable targets set out in the Climate Change of such sittings should be extended from four hours to Act 2008, enabling the Government to set the world’s five hours. I beg to move. first legally binding target range for power-sector decarbonisation. Lord Foulkes of Cumnock: Can the noble Lord give The Bill received strong support at Third Reading us an absolute assurance that unlike the Procedure in the other place, commanding the largest majority in Committee’s report in the last Session, this will not a vote at Commons Third Readings since the coalition have unintended consequences? came to power. This sends a clear message to investors, building confidence in the financial, legal and, importantly, political frameworks of electricity market reform. I The Chairman of Committees: I think the logical hope that we can express an equally strong consensus problem at this stage is that I can give no guarantee in this House, sending the message that the whole of that it will have unintended consequences, because Parliament is united behind the Bill. they will by definition be unintended. I extend my gratitude to the noble Lord, Lord Lord Geddes: Did the Procedure Committee give Oxburgh, for his expert chairmanship of the Lords any consideration to extending the time above one informal scrutiny group, which reconvened this year. I hour if, for instance, more than 20 people were down am extremely grateful to noble Lords who have attended to speak on a particular QSD, thereby limiting those the group’s meetings and contributed so eloquently, Back-Bench speeches to two minutes? and to other noble Lords who met me separately. I look forward to their continued engagement in debates over the course of the Bill. The Chairman of Committees: I appreciate the noble Lord’s point, but on this occasion the Committee did Let me turn to some key provisions in the Bill. not give specific consideration to that. However, I am Today, I want to set out the main proposals in the aware that speeches are increasingly being limited to a following areas. First, on decarbonisation, we are bound very short period of time indeed. by law to cut emissions across the whole UK economy by 50% by 2025. The Energy Bill will help us to Motion agreed. achieve this. The contracts for difference framework will offer long-term contracts for low-carbon technologies, giving investors confidence, and will enable renewables, Energy Bill nuclear and carbon capture and storage the chance to Second Reading compete against conventional power stations. Importantly, this will be backed by the tripling in support for clean 3.08 pm energy technologies by 2020. Moved by Baroness Verma We know that there are differing views in the setting of a 2030 decarbonisation target range for the power That the Bill be read a second time. sector, and I would like to explain the Government’s position. By legislating now to enable us to set a The Parliamentary Under-Secretary of State, Department decarbonisation target in 2016, we will be able to take of Energy and Climate Change (Baroness Verma): My into account the level of economy-wide emissions Lords, this Energy Bill comes at a critical time for the reductions that will have to be achieved by 2030 under country. Electricity demand is expected to double over the fifth carbon budget. We want to ensure that we are the next 40 years, but around a fifth of the generation considering the pathway of the whole economy towards capacity that was available to us in 2011 is set to close our 2050 target, rather than setting a sector-specific over the coming decade, because power plants are target in isolation, making sure that we minimise costs either too old or too polluting. At the same time, we to both the economy as a whole and the bill payer. 143 Energy Bill[18 JUNE 2013] Energy Bill 144

We have also committed to providing further clarity there have been calls to see the draft strike prices up to 2030 by issuing guidance to National Grid on sooner and I am pleased to say that the Government an indicative range of decarbonisation scenarios for intend to publish the draft EMR delivery plan in July. the power sector to 2030, consistent with the least- The Bill also introduces provisions for a capacity cost approach to achieving our overall 2050 carbon market to ensure that there is sufficient reliable electricity target. No other country has yet set a power-sector capacity to meet peak demand. This will provide all decarbonisation target for 2030; the UK is the world capacity providers with an upfront steady payment leader. to ensure that demand is met. Operators will not be This is not the only way in which we are leading. dependent on volatile revenue from the energy-only The Government’s decision on the UK’s position for market and consumers will be safe in the knowledge the EU’s 2030 greenhouse gas target is another good that there is a secure energy supply. At the Report example of our strong position. In arguing for a 50% stage in the Commons, we introduced provisions to reduction target in the EU, the UK has taken the most enable electricity demand reduction to be part of the ambitious position of any member state. It is therefore proposed capacity market, as well as the powers to important that we consider the wider European context take forward a pilot. Greater energy efficiency will as well as the level of UK economy-wide emission help to reduce our carbon emissions, help to reduce reductions to ensure that we do not pre-empt decision- demand at peak times—bolstering our security of supply making and agreements in the EU. However, it is —and help to reduce consumer bills. important that we continue to take a leading role in The electricity demand reduction provisions in this that process and push for change, which we are doing. Bill will incentivise the industry to deliver these benefits. This Government are leading the way on climate change Working through the capacity market will allow energy- action. saving projects to compete with power stations for new Let me turn now to the proposals for electricity investment for the very first time. The Bill can incentivise market reform. Electricity market reform is not a permanent reductions when demand is at its peak, permanent intervention in the market. It is designed as allowing for a more direct trade-off between generation the first step on the path towards sustainable and capacity and demand reduction. It will also bring competitive low-carbon electricity generation in the permanent demand-reduction projects into the same UK. It will help to limit, and in the long term break, mechanism as shorter-term demand-side response our dependency on rising gas prices globally, the main measures to enable more effective, joined-up delivery. driver of increases in electricity bills. In order to guarantee certainty for investors and We will send out a clear signal to investors that the industry, these new EMR mechanisms—contracts for UK is open for business, attracting the £110 billion difference and the capacity market—will be supported investment that we need in this decade alone to replace by a clear institutional framework. The Government our ageing energy infrastructure with a more diverse will maintain responsibility for key policy decisions and low-carbon energy mix. The levy-controlled on contracts for difference, such as strike prices and framework will provide £7.6 billion a year by 2020 to on the capacity market, taking wider economic and support low-carbon technologies, including infrastructure sustainability impacts into account. We believe that projects that are ready to go now. the system operator, National Grid, is best placed to The introduction of provisions for contracts for administer the capacity market and allocate contracts difference and a capacity market will transform the for difference, given its existing role and expertise in energy market to give investors the certainty they the UK energy market. need. I will therefore spend a little time outlining how In response to stakeholder concerns, last year we these important mechanisms will operate. First, the worked with Ofgem to assess any potential conflicts of contracts for difference—CFDs—will give long-term interest and published our findings in April. The report electricity price stability, providing developers and sets out that the risk of any conflicts of interest arising investors with increased revenue certainty. Generators is low, but we have proposed a package of proportionate will receive a fixed price level—or strike price—for the measures to ensure stakeholder confidence in the EMR low-carbon electricity they produce. When the market delivery body. Ofgem will oversee the performance of reference price is below the strike price, the generator the system operator and will continue its independent will receive a top-up payment from suppliers. When it regulation of the market to protect the interests of is above the strike price, the generator must pay back consumers. the difference, meaning that consumers are protected. We are committed to helping independent generators The Government listened to points made in Commons secure a bankable route to market for their power as Committee regarding the nature of the CFD counterparty part of our wider goal of increasing competition in and in response clarified the drafting of the Bill at the the electricity market. We understand that lack of Commons Report stage, making the policy intention liquidity is an issue for independent generators and of creating a single counterparty more explicit. The suppliers, particularly in the forward markets. We Government-appointed single counterparty to these recognise that improving liquidity would reduce barriers contracts will sign and manage the contracts over their to entry, aid security of supply and increase the robustness lifetime and collect money from suppliers to meet the of the reference price for CFDs. We support Ofgem’s payments due to generators under the contract. Subject objectives for reforms to the wholesale electricity market to Royal Assent, we intend to publish final strike and we welcome the announcement last week of prices for renewable projects in December 2013 and to the measures it intends to pursue. However, given the issue the first contracts for difference in 2014. I know importance of the issue and in the absence of significant 145 Energy Bill[LORDS] Energy Bill 146

[BARONESS VERMA] energy companies to compensate consumers who suffer improvements, government intervention may be necessary, a loss as a result of a company’s breach of regulatory and accordingly, we are proposing backstop powers in requirements. At present, Ofgem has the power to fine the Energy Bill to promote market liquidity. The Bill companies, but these fines are paid into the Consolidated also includes powers to intervene to support investment Fund, so the consumer will not directly benefit unless by improving the route to market for independent the company offers redress of its own volition. Currently, generators for the sale of electricity. Although the Ofgem has no power to compel energy companies to CFD will reduce the risk for independent generators, compensate consumers. We are rectifying this situation we believe that it is important to be able to act if through the Bill and securing a fairer deal for customers necessary. with provisions for a new enforcement power for Ofgem We remain committed to encouraging a more diverse to require energy companies to provide redress. and competitive energy market and there are a number We are also giving legal backing to Ofgem’s plans of related areas within the Bill that we will hope to to ensure that consumers get the best deal by making consider further. They include giving greater certainty the tariff system simpler and clearer for consumers. to independent renewable generators and, as indicated Our measures will help customers get the best deal by at Commons Report, we will continue actively to cutting the confusing array of tariffs by limiting suppliers consider raising the threshold for the small-scale feed-in to offering customers four core tariffs for each fuel tariff scheme from 5 megawatts to 10 megawatts. and meter type, providing them with clear information The support for electricity market reform seen at about their tariffs to help them to make a more Commons Third Reading has been echoed by industry informed choice, putting them on the cheapest tariff and the investment community. While we are advancing in line with their preferences, and promoting competition our reforms, we want to ensure that investment decisions by creating a market where suppliers are working hard are not postponed in the mean time. The Bill enables to attract and keep their customers. the Government to enter into investment contracts—an A range of other measures in the Bill deserve more early form of contract for difference—with developers attention than I can give them in the time available. of low carbon generation. These will be transferred Notably, they include measures to establish the Office to the CFD counterparty once it is established and for Nuclear Regulation as an independent statutory regulations to collect payments from suppliers are in body with financial and organisational flexibility. There force. are also measures to allow the sale of the government The Bill also includes transitional arrangements for pipeline and storage system and to enable offshore renewables as we introduce the contracts for difference generators to build and test transmission assets for in 2014. During the transition period between the exporting their power with confidence that they are introduction of the CFD and the closure of the renewables acting within the law. The Bill also contains two minor obligation, we will allow new generation to make a provisions regarding fees. one-off choice between the two mechanisms in order As I stated at the beginning of my address, this Bill to minimise any hiatus in renewables investment. For arrives from the other place with overwhelming cross-party existing generation, the Bill contains measures to give support. I look forward to a swift passage through this confidence to generators during the final years of the House to enable these important and urgent measures renewables obligation. Fixed-price certificates will be to pass into law and bring about a transformation of issued in place of the current renewables obligation our electricity market. We are charged with a great certificates and there will be an obligation on the responsibility to ensure the security and affordability purchasing body to purchase those certificates at a of energy for many generations to come. Nevertheless, fixed price. we are also presented with a significant opportunity to The emissions performance standard is an important help Britain’s economic recovery through the creation supporting measure of EMR, providing a regulatory of jobs and the delivery of a more stable and predictable backstop on the amount of emissions that new fossil energy market, as well as reinforcing our position as a fuel power stations are allowed. The EPS reinforces world leader in tackling climate change. With that in our planning policy that any new coal-fired power mind, I commend this Bill to the House. station must be equipped with carbon capture and storage. The Bill sets out the statutory emissions limit 3.25 pm at 450 grams of carbon dioxide per kilowatt hour—about Baroness Worthington: My Lords, I thank the Minister half the level of emissions from unabated coal plant. for addressing us today and for introducing the Second The level is above that associated with new gas plant, Reading of the Energy Bill. I have been working in as we recognise the role that it will have in providing climate and energy policy for well over a decade—at reliable and flexible back-up generation as we transition UK and EU level. Energy is a fascinating subject. Much to a low-carbon electricity system. Further certainty like the Mandelbrot set, its many layers of complexity for new investors in gas is also given through the seem completely endless. I keep uncovering whole new grandfathering of the limit to 2045. areas of mind-bending detail to get my head around, In the light of our review of the role of Ofgem, the most recently in relation to nuclear fusion after an independent regulator, we are introducing a statutory engrossing visit to Culham in Oxfordshire. strategy and policy statement. This will provide greater I have studied energy policy in a number of different clarity and certainty about the strategic context of roles: for an environmental NGO, for a power company, Ofgem’s role and clarify the demarcations between the and as a civil servant. Over the years, I have come to roles of the Government, the regulator and other the firm conclusion that energy policy is an area where bodies. The Bill will further empower Ofgem to require we need the creativity and drive of markets governed 147 Energy Bill[18 JUNE 2013] Energy Bill 148 by careful and well-designed regulation to guide market could do one of two things. They could set clearly forces. What we do not want is for energy to become a defined outcomes that the market must deliver or political football, confusing and destabilising the market. attempt to renationalise energy policy with almost We also do not want civil servants trying to second-guess every aspect dictated by government. Strange though what an economically optimised energy system should it may sound coming from a Labour Front Bench, I look like. Sadly, we begin this discussion of the Energy strongly believe that it is the former we must do and Bill with exactly those two sets of circumstances that this Government are about to do the latter. dominating—policy is becoming highly politicised and The Bill as it stands is a curious mixture of excessively civil servants are set to start micromanaging almost wide enabling powers that enable the Secretary of every aspect. State to do virtually anything he or she wants with There is a public spat going on between two different anyone, at any price; or, if he or she so chooses, to do factions of the coalition Government, between those absolutely nothing. If this were not political enough, who believe that climate change is either not real, there are now some extra provisions to allow for even or that tackling it is too expensive to be bothered more finely grained politicisation. Targets can be set about, and those who believe that the vast majority of for particular technologies and for particular geographic scientists are correct and that we have a moral duty locations. If you do not like wind farms, you can either to do something urgently to address the problem in ensure that the negotiations on the contracts are so ways that boost rather than damage the economy. The protracted that they never get signed or, it seems, and schism is so apparent that our new part-time Energy to be on the safe side, set targets determining where Minister, Michael Fallon, in an interview with The House they will or will not be accepted. magazine, refused to answer a simple question about In terms of restrictive detail, when the powers to be his views on climate change, dismissing it as “theology”. taken are not enabling, they are disabling. The Secretary There is a moral aspect to climate change and we will of State must not set a decarbonisation target until at hear today from two eminent theologians. However, I least 2016, while the energy performance standard have met many climate scientists, most recently the levels are fixed until at least 2044. The mix of sweeping noted Oxford academic Myles Allen. Theirs is not a generalisations with occasional restrictive detail results profession of faith or belief, but the careful study of in an inelegant and potentially dangerous Bill, for facts and evidence and the articulation of future scenarios which it is impossible to predict all the consequences, that accord with those facts. intended and unintended. Here are a few of them. The concentrations of As the Government cannot agree on the overall carbon in the atmosphere, at around 400 parts per purpose of this Bill, they have been incapable of million, are higher than at any other time over the past presenting clear and concise legislation that can guide 3 million years. Already our world has warmed on the market. They propose instead to take the reins of average by 0.8 degrees since the 1900s. A global average almost every aspect of investment decisions in the of this much equates to far higher levels of warming at coming years. My great fear is that those seeking to the poles. The impacts of these levels, on, for example, take control are not up to the task. I imagine that the the melting of the arctic sea ice, match the most department is now realising, as I have, that the energy pessimistic forecasts. They are happening at the fastest market is so complex that a single Secretary of State, rate that has been predicted. Land-based temperature overseeing a small department with a small number of recordings, which some may cite today as evidence civil servants, who are necessarily divorced from the that we do not need to act, have levelled off for the real world, cannot and should not be deciding who best part of the past decade. However, ocean temperatures builds what, when and on what terms—even if they have not. The ocean is likely to dump part of its enjoy the oversight of the great minds of the Treasury. increased heat out on to land during the next large The question I am sure that your Lordships are all El Nino effect, which has occurred roughly once every formulating is: if this is the case, what would Labour decade and which could happen again at any time. do differently? Then land-based temperatures will once again rise. It First, we would be unequivocal about the fact that, would be reckless and arrogant for this Government—or in keeping with the advice of the Committee on Climate indeed this Parliament—to ignore the scientific evidence Change, we would seek to decarbonise the electricity and to try to change direction in terms of what is one generation sector within the next two decades. We of the over-ridingly important goals of energy policy would set clear targets to achieve that outcome—targets today. that we know have the support of industry and civil This is not a Bill solely about climate change; it is a society. Such targets need not dictate precisely how Bill about our energy future. It is about how we this outcome is achieved but give the market confidence maintain our energy security, now that North Sea oil that this is the path we are on and that we intend to and gas, just four decades after their discovery, are stick to it. Secondly, to keep prices affordable, we now rapidly declining. It is about the role nuclear would legislate to require greater liquidity and competition power can play in the future and how confidence in in electricity generation and create a new energy regulator the industry can be restored today. It should also be, with real teeth. Thirdly, to keep the lights on, we first and foremost, about consumers and helping to would focus on providing incentives to encourage ensure that they are protected through regulation that more active participation in the management of demand, maximises competition and transparency in the market. reducing peak demand and helping to soak up excess In addressing the trilemma of energy policy—how electricity in times of high supply. If necessary, we to keep the lights on without destroying our environment would also take powers to enable interventions that but making sure we can afford it—the Government support National Grid in managing supply and demand. 149 Energy Bill[LORDS] Energy Bill 150

[BARONESS WORTHINGTON] good time so that it will inform our discussions? I am That is what we would have done; it is not what hopeful that we might be able to agree to consider the Government are doing. This is primarily because relevant clauses in the Bill at the end of Committee the impetus for this Bill was not to solve the energy stage rather than at the beginning. This will enable us trilemma. It was to provide EDF Energy with what it to consider those clauses with the information in the believed it needed in order to build Hinkley Point draft delivery plan in front of us. This puts a lot of power station. Having decided on that outcome, the emphasis on to the department issuing its information department has now had to concoct ever more complex before the Commons rises on 18 July. I hope that that layers of interventions to try to square the reality of will be in the public domain before 18 July. the privatised market and state aid rules. A new reactor There are things we do not like in the Bill, things we at Hinkley, if it can be delivered at reasonable cost, is a would have done differently, and things we would like good idea. I am not disputing that. I am, however, to have seen given a higher priority; but we are not deeply concerned about the contortions and complexities opposed to the broad objectives. Although lots of the we are now having to add to an already complicated detail is still missing, we are committed to restarting market in order to lure one company into building one and increasing investment in low-carbon generation project—a project that will not be ready until the and, on those grounds, we do not seek to oppose the middle of the next decade and that cannot help to Bill. address any security of supply concerns in the interim. We will have an excellent debate today. I am greatly In an ideal world we would not be starting from looking forward to the contributions of noble Lords here, but here we are and we must make the best of it. from whom we will have the pleasure of hearing. The During the Commons stages we raised other important number of speakers and the breadth and depth of issues that we will continue to press in this House, such their knowledge and experience is testament to the as the need to ensure adequate competition in the central importance of this issue. I am honoured to be generation market so that independent generators can a Member of this House and to be leading for the gain access. I was encouraged to hear the words of the Opposition as we embark on the process of doing what noble Baroness today in that respect. We need to we do best—scrutinising legislation in an environment encourage community ownership of energy projects, at one remove from the cut and thrust of daily politics. which I am again very grateful for having received In this House, we are able to take a long view and to mention today. We also need much clearer regulation take the necessary time to prevent poorly thought-through of existing fossil fuel stations, giving clarity about plans being pushed through and that is what we will their closure schedule to spur investment in carbon do. We will seek to work constructively to improve the capture and storage. Bill. I very much look forward to the weeks and The irony is that this Energy Bill has helped to months ahead as we turn our attentions to this most exacerbate the investment hiatus that the Government important of subjects. have created and that they should have been seeking to address. If, in the future, the Government will be paying everyone to build or operate plant then no 3.38 pm company can risk moving ahead with plans until the Lord Teverson: My Lords, I thank my noble friend details of these payments are clear. As a result, investment the Minister for all the work that she, together with the in our energy infrastructure has plummeted under this noble Lord, Lord Oxburgh, has undertaken in preparing Government. This cannot be allowed to continue and us for the moment when the Bill finally arrives in this Royal Assent must be achieved by the end of this year. House, and for all the teach-ins and the work that we Let us aspire to signing into law something that have had to get here. One of the things that strikes me creates stability in the market, so that we can stop the most is how great it is that this Bill has arrived. It was almost yearly cycle of energy Bills appearing before us December 2010 when the original consultation paper and investors can get on with the job of addressing the on electricity market reform was published. Over the challenges now inherent in providing us with energy. two and a half years since then, queues of industry As we come to consider this Bill in Committee, some suppliers, generators, NGOs and trade associations of the much sought-after detail should emerge from have tried to bend the ears of a large number of the department and we will be in a much better place Members of the House to give us their views on this to try to assess the impact of its many provisions in very complex legislation. We are here, and we can start totality. The draft delivery plan, for instance, which is this process in the Lords. due to be published in mid-July, will include more The reasons why this Bill is here are important, and details of strike prices for renewables, though regrettably they are important to go through. They include the not for nuclear or CCS, and much needed information future capacity to generate electricity for our economy about the Treasury’s levy control framework which will and our homes and the security of supply, which is interact with provisions in the Bill in a very important made more difficult by our own resources running out way. It may sound like a lot of money but unless within our own geographical area. They also include anyone wants to invest it will merely be a promissory keeping down costs. So often you hear about the note that actually may restrict investment in certain subsidies for green energy adding to costs, yet we sectors and technologies. know that over the years 2004-12 the price of gas for I hope the Minister will agree that the more detail households doubled from £400 to £800, and that was a we have in front of us the better placed we will be to sector that had no levy control framework. Electricity provide proper input. Can she give us an assurance also went up by a huge amount, although by much less that the department will release further information in than gas, because of fossil fuels. 151 Energy Bill[18 JUNE 2013] Energy Bill 152

It is very difficult to see the future, but I am certain we do not have such a demand. The UK electricity that with renewable energy, and in the longer term industry operates, on average, at 50% utilisation of maybe even with new nuclear, with its low marginal capacity. To me, that is not good enough. We need to fuel costs—zero, in fact, for wind and solar—we will look at the demand side as well as the supply. I very ensure that our prices are far less dependent on much welcome the Secretary of State bringing forward unpredictable and expensive fossil fuels in future. The demand-side factors into the capacity market, and Department of Energy and Climate Change suggests hopefully beyond that broader demand reduction. I that by 2020 energy prices will be just under £100 less know that we will flesh out some of those opportunities than they would have been afterwards. To me, given in Committee. I welcome the Government’s very strong the past performance of energy prices, that is absolutely move in that area. credible because it is based on historical evidence. On emission performance standards, I am not quite That is important for us to understand. so confident about the long-term nature of grandfather The real issue of the Bill is climate change. I rights. I also question, and want to explore in Committee, congratulate the noble Baroness, Lady Worthington, whether there is still opportunity for coal to continue on her description and her attack in that area. She is long term as a generating source of electricity under right that a major part of the Bill is to ensure that our the Bill in its current state. Coal is so much cheaper at electricity supply industry is not dependent on unabated the moment, largely because of changes in the United fossil fuels into the distant future. It is of great concern States, along with other factors, that it may still be to me that it is often not realised more broadly that commercially possible to generate long term by paying coal now produces 42% of our energy generation. the carbon floor price and re-engineering plants so Once again it has replaced gas as the major fuel for that they are able to stop their sulphur emissions. I am electricity generation, yet it is a fuel that produces not sure whether that is possible in this Bill as it something like double the carbon emissions for every stands, but I want to make sure that it is not. We need unit of energy than the cleanest gas generation. We to take coal out of the generating system. have gone through the limit of 400 parts per million of The other area, which I am sure Members from all carbon dioxide in the atmosphere and, as the noble around the House will be particularly concerned about, Baroness well described, we still have all the symptoms is the route to market for smaller producers. If there is of climate change, whether that be rising ocean levels one thing about the energy market that is similar to at 3 millimetres a year, shrinking icecaps or retreating banking, it is its oligopolistic nature. That is what glaciers—not all of them, but the vast majority. makes some of the strike price negotiations difficult. Let us look at the debates that there will be on We need to ensure that the smaller producers, and decarbonisation and decarbonisation targets. I welcome indeed the smaller suppliers, within the market are the fact that there is provision in the Bill for a able to have much greater access to a greater share of decarbonisation target. That was not there in the original that pie. It is through that competition that we will draft Bill; it has been added. As for whether the year ensure that price increases are far less than they have should be 2014 or 2016, maybe we are moving towards been in the past. theology there. There is one last thing. One of the unsung things in Two of the things that are repeatedly mentioned the energy market is licence lite, which is being explored to me are the risk of investment in the industry and by the Greater London Authority. It is about small future generating capacity. We know that the whole independent producers, in particular community schemes, industry will look for less and less risk, and indeed being able to supply directly through local networks to those who provide finance will do the same in order to final consumers at a consumer price, thus not needing protect their investments, so, whatever they are given, subsidy for that energy. I would like to explore how I am sure they will ask for more. I spent a lot of years that great initiative—unsung by DECC, I think—can in the private sector, so I can ask what other industry be expanded more quickly and effectively throughout is given a guaranteed price, index-linked, over several the United Kingdom. decades. No other industry gets anything like that—it As I said earlier, it was 2010 when the initial would be heaven on earth for most industrialists—yet consultation document was produced. We need now that is what we are offering electricity generators as to make sure that this Bill gets through this House, part of the Bill. Frankly, you can start to become a gets through it on time and lands on the statute book, little too greedy about the risk that you want to reduce so that those investors, however nervous, can invest. if you go beyond that level. I will come back to the agreements in that area. 3.48 pm I see a tension within the Government. We have a £7.6 billion levy control framework commitment. That Lord Oxburgh: My Lords, I declare an interest as is a great win. It is substantial and it will ensure that in honorary president of the Carbon Capture and Storage practice a low-carbon economy and a low-carbon Association and a director of 2OC. I shall confine my network can actually be delivered. remarks to electricity market reform or EMR. Having said that, I feel that there are certain things National Grid figures show that unless new power in this Bill that still need to be done. I am sure that the stations are built by 2015, we shall be more vulnerable Minister will agree with me on the vast majority of to loss of supply than we have ever been. To give an these. As for demand management, I suspect that this example, if in 2015, at a time of high demand, three Bill was originally drafted by DECC officials who love power stations were to drop out unexpectedly—as they shiny new power plants that impress their friends, look did three weeks ago—we shall be into rolling blackouts. good when built and are great for press releases. However, The situation is serious. 153 Energy Bill[LORDS] Energy Bill 154

[LORD OXBURGH] whether we achieve an affordable and workable system Why are no new power stations being built? Everyone that also meets its stated policy objectives. It is very has known for a long time that the electricity market easy to get this wrong. would have to be reformed. Potential investors are What, therefore, needs to be done in this House? I simply holding back until they know more about the emphasised at the outset that the highest priority must market into which they will have to sell their electricity. be to secure investment in new plant. Investors have The main aim of EMR is to use market mechanisms choice over not only what kinds of project they invest to achieve a secure, decarbonised electricity supply at in but in which country to do so. The Government’s the lowest possible cost. That might have been possible stated strategy is to achieve a massive decarbonisation if this Bill had been presented two or three years ago. of UK electricity generation. In the short term, this is Then there would have been time for the contracts for not the path of lowest cost. Given the long-term difference and the capacity payments—central elements nature of energy investments, investors have to be of the new market—to be thoroughly considered and confident that the Government will stick to this path properly auctioned. Today, Ministers make decisions and continue to reward low carbon in the future. For by administrative means when they should have been these reasons, the Government’s vigorous opposition the outcome of strategically planned competitions. to the cross-party amendment tabled in the other These fundamental infrastructure decisions will determine place, which would have included a reference to the how we generate electricity for decades to come and 2030 emissions reduction target of the climate change how much we pay for it. Nevertheless, recognising our committee, was particularly unhelpful. It has certainly present vulnerability, Ministers must move as fast as been read externally as a weakening of government possible to seek bids for contracts to guarantee generating resolve. To make our energy system investable, we have capacity. If they act rapidly, there should be just to consider the reintroduction of that amendment in enough time to bring in new capacity for when it is this House. needed. Secondly, we shall need to scrutinise the details of What kind of electricity generation do we need? In the CFDs and CPs, some of which have not yet been this debate we shall certainly hear from proponents fully worked out. Consideration of the Bill in the and opponents of different technologies, as if they other place had to be completed without this detail. alone could satisfy our requirements. There will be The workings of the present electricity system are wind enthusiasts and wind-haters, and nuclear enthusiasts complex and in some respects less than transparent. and nuclear-haters. In reality, every means of generation We are promised more of this detail during the passage has its own cost structure and its own operational of the Bill through the House and this will need to be limitations that have to be taken into account in discussed as it becomes known. In parallel—as has building a generation system. been pointed out—there are important proposals from For example, most of the cost for both nuclear and Ofgem for changes in regulating the market. wind is fixed up front at the time of construction. Their costs of generation should therefore change There are two important elements of any energy little over time and they should offer something of a system on which the Bill is silent and which will have hedge against inflation. Both have low carbon footprints. to be considered alongside the generation mix: namely, However, the weakness of both is in their operational the interconnectors through which we can import and inflexibility. Nuclear is not able to ramp up and down export electricity to our neighbours, which is always a fast enough to match the daily variation in demand, possibility if we cannot generate ourselves; and secondly, and wind is completely insensitive to demand. This our national provision for gas storage. This House has is not fatal for either; it simply means that if they are discussed gas storage on a number of occasions in the used they have to be part of a system that takes past, primarily in the context of security of supply in advantage of their strengths and compensates for their the face of declining North Sea production. We have weaknesses. By comparison, fossil fuel is dispatchable—it noted that while our domestic gas storage is measured can be turned up or down relatively quickly to meet in days, our neighbours measure theirs in months. changes in demand. On the other hand, it is both This concern has been alleviated—but only somewhat—by exposed to the vagaries of international fuel prices the construction of UK terminals to receive liquefied and, unless abated by carbon capture and storage, natural gas bought on the international market. carries a substantial carbon penalty. Other key elements Today, however, storage can help UK consumers in of energy systems have their own costs and limitations. another way. Storage would make it possible to buy The requirements of our system can be met in gas in summer when prices are low and use it in winter many ways with different technology combinations. when prices rise. This is a benefit primarily to consumers However, the addition or removal of one component rather than suppliers. Suppliers simply pass on increased has consequences for all the others and for the system gas costs to the consumer, who has no choice but to as a whole, including for transmission. A workable pay them. The Government should carefully consider system will have a number of complementary elements whether this potential consumer benefit can be captured, that play different roles, add to its robustness through possibly by offering a capacity payment for gas supply their diversity and have different implications for cost. at a guaranteed price and guaranteed time. With the powers that it is assuming in the Bill, central Finally, we also need to consider whether in future government takes full responsibility for the shape of we can avoid the acute energy difficulties in which we our system. This is not necessarily bad, but we should now find ourselves. These are entirely attributable to certainly recognise that it is happening. The Government’s successive Governments’ culpable neglect of energy and decisions over what CFDs and CPs to offer will determine the absence of any overarching strategic energy policy. 155 Energy Bill[18 JUNE 2013] Energy Bill 156

Energy capability and competence within the Civil without first receiving a formal request for a connection Service was over the years run down. The responsibility to the system from individual developers, deserves for energy was shuffled between government departments, immediate and urgent attention. and folk memory and experience were largely lost. To In the limited time available, I want to focus on make matters worse, ministerial appointments were energy demand reduction, which an institution in our treated in a similarly cavalier fashion, with few individuals position has very much at heart. We have been exploring in post long enough to shape policy. At a major energy how to improve our own energy efficiency; there has conference in Oxford attended by several Members of been some success in my own diocese of London, this House a few weeks ago, one speaker asked, where over a six-year period we have been able to save “exactly who is to make and implement the key decisions? Government about 22% of our energy use. But like others, we need per se does not have the expertise”. the help of government to achieve the next level. My Those words received universal acclaim and a standing question to the Minister is: will she undertake to ovation. amend Clause 37 to bring forward multiple pilot schemes Speaking in an earlier debate, I raised the possibility for incentivising a reduction in energy demand, allowing of establishing a senior expert advisory group within not only for a capital market pilot but a premium DECC that reported to Parliament and contained payments pilot and enabling ordinary households as both internal and external members. The external well as big business to be rewarded for demand reduction? members would have long tenure and provide both Earlier this year the right honourable Member the technical and commercial expertise, and would bring Prime Minister in a speech to the Royal Society said a strategic overview and degree of continuity that has that, been conspicuously lacking. I am consulting both “the economies in Europe that will prosper are those that are the inside and outside the House to see whether we can greenest and the most energy-efficient. Energy consumption is set come up with any proposals that might ease the present to grow by a third over the next two decades alone. And in a race situation, which is no longer acceptable. for limited resources it is the energy-efficient that will win that race”. Noble Lords will be aware that the Department of I have already commented on some of the imperfections Energy and Climate Change launched a consultation of this Bill, but we need it urgently. Our top priority in November last year, and a number of ideas for must be to give investors the confidence to invest in reducing energy demand emerged. But in the response power generation in the UK. Our longer-term objective to the consultation last month, the Government stated must be to ensure that a situation such as we find that, of all the various options, just one would be ourselves in now does not arise again. pursued, and a pilot was proposed. It is good news that a commitment to this pilot has been incorporated in the Bill at Clause 37, but despite widespread support 3.59 pm in the consultation, the option of an incentive scheme The Lord Bishop of London: My Lords, we have available to anyone, including individuals, who deliver already heard several references to theology. I propose an approved level of energy efficiency, has been dismissed. not to speak from a great altitude, but rather from It would be helpful if the Minister could explain why it the grassroots—although, as I worked my way through is not possible to undertake multiple pilot schemes. Is this hugely complex Bill, I found myself at times it possible at this stage, or in Committee, to give some wondering whether it had been drafted for the sake of greater detail on the pilot that is proposed? How long archangels in retreat. As speakers have remarked before, it will last and how large will it be? it is extraordinarily complex in parts. Our thanks to Reports from all over the country from people the Minister, the noble Baroness, Lady Verma, for the anxious to act in an environmentally responsible way way in which she introduced the debate and for the detail the frustrations and complexity of the Green courtesy which she has shown in making herself available Deal. Will the Minister consider ways in which the for conversation with Members of the House in advance Green Deal can be simplified and streamlined to improve of this Second Reading. It is much appreciated. take-up? For all its imperfections, this policy remains Like previous speakers, I find that there are welcome a potentially transformative long-term project, but it proposals in this Bill that are urgently needed and is so complex and paper heavy that it has resulted in address objectives that every Member of your Lordships’ only about 200 people to date accessing Green Deal House would surely support, including security of finance. energy supply and its affordability, together with a Small to medium organisations, which include dioceses reduction in carbon emissions. and individual churches, and faith communities of all I declare an interest as chairman of the somewhat kinds are finding the deal hard to implement, while ludicrously named Shrink the Footprint, which is the it has also proved difficult for smaller independent environment campaign of the Church of England, companies and co-operatives to access the market. focused on our thousands of buildings with the support Here, I echo comments made by the noble Lord, Lord of tens of thousands of volunteers. I echo many of the Teverson. On the point that he raised, I note that there points already made in this debate, but I shall not is no specific mention of community energy in the Bill, repeat them. At the same time, from a London perspective, although I was encouraged by what the Minister said with our growing population and increasing demand in her introductory remarks. I hope that she will be for electricity, which could be as much as 4% a year, I able to enlarge on those a little later. am also clear that the Mayor’s call for a change in the Allowing the participation of independent generators system which currently prevents distribution network in the energy market, via the introduction of some operators from installing more capacity in the network kind of green-power auction, would help to increase 157 Energy Bill[LORDS] Energy Bill 158

[THE LORD BISHOP OF LONDON] year protecting ourselves against such a thing happening competition, while encouraging the engagement of because the horror of it is so great that it is not local communities with their energy production. This something that we wish to carry. is an objective in tune with the Government’s emphasis The chance of disastrous climate change occurring on localism. The Shrinking the Footprint campaign, is enormously greater than the chance of your house which I chair, is part of a general community energy burning down, yet we are now seeking to say that we coalition. Already church buildings across the country should not spend certain sums. At the moment, for an feed into the grid from more than 100 solar-panel average family the cost is about £60 a year and by the installations. end of 2020 it will be £100 a year. We might increase In a highly complex society, security and affordability that by about £20 if we take the serious and important of energy are crucial. I imagine that noble Lords will step—I say this to the Minister—of having a carbon have taken to heart the comments of the previous intensity target for 2030. Thereafter, what we will speaker on the enormous responsibilities that the have insured against will in fact provide us with lower Government are taking on through this Bill: any mistake energy costs and a real future. will have grave consequences. We can all see the importance of the Bill. On these Benches there is general support Therefore, the choice is between accepting the and a commitment to work hard with other Members infallibility of those who deny climate change and of the House to make it even better in Committee. accepting sensible insurance in order to recognise what the vast majority of scientists are putting forward. 4.06 pm There really is no argument, and there is no argument in the view of the public. That perhaps explains why, Lord Deben: My Lords, I refer the House to my however difficult it is, there remains, and is increasingly, declarations of interest and particularly to my a demand by the public that we do something sensible chairmanship of the Committee on Climate Change. about this. In that position I am bound by statute to be independent, and on this subject it is not difficult to be independent The question is: how do we get the very important because all parties have a less than good record in matter of electricity reform to deliver a decarbonised facing up to the issues of energy. The noble Lord who source of energy for us? We cannot do all the things spoke a moment ago was kind. Successive Governments that we need to do to meet our statutory requirement have recognised that this is a tough thing to deal with of reducing our emissions by 80% by 2050 if we are and often better left alone. At one stage we had an not able, for example, to use electricity in a pure and energy Bill in which every date had been removed clean form for motorcars and the like. Therefore, except 2050, which was well beyond the lifetime of any electricity decarbonisation is an essential part of what living politician. This enabled people to promise good we are doing and the Bill paves the way for that. It things for the future without having to pay for them does so by giving sufficient security to private investors in the present. This Bill is entirely different and I to invest, but I warn the House that many other people congratulate the Government on bringing it forward. are seeking to do the same. It seeks to face the real issues and accept the price Those who deny the issue, of course, are always of facing them. Sitting where I do geographically, I saying that we are the only people doing this and that recognise that there are some who have not accepted we are right out in front. In fact, GLOBE International, the reality of the danger, so I ought to start by of which I am president, recently produced an independent explaining why—for a simple reason—we do not have report with the London School of Economics showing to argue about it. that more than 33 countries are dealing with this issue, There is no doubt that there is sufficient scientific some of them more extremely and better than we are belief and evidence that climate change is happening, doing. China, for example, has made a huge investment is caused by human beings and could be disastrous. It in making itself increasingly the centre of renewable is therefore a threat with which we have to deal. There energy. Mexico, South Africa and Korea are other are two ways that you can deal with a threat: the first is examples. All around the world people are encouraging to insure yourself against it, and the other is to hope others to invest in order that they may achieve those for the best. There is a problem with the climate-change ends. Therefore, if we want investment here, we have deniers. I use the word denier because they are no to recognise that we are in a competitive market. I say longer sceptics. I am a sceptic—I wish that climate to my noble friend Lord Teverson that that is the issue change did not happen. I am sceptical in the sense that concerning greed. I work with scientists, and therefore one is sceptical The fact is that if we want the investment and the about everything that is put forward. The problem is jobs here, we have to provide the security that enables that those who deny climate change start from the people to invest. That is why I again say to my noble assumption that it is not happening; that if it is friend that the very sensible proposal of the Committee happening, we do not need to do anything about it; or on Climate Change that we should have a carbon that if we did do something about, it would be far too intensity target for 2030 is essential not for climate expensive. change but so that we get the investment for Britain In this Bill we are seeking to provide the insurance plc. If we want to show people that there is a continuum that any sensible father would have for his children. I of support, that it will not drop over the precipice in am sure that there are no Members of your Lordships’ 2020 and then arrive again in 2050, we have to have House who do not take out insurance against their some kind of assurance. The beauty of the assurance house burning down, although there is a 99.8% chance that we have suggested is that it is not prescriptive. of it not burning down. Yet we all spend about £140 a It does not say how we should do it; it merely says 159 Energy Bill[18 JUNE 2013] Energy Bill 160 that there will be a clear indication that we want this Bill, I have begun to regret that just over a year decarbonisation of electricity and that the carbon ago, when I ceased to be chairman of the European intensity target that we set will have to be reached by Union Committee and I decided to take up a new whatever means we wish. It might be achieved by subject from scratch, I chose energy. Given what we advancing CCS, by having more nuclear or by producing have come to, I think it may have been a problem, but I more offshore or onshore wind, but we know where am extremely grateful to the noble Lord, Lord Oxburgh, we are trying to do it, and we know that we are doing and to the DECC officials, who, in the informal group it so that all of us in this country can see the benefits that has met on the draft Bill and more recently on this of the investment we are making. Bill, provided particularly useful tutorials in helping I want to be the first to congratulate the Treasury me to understand a pretty complex subject. As the on producing £7.6 billion of investment to enable us to noble Baroness, Lady Worthington, said, each time do that, but if that investment is to do Britain the best one thinks one understands it, one discovers yet another that it can, it must encourage people to bring their twist to the complexity. supply chains into this country and not maintain them Before giving this Bill a Second Reading, we have to elsewhere. It also means that we have to have very agree that there is a need to decarbonise our electricity clear visibility between now and 2020. My noble friend industry and, if that is the case, whether the principal has promised to let us have this information early. I elements of the electricity market reform set out in hope that we will not go for just a year-by-year Part 2, the contracts for difference, strike prices and arrangement. We must know so that people who are the capacity mechanism, are the right way to achieve making investment decisions now—which will emerge such reform. On the first issue, over the past year, I in 2018, for example—know exactly where they are have tried to follow the debate on global warming. going to be. Indeed, there are those who argue against it, sometimes Against that background, I suggest that there is —we may well hear them later—fairly effectively. But another issue which the right reverend Prelate the although there are significant arguments against the Bishop of London did not refer to but which I know is scientific consensus, I have reached the judgment that close to his heart. We are arguing this case in a world in applying the precautionary principle there is no that will have 9 billion people. The idea that we will case at all to resile from the commitments which this have cheap energy with the pressures of 1.5 billion country took under the Climate Change Act 2008. more middle-class people demanding the sort of lives that we live, or the idea that there is some mysterious As referred to by my noble friend Lord Deben, the and magical world around the corner with cheap gas, argument is also developed that our efforts are of little seems beyond any sane measurement. Of course we relevance given the absence of comparable actions have to use our fracked gas, of course we have to make elsewhere in the world, with the statistic of three sure that we use what resources we have, and of course coal-based stations being built a week in China perhaps we need carbon capture and storage to make that gas being most frequently cited. In fact, as we have heard as low in its emissions as possible. At the same time as this week—indeed, he referred to the work done on paying this very small amount to give us insurance climate change in China—China is rolling out an against climate change, exactly those same efforts are emission trading system starting in Shenzhen and then giving us insurance against ever-higher gas prices. extending elsewhere in the country. It has been carrying After all, the International Energy Agency has made it out a significant programme of work on carbon capture clear that gas prices are likely to rise—to double in the and storage which compares favourably with what we United States—over the next 10 years. have done in this country. Therefore, the argument It will also give us sovereignty, and I will finish on that there is no point in doing anything because things that point. I do not want my children to be in the will go wrong elsewhere does not seem to hold very hands of Mr Putin’s children. It is a simple matter. If much strength. we can create our own energy here, we are not only Given the case to move to a low-carbon generating protecting ourselves against climate change and taking technology and to encourage the necessary investment, insurance against high gas prices but ensuring that, by what are the policy instruments which can do that having a portfolio of energy resources, we in this most effectively? Sitting on these Benches and having country control this crucial element in our future. I been taught some of my micro-economics by Milton therefore congratulate the Government on bringing Friedman, I have to look very carefully at any attempt the Bill forward. It needs one or two tweaks, and I to intervene in markets. That often causes more harm shall be pressing for those tweaks—and I know that than good. I was very glad therefore that my noble many will join me. It is the first time that we have had friend the Minister in her opening remarks was able to so far-reaching and far-looking a Bill before this House assure us that the contracts for difference and strike on a subject that has for far too long been at the prices are transitory measures, particularly that they bottom of the list of priorities. will be set on an administered basis for this transitional period. My noble friend also referred to the fact that the delivery plan will be published in July. I hope very 4.18 pm much that when the Captain of the Gentlemen-at-Arms Lord Roper: My Lords, it is a particular pleasure to produces an order of consideration, the sections dealing follow my noble friend Lord Deben, who is a very with Part 2 can be placed towards the end of our effective advocate for this Bill, even if the levy-controlled consideration in Committee in order that we will have framework is, I think, a little more complex than he the benefit of seeing the delivery plan before we come described. Given the complexities and the length of to consider them. 161 Energy Bill[LORDS] Energy Bill 162

[LORD ROPER] Finally, I wonder if my noble friend can tell us Subject to that, the very useful impact assessment about the position of the European Commission as published with the Bill shows that the market failures far as any possible state aid implications of the Bill are and imperfections justify the proposals for electricity concerned. Are we likely to have problems with that at market reform in Part 2. Contracts for difference are a later stage? I think that this is a difficult Bill, but I the means of providing revenue certainty for low-carbon look forward to continuing my education on the subject generators and thereby the incentive for investment in in Committee. nuclear and renewable generators. They would enable development of such projects to obtain the finance for 4.28 pm their investments and the impact assessment shows a significant net present value. As we have heard, the Lord Cameron of Dillington: My Lords, I must first capacity market is the mechanism for ensuring security declare an interest as a farmer and landowner with of supply and although the impact assessment in this family and trustee interests in small renewable energy case shows that there could be small net costs compared schemes. with a perfectly functioning energy market, it is very Electricity is now as vital a part of modern human difficult to accept that we have a perfectly operating life as air, water or food. It is only a mild exaggeration energy market. It seems a rather useful insurance to say that we cannot survive without it. So much depends mechanism to avoid loss of supply. on it: from the pumped water we drink and the growing The question of the nature of the energy market is, and processing of the food we eat, to lights, heating as we have already heard, central to our consideration and cooking, through music, communication, navigation, of the Bill. There has been much discussion on the health, design and even democracy—think about this illiquidity of the market, and Ofgem’s announcement Chamber with its lights, air-conditioning, microphones last week is therefore of great importance. We shall and TV and radio services all dependent on electricity. need to consider it when we come to consider Chapter Furthermore, our use of electricity can only increase: 6 of Part 2 of the Bill. The asymmetry of the market electric cars, for instance, could be a huge new field of between the larger generators and suppliers and the demand. smaller ones have led to many reports of illiquidity It is therefore vital that we plan well ahead to ensure and difficulties for small developers of renewable projects that we “keep the lights on”, Bear in mind though that in accessing the market. In the Commons, consideration that flippant phrase could equally well be replaced was given to a green power auction market. This was with “preventing catastrophic life-endangering situations”, resisted by the Government. Others have suggested an or “maintaining the vibrancy of our economy”. Electricity off-taker of last resort. It will be essential for us to is the vital fuel of modern life and it would be unthinkable return to this in Committee as energy market reform for our system to fail. will not succeed unless we provide a satisfactory route Noble Lords will have gathered that in the trilemma to market for independent generators. between decarbonisation, the cost of power and the There have been difficulties in the recent past for security of power, for me the greatest of these three is such generators to get satisfactory power purchase security. If we do not have security of power, the rest agreements with large suppliers, and the nature of are as of nothing. PPAs will themselves change with the introduction of Ensuring security of power means that we have to contracts for difference. How do the Government plan ahead for more than one decade. Even a gas-fired intend to ensure a satisfactory development of PPAs power station, from conception through planning, after EMR? As my noble friend Lord Teverson and construction and commissioning, can take the best the right reverend Prelate said, Clause 37 is extremely part of a decade, while a nuclear station takes considerably important. It is the amendment which was introduced longer. Furthermore, if you take a long-term view— on Report in the Commons to deal with demand decades rather than years—I do not believe that there management. Although the reference is to a pilot is a straight choice between green energy and cheap scheme, I think that if I remember rightly, in moving energy. The danger of ever rising costs of fossil fuels in the report, the Minister referred to several options the long run is possibly even a greater danger than the within this pilot, so perhaps it is not quite as narrow as initial high cost of alternative sources of energy. was suggested by the right reverend Prelate. For instance, looking forward, between now and I also find some confusion, probably it is my ignorance, 2030 it is likely that China will increase its use of gas between permanent reduction in the demand for electricity by over 500%. What will that do to the world price of as described by the right reverend Prelate, and demand-side gas? Or you may prefer to look at, say, Germany, response in the context of the capacity market. Will where since 2000 the price of electricity has gone up my noble friend tell me which of the two is being by 61%, of which 75% is due to the rising cost of gas referred to in Clause 37? rather than its support for renewables. It is the same I welcome the fact that Part 1 gives the Secretary of in the UK. Only a small proportion of the increase State a power to set a decarbonisation target range for in the cost of our power is due to renewables—less 2030 and implicitly prevents him from setting it before than 15% 2016. As we have already heard, there will no doubt be So never mind the climate change debate—although discussion in Committee on the date. However, I hope I should make it clear that I am a firm believer in that as well as the date, it will be possible to consider man-made climate change—in the long run we need as whether the Bill should be amended to require him to many alternative sources of energy as we can muster set a target rather than to give him the power to set a or encourage. Furthermore, we must never put all our target, which is an important distinction. generation eggs in one technology basket. 163 Energy Bill[18 JUNE 2013] Energy Bill 164

Therefore, the overriding need for and the purpose The same goes for CCS, although this time the of this Bill, to me, is that during the next two decades signal is as much for the Treasury as the private sector: or so we will need huge amounts of money to be it really needs the self-discipline to commit this time to released for investment into the generation of power, what could be a very profitable area for the UK. There the transmission of power and even the saving of will be a huge worldwide market for CCS if we can power—literally hundreds of billions of pounds. Coming create a safe and reliable system. I sympathise with the straight, therefore, to the $64,000 question—or perhaps Government over decarbonisation targets. There is a that should be the $1 trillion question—will this Bill lot of uncertainty about where our power sector could be enough of a signal to release that kind of money for go over the next 15 to 20 years. Will we have a shale the markets? Possibly, is my answer. gas revolution? Will nuclear become too expensive to Contracts for difference are excellent; they seem a replace? Will the only practical source of power be gas fair way of supporting new technology and even old and will CCS fail? Will the gas lock-in, which I spoke technology, speaking as one who lives not a million of about, become an accepted feature of our energy miles away from Hinkley Point. CFDs seem a fair way landscape? Can we burn cheap coal-bed methane or of balancing the demands of new sources of power will algae be the solution to the world’s energy problems? against the interests of consumers should there be a Will the economy soar and increase demand, or will it dramatic shift in the marketplace. However, as other plummet and make cheap electricity the overriding noble Lords have mentioned, I worry about the need? It is hard to know which will be the safest road. complexities and uncertainties of CFDs for the small-scale We could go in any direction. generator. We still need either a small-scale FIT or a That is the key point. These same thoughts are green power auction mart or something similar to give going on in the minds of investors, too. They, too, do the small-scale generators—or, more importantly, their not know which way to jump. They, too, are tempted banks and backers—the 15 to 20-year comfort they to hold back their billions until they see which way the need to enable them to invest. These are expensive cookie is going to crumble. Which technology is going projects for often quite small players. With all the to succeed in the UK? What is going to happen to the money needed up front, you cannot start small and levy control framework after 2020? It is all very well grow as in a normal business venture. We need this the Government relying on the Climate Change Act, investment. but that is about general targets across the board. The capacity market, again, seems a good way of What sector-specific commitments are the Government keeping the lights on and all that entails. As I say, giving within the electricity industry? Why should security is the key. However, I am concerned that, with investors commit their money if politicians cannot the first auction in 2014, the intention is to have a commit their and their successors’ reputations? In my capacity market in place only by 2018, and I ask view, the Government should provide certainty to whether we could not do it a bit quicker. Sadly, the investors. The target need not be as low as 50 grammes baton of the 2015-16 power supply was dropped some per kilowatt-hour, but a target is needed. Then the time ago and power cuts at that time seem quite likely. investment that follows will, in my view, bring down the cost of power, boost our employment and economy, The only other problem with the capacity market and raise the certainty and security of power, which is exercise as currently planned is the likely lock-in to gas really important. generation, possibly up to 2045. When we are trying to get out of expensive and non-renewable gas this is an 4.36 pm unfortunate, but perhaps inevitable, result of our need for security in the medium term. I hope that CCS Lord Lawson of Blaby: My Lords, like other noble could be a solution. Lords who have spoken, I begin by declaring an interest. It is a non-remunerated and non-pecuniary interest, I support the levy control framework as providing a unlike some noble Lords’ interests. It is the chairmanship cap on the effect of alternative technologies on fuel of the Global Warming Policy Foundation. While I poverty and manufacturing competitiveness. We will am about interests, perhaps I should declare two past have to consider both these issues in Committee but interests, which I think are slightly more relevant to the levy control framework allows people to know this debate: one which was remunerated, not particularly where they stand, at least up until 2020. well, Secretary of State for Energy, and the other, That brings me to the major point of contention president for a very long time—indeed I am the immediate surrounding the Bill: do we or do we not need a past president—of the British Institute of Energy decarbonisation target for 2030—or, more precisely, Economics. I have been tilling this soil for quite a long do we need to set a decarbonisation target for 2013 time. I am glad to say that next to me here is my and 2014 or will it wait until after the next general successor as president, my noble friend Lord Howell, election? Will a two or three year delay make all the who was my predecessor as Secretary of State for difference in releasing the billions of pounds desperately Energy. Unfortunately, his other commitments prevent needed to keep the lights on? him from speaking in this Second Reading debate but If it was merely a question of buying wind turbines I hope he will bring his great wisdom on this issue to and towers to place offshore, say, in the 2020s, it would bear in further stages of this Bill. not necessarily matter. However, we know that Gemesa, I do not blame my noble friend the Minister in the Siemens, Vattenfall, Vestas and so on need the signals slightest for the fact that this is the worst Energy Bill in as soon as possible to start building the factories, to living memory and, indeed, probably the worst Bill of create the jobs, to build the parts necessary for such any kind that the present Government have brought wide-scale investment in power in the 2020s. forward. That may to some extent explain why it is so 165 Energy Bill[LORDS] Energy Bill 166

[LORD LAWSON OF BLABY] by at least 80%. The countries concerned are busy enthusiastically welcomed by the party opposite. It withdrawing their subsidies and one renewable company has, as the Minister made clear, one purpose and one after another is going bankrupt. purpose only: to reach the very demanding—that is an The final thing, to which allusion has already been understatement—and radical decarbonisation targets made and which is probably the most important, is the in the Climate Change Act, which, as she rightly said, shale gas revolution. The development of fracking, as is something on which no other country has embarked. many noble Lords know, means that it is now possible She seemed to think that was a good thing. In my economically to win gas from shale on a massive scale. opinion, it is just because no other country is so Indeed, the United States, which was first in the field, stupid. is already doing it for oil as well. It is getting oil from The policy too has a particular characteristic. It has shale. That has transformed the picture economically. been characterised by our leading energy economist, The price of gas has collapsed in the United States, the Professor Dieter Helm of Oxford, as the Gosplan price of coal has collapsed in accordance and even approach—his word, not mine. The noble Baroness, the oil price is looking a bit shaky. That also has an Lady Worthington, had a similar critique of this Bill. important geopolitical consequence as shale is in It is a curious, arbitrary form of nationalisation with abundance throughout the world. In this country, we much greater discretion for Ministers and officials have large deposits in the north-west, in Lancashire—in than any of the old-fashioned nationalisations. The the Blackpool region—and in other places. That means noble Baroness developed a powerful critique. It was that we no longer need to have any fear of being probably the only aspect of her speech with which I beholden either to an unstable Middle East or to an agreed, but nevertheless she made a very important unreliable Mr Putin. There is an abundance of fossil point. The other claims for the Bill are, of course, fuels throughout the world. Everything has changed. poppycock. We have an abundant supply and a prospect of lower As my noble friend Lord Teverson pointed out, this prices. As other speakers have said, on the old forecasts is not a new Bill. It was first published in draft in 2010, it was thought that prices of fossil fuels were likely to and in gestation, it inevitably goes back beyond that. increase. Even the International Energy Agency now Since then, absolutely everything of importance in the thinks—although obviously it is all very uncertain—that energy field has changed. Incidentally, we need to they are just as likely to fall as they are to rise in the distinguish between the climate change issue and the future. Yet despite these revolutionary changes, the energy issue. For example, Professor Helm, to whom I Government’s policy and the Bill itself are completely referred and who I have known for many years, is, on unchanged from when they first came forward. They the climate change issue, at the alarmist end of the are ploughing on as if nothing had happened, despite spectrum, yet he has produced the most devastating the fact that the whole energy scene has totally changed. critique of the Bill because he is, among other things, This is not just a stupid energy policy; it is also an unlike some noble Lords who have spoken, a highly extraordinary foreign policy. I see a distinguished former competent economist. Permanent Secretary at the Foreign Office in his place, Anyhow, since the Bill first came forward, everything the noble Lord, Lord Kerr. He used to be my Principal of significance on the energy scene has changed. On Private Secretary, so he is obviously a good man. I climate change, too, it is now agreed even by the Met remind noble Lords that in the other place the Energy Office that there has been no further recorded global and Climate Change Committee produced a report on warming for the past 16 years or so. That has led to a low carbon growth links with China. It concluded and great debate among scientists as to whether, as seems I am not making this up: likely, they exaggerated in the past what is known in “China … should be at the heart of HMG’s climate change the jargon as the climate sensitivity of carbon. There mitigation strategy”. is an emerging consensus among scientists that the There was, of course, a response from the Government climate sensitivity of carbon is probably less than they as there always is to Select Committee reports. This thought. That means, importantly, that any dangers was jointly from DECC, the Department of Energy from warming, if they occur, are postponed well into and Climate Change, and the Foreign and Commonwealth the next century. It means that there is no urgency to Office. They said: go ahead in this way, not only because the uncertainties are in the distant future but because we have no idea “We therefore welcome the Committee’s report, which rightly concludes that the UK has an important role in encouraging the what technologies will develop over the next 100 years. trend to low carbon in China”. All we know is that there will be technological development, because there always has been and always They went on, correctly: will be. “As the UK is responsible for less than 2% of global emissions, we need all other major economies to reduce their emissions as Again, the Kyoto agreement has collapsed with no well”. successor. The whole of the Bill was predicated on the idea of a global agreement, but we now know that They then added, and I quote: there is no global agreement and that there will not be “By demonstrating political leadership … the UK can have a a global agreement on mandatory carbon emission powerful influence on the speed of transition to low carbon controls. In the European Union, which is the closest economic models in other countries”. to us in going in this direction—although it has no What on earth have they been smoking? Their view, it Climate Change Act as it is not so stupid—the renewables seems, is that the Chinese cannot make up their minds industry is in meltdown. Over the past five years, the whether they really want to decimate their industry on share price of the renewables companies has fallen the altar of higher energy prices and impoverish their 167 Energy Bill[18 JUNE 2013] Energy Bill 168 still quite poor people even further and that they are is of considerable complexity, and within that complexity only looking for a lead from the Foreign Office in there is the opportunity for a considerable mistake. Britain before deciding to do just that. What sort of However, the Bill is needed, although it may not be in world do they think we are living in? It is complete the right shape. Also like the noble Lord, Lord Lawson, lunacy. China and India, despite what noble Lords may I am concerned about the lack of impact on fuel have heard earlier in this debate, have not the slightest poverty, which I will come back to in my section on intention of following us down this crazy path. demand reduction. I am not going to say much about We must also look at the oil industry. YourLordships decarbonisation, but when you put those issues alongside may not like the major oil companies, but they are not the decommissioning of existing capacity, there is a stupid. If they really thought for a moment that we crisis of security, as the noble Lord, Lord Oxburgh, were going to move into a decarbonised word, would pointedly set out. they be spending untold billions on exploring for new It may have been the intention that this legislation oil and gas—and even more for developing them? would end uncertainty. The Minister referred to that What about the financial markets? What happens in her opening remarks but, frankly, its long gestation when one of the oil companies makes a great discovery? period has added to the uncertainty, as well as the fact Do the shares go down, because, after all, fossil fuels that we need more detail on the setting of the strike are completely obsolete and they are pursuing a damaging prices and the need for secondary legislation to support strategy? No, the shares go up, when they have a great the Bill. We have a considerable difficulty here around oil or gas find. uncertainty. If I may give just one example, Ernst & This is an Alice in Wonderland world in which the Young has recently done some research on the Government live and in which this debate is taking international investment market for renewable energy. place. Nor is this policy a harmless lunacy. UK energy Because of uncertainty in the British market, we have costs and prices are inevitably bound to rise as a result dropped to sixth place in terms of our attractiveness of this Bill, which will become an Act, I am sure. The for that investment. purpose of this legislation is to push up energy prices, In the area of offshore wind, where Britain is because that is the only way that renewables, and even actually a leader, we have lost our top position. If nuclear, can be made economic. British electricity noble Lords want an idea of the scale of this, let me prices are already, as a result of government policies in point out that last year, ¤4 billion of manufacturing this area, among the highest in the world. According capability was commissioned in Europe. Some 75% of to the energy experts who have studied the Bill they the turbines for offshore wind were built in Britain. are set to double by 2030. As we move from low-cost There is a huge opportunity for offshore wind and we carbon to high-cost renewables, we will be damaging have managed to fail to exploit it to the full because of the economy and damaging industry and it will be the the slow progress in proceeding with this Bill. poorest families that suffer the most. I am astonished This Bill is an example of market manipulation. I that we did not hear a word from the spokesman for do not have a problem with that; infant industries the party opposite on the plight on the poor who are often need market manipulation. The noble Lord, suffering from fuel poverty, and who will suffer even Lord Roper, is right to ask for an explanation of where more as a result of this legislation. we are in negotiations with the European Commission This is a bad, bad Bill. There is not a single energy on state aid. I would also be very interested to know if expert of repute, whatever his views on climate change, the Minister could enlighten us on where we are in who believes that the policy enshrined in this Bill is relation to the impact on UK energy costs compared sustainable. However, that is no consolation because with our EU competitors. That is a critical balance, the damage that will be done before the inevitable and not just in terms of how our economy operates. The U-turn takes place will be incalculable. noble Lord, Lord Oxburgh, referred to interconnectivity; the direction of flow with interconnectivity will be 4.51 pm based on the relative prices on either side of the Baroness Liddell of Coatdyke: My Lords, I, too, interconnector. Like the noble Lord, Lord Deben, I must draw attention to my entry in the register of worry about sovereignty. This is one of the key issues Members’interests as a director of the Offshore Renewable of the past 10 years. If someone has the capability to Energy Catapult. I should also take my lead from the switch off access to energy, they will have strategic noble Lord, Lord Lawson, who pointed out that he control over what happens to the economy of this was a previous Secretary of State for Energy. I was a country. Minister for Energy but, being a woman, I was expected Going back to the complexity issue, there are some to multitask so I was also Minister for competitiveness aspects of EMR that have been tried elsewhere and in Europe. Tempting though it is to follow and challenge some experience of capacity markets in the USA, but some of the lines of the noble Lord, Lord Lawson, I I am not aware of any country using the model of notice that the noble Lord, Lord Stern, is in his place contracts for difference and capacity markets at the and is soon to speak. I think that he will probably do a same time. I would be very interested to know how the much better job of it than I could conceivably do. Minister sees some of these issues working. Yet like the noble Lord, Lord Lawson, I am not an We also have a pressing need for diversity of energy- unalloyed fan of this Bill. Professor Dieter Helm’s generating capacity. Many of us in this House are in analysis of the Bill was actually very interesting. I see our prime and we can remember the six-day war. We that the noble Lord, Lord Birt, is to speak later on. also remember what happens when we become overly Perhaps he, too, could take up the issue of the bias dependent on one energy source as against another, against understanding contained in this Bill because it and we must ensure that that does not happen again. 169 Energy Bill[LORDS] Energy Bill 170

[BARONESS LIDDELL OF COATDYKE] I look forward to our deliberations on the Bill. There is a place for all sources of energy, including There are critical issues that need to be raised. We fossil fuels. This is a real challenge for the scientists need an energy Bill but, sadly, I am not sure that this and engineers who, for as long as I have been around, Bill as it stands is the finished article. I hope that by have been promising clean coal technology. Carbon the time we get to the end of July, it might be. capture and storage is the holy grail, but I have been waiting for far too long to see its commercialisation. 5.01 pm The Minister skirted over nuclear in talking about the Office for Nuclear Regulation, but in a situation where Baroness Maddock: My Lords, I need to declare my EDF is in a monopoly position in negotiations with interests as president of the Micropower Council— the Government, where are these discussions? What contrary to what noble Lords might have read in the conclusions will we come to? The Committee on Climate Daily Mail, you do not get paid for being president of Change has said that at least 16 gigawatts of future something—and vice-president of National Energy supply should come from nuclear, but it is difficult to Action, a charity dealing with fuel poverty. Like the see how that is going to come on stream in time previous speaker, I will say a little about fuel poverty to impact on the insecurity of supply that we have to in my remarks. deal with. There are many reasons to support the Bill but we There are some of us who do not necessarily remember have also heard about some of the problems surrounding it, but know that there was shale gas in this country it. Maybe we in this House can ensure that it is better before. I live very close to West Lothian where there by the time that it leaves us. However, it will address was quite an industry around shale gas in my father’s some of the challenges that we face such as the security day. There have been recent announcements about of supply and the need to invest to meet our current the prospect of 37 gigawatts of gas generation being and future demand for electricity. It has been estimated sanctioned, alongside the prospect of shale gas—with that we need at least £110 billion to do that. We need envious eyes across the Atlantic looking at how shale to improve the national grid, as others have mentioned; gas has impacted on US energy markets. Are we going investment in the grid has been neglected for a long to end up with a dash to gas being forced on us period. The Bill will also address our aim, which some because we need security of supply? We need to get a people agree with and some do not, to decarbonise the move on with nuclear and with investment in renewable electricity sector by the 2030s as part of the global energies. We are seeking economic growth, so it is all challenge of tackling climate change. We hope that the the more critical that manufacturing capability which Bill will support the construction of a diverse mix of we can rely on in the future is developed. What is renewables, new nuclear, gas and carbon capture and going to happen about strike price setting in practice? storage—many of the things that people have said in What will the setting of the strike price be, taking into the debate that we need. account new nuclear? How will a competitive model It is estimated that electricity market reform could eventually operate? provide around 250,000 jobs. Coming from the north-east Let me turn now to the lines on capacity markets to of England, I think that creating jobs away from the deliver energy saving. Frankly, I think it is fanciful. I south-east is really important. I associate myself with am with the right reverend Prelate when he asks why we the words of my noble friend Lord Deben about the are having only one pilot. Why are we not in a position importance of a supply chain. Already in the north-east to look at other ways of managing demand? One of we have industries providing pieces for turbines for the best ways of ensuring a robust energy market is to onshore and offshore wind, and I hope that that will ensure energy efficiency. I ask the Minister to answer continue. this in her summing up: if I were Mrs Liddell of My interest in how we protect our environment Coatdyke in North Lanarkshire, living in a damp council globally and locally stems from three years that I spent house with inadequate insulation, possibly a post-war over 40 years ago living in Stockholm in Sweden, house with no upgrading since, how will that affect my where I realised that if a home was properly insulated fuel bill? It will not. And please do not tell me about it cost a fraction of what I had been paying in England the Green Deal; you need £150 even to get your foot in to heat one. I also realised, because I was teaching the door. That may buy a rather nice dinner in the English at the time to old-age pensioners, that they did Barry Room, but it is a king’s ransom for some of the not die in the winter because they were living in cold people who are most intimately affected by this. and damp homes, and that there was no such thing as I turn my attention to an area that has caused fuel poverty. Shortly after that we had the world oil considerable concern throughout the country: the mis- crisis, which brought home to me the need to not be selling of tariffs for electricity. I am not suggesting wasteful with our global natural resources. Whatever that there needs to be some kind of retrospective we believe about climate change, that is something legislation with regard to this, but I am asking that we that we should all be aware of. get some clarity on the Prime Minister’s claim that In the 1970s, when I joined a political party, it people will be put on the lowest possible tariff. How is seemed to me that at that time only the Liberals were that going to work? We need that spelt out, and genuinely concerned about these issues, although I quickly. We need additional powers and resources for must say that that is not the only reason that I was a Ofgem, which at the moment is apparently looking at member of the Liberal Party and am now a Liberal 27 cases of mis-selling, both formal and informal. Democrat. In my early days, campaigning to be elected Mis-selling is fraud against the most vulnerable in our and serving as a councillor in Southampton, I was society, and this Bill is not going to help that. often mocked for what I was talking about with regard 171 Energy Bill[18 JUNE 2013] Energy Bill 172 to these issues. I particularly remember being mocked you should open your fridge to persuading you and when we were trying to introduce recycling in the city. those you lived with to sit around one light when you At one point, three colleagues and I held the balance were in your flat in the evening. It resulted in huge of power on the council and we managed to set up an savings of electricity. There were no blackouts. The environment committee. Not everyone at that time area that saved the most got their bills reduced. So was a dinosaur and one of the colleagues that I there is evidence that this is something that works. worked with—we worked across party lines—was the As to the role of the capacity markets, there is honourable Member for Southampton Test, Alan evidence that a capacity market is of limited use in Whitehead, who has played quite an important part in rewarding energy savings—I believe that experiences this Bill’s passage in another place. At that time we in America have shown that to be the case. Payments managed, using some geothermal energy, to set up a from capacity markets are uncertain and it is not yet district heating system that has become one of the clear when or if a capacity auction will be triggered most successful in the country. here. Could the Minister, when she replies to this So when I was elected in another place, now 20 years debate, address this issue? As energy efficiency and ago, it is not surprising that I chose to promote the demand reduction reduce the risk of capacity shortage, Home Energy Conservation Act. I was fortunate enough it is rather perverse to make support for them dependent to be No. 1 in the ballot for Private Member’s Bills on those shortages occurring. I hope that we will and, with the help of a lot of other people and address this during the passage of the Bill. organisations, that Bill became an Act. Capacity markets are not suitable for delivering I think that a majority of people today—although energy saving for households or small businesses. The not everybody, including my noble friend sitting in complex design of the capacity market means that front of me—are very concerned to protect our planet only large energy suppliers and other specialist companies now that we have seen the data and how human are likely to participate. It is vital that we have mechanisms activity affects our climate. In my early days of to capture savings from small businesses and homes if campaigning on these issues, it was a wild dream that we are to achieve the full electricity-saving potential Liberals would be in government and that we might that the Government have identified. A capacity market see a Liberal Minister leading a Bill of this nature. So I is primarily designed to ensure capacity during troughs am particularly pleased that my longstanding colleague, in supply, so it rewards energy efficiency for only its my right honourable friend Ed Davey, has been security benefits, not for the much larger benefits or spearheading this Bill. for emissions reductions and affordability. I am disappointed that on Report in the Commons, Given my background, I think that it is not surprising cross-party amendments that would have introduced that the two things that I have chosen to concentrate simple transparent payments for households and on in this Bill are electricity demand reduction and businesses that save energy were not addressed favourably. help for consumers, particularly with fuel poverty. Will the Minister look again at such proposals, which Several other noble Lords have mentioned electricity may come forward again during the passage of the Bill demand reduction. A major criticism of the Bill has in your Lordships’ House? been that, in its original form, it did not contain measures on electricity demand reduction. During the Clause 37 allows the Government to introduce a passage of the Bill in another place, the Government pilot for electricity demand reduction. Will the Minister introduced amendments, which have been spoken about, also look very carefully at this? I am not the only one to enable electricity demand reform to form part of to raise this matter today. We would like to see more the capacity market and for there to be pilot schemes. than one pilot and a variety of schemes. However, among many of those—including me—who As I declared in my opening remarks, I am a are pleased to see this step, there are concerns about vice-president of a national charity that works in the how capacity market measures will operate and whether field of fuel poverty. The charity works with government they will actually achieve substantial reduction in and others to ensure affordable energy for disadvantaged demand, particularly permanent reduction. There are customers through a wide range of activities. National also concerns about the nature of “a pilot”, rather Energy Action is currently helping the regulator Ofgem than several pilots, and what actions might follow as a to refine the contribution of district network operators result of such pilots. to permanently reduce electricity demand within the Following the initial criticisms, there was a consultation UK. District network operators will be subject to an from DECC to explore the options to encourage electricity energy efficiency incentive during the new distribution demand reduction. Of the options put forward, a price control—ED1—and will be encouraged to foster majority of respondents favoured a system of electricity- innovation and support low-income and vulnerable efficiency premium payments which would provide customers through new social outputs. Therefore it electricity users with a payment on top of the savings would be very helpful if Clause 37 could be amended that result from reduced electricity usage. I strongly to show that the Department of Energy and Climate support something of this nature. During the time Change is aware of the role of district network operators that I lived in Stockholm in the late 1960s and early in encouraging permanent electricity demand reduction. 1970s, most of the electricity used in Sweden was Finally, I turn to consumer bills, which other noble hydroelectricity. However, they had had two or three Lords have already mentioned. I am pleased that there very dry summers and there was a shortage of electricity. is something about this in the Bill. However, due to my There was a huge campaign about how to save electricity experience of the big six energy companies and the and measures were advertised, from how many times various bills that I get from them, I am not holding my 173 Energy Bill[LORDS] Energy Bill 174

[BARONESS MADDOCK] societies and the journals that we should go for serious breath. I am always shocked by the way in which they science. Taking the long-term view, the world is warming try to follow whatever they have been asked to do. and the only plausible explanation is human activity. They recently began to try to explain to customers, We cannot predict the outcomes with certainty; this is partly because it is in the Bill, how much electricity about risk management, but it is surely clear that we and gas the customers have been using and how much are embarked on a reckless and potentially irreversible they can save on one tariff. I usually pay my bill by experiment with the only planet we have. cheque when it comes. I received a bill—I will not The risks are more severe and will come earlier to mention from which company—which said on the front the poorest among us, but we all face them, whichever that if I paid it by direct debit, I could save X amount country we live in and however well-off we are. Contrary of money. On the next page it told me that if I paid it to what the noble Lord, Lord Lawson, has just claimed, by direct debit I would save 10p. On the front of the the broad estimates of climate sensitivity are fairly bill the figure was several hundred pounds. That does stable. If he wants a discussion about those estimates, not give me confidence that even the proposals that I again refer him to those who know about these issues the Government want to see from energy suppliers in and study them professionally. I have discussed them assisting customers may be forthcoming. intensively with Professor Myles Allen, of Oxford A representative of one of the suppliers—I think it University, who has already been referred to, with was British Gas—came up to me one day proudly Sir Brian Hoskins, whom I mentioned and leads on talking about their bills and how they set them out. climate for the Royal Society, or with Julia Slingo, the For many years, as noble Lords will have learnt from chief scientist at the Met Office. We are all confident my comments, I have been a political campaigner. I that the IPPC report, looking across the whole waterfront learnt very early on where you put something on a of the evidence and reporting this autumn, will say page so that people look at it first when it comes exactly that—the estimates of climate sensitivity are through the door—the famous Liberal “Focus”leaflets broadly stable. come to mind. I suspect that British Gas had paid Let me turn to where other countries are going. It is huge sums to people to advise them on how to set out all too easy to say that we are small—accounting for their bills. However, the thing that they wanted you perhaps 2% of global emissions—and to claim that to read was down there on the page, not in the top other countries are doing little. That is not correct. I right-hand corner, which is where everybody looks. have worked on China as a professional economist I hope that many of the things in the Bill will assist and as chief economist to the World Bank for more people who find paying their bills difficult—those in than 25 years, including intense discussion over the fuel poverty—and make sure that we have a secure recent 12th five-year plan. China is midway through energy supply. I am sure that the expertise that we have that plan, which contains strong emissions reduction heard this afternoon, and will hear later this evening, programmes. Its carbon intensity reduction target should assist us all in ensuring that this Bill is a lot to 2020, relative to 2005, is 45%—considerably more better when it leaves this place and achieves some of ambitious than our own 30%. China is ranked third the things that we all want to see. on the Climate Institute’s low-carbon index. China plans to peak coal use during this plan period—that is, 5.15 pm within three years—and is considering peaking annual Lord Stern of Brentford: My Lords, I refer to my emissions by 2025. interests in the register, in particular my chairmanship Why is China doing this? I certainly agree with the of the Grantham Research Institute on Climate Change noble Lord, Lord Lawson, that it is not because it and the Environment at the London School of Economics, studied the United Kingdom with great precision. It is which is part of my role as professor of economics doing it because it understands the grave risks of at the LSE. I am perhaps one of the few unretired climate change and because it realises that there is a professors of economics in your Lordships’ House, if green race, which it intends to win, or at least compete not the only one. in very strongly. That is the kind of race that we I will not dwell on the science—after all, I am an should seek. The US is now reducing emissions rapidly economist. This House has often heard on this issue and energy-related CO2 emissions are back to the from two former presidents of the Royal Society, the levels of the mid-1990s—achieved by a combination noble Lords, Lord May and Lord Rees. Noble Lords of substituting gas for coal and regulatory standards. can also consult the current president of the Royal They could meet their 17% 2005 to 2020 reduction Society, Sir Paul Nurse, and Sir Brian Hoskins of targets without national legislation. Brazil is targeting Imperial College, who leads for the Royal Society on 40% reductions for 2005 to 2020. I could go on. Those climate change. If any noble Lords have new results are three very big and important countries. that can overturn 200 years of research, dating from The world is doing too little, but it is absolutely not the great French mathematician and physicist Joseph true that other countries are doing nothing. The more Fourier in the 1820s, and can contradict the 98% of we recognise, country by country, what others are peer-reviewed papers that identify anthropomorphic doing, the sooner the much needed acceleration of climate change, they should immediately publish them action will come. The global race is becoming a green in one of the learned journals. one, and those who attempt to stay dirty will find If you want to learn more, consult the Royal Society, other, cleaner countries understandably placing restrictions the US National Academy of Sciences or the French, or tariffs on their imports. They will be WTO-compliant, Australian or Chinese academies—whichever you choose because they will counter a subsidy on dirty. In this to turn to. It is surely to the learned societies, scientific international context, UK climate change legislation 175 Energy Bill[18 JUNE 2013] Energy Bill 176 is wise and forward-looking, not only from the perspective of past confusion, and I warmly welcome the Bill as of climate change, fundamentally, but from the point making a major contribution to reducing that confusion of view of future growth. So, too, is this Bill wise and and giving a clear sense of direction. forward-looking. We need substantially more strengthening of the What about costs to consumers? Energy bills have necessary confidence. In particular, we need a stronger increased by around £400 for the typical household institutional structure to bring confidence to the investment since 2004, from £600 to roughly £1,000. Of this framework. For example, the LSE Growth Commission, increase, 80% was unrelated to carbon policies and which reported in January and of which I was a was due largely to the increased price of gas, together member together with the noble Lord, Lord Browne, with some increase due to investment in networks. and others—I apologise for referring to the LSE again— Much of the remaining 20% was associated with recently proposed a new institutional architecture for investment in energy efficiency, which will bring its infrastructure, including an infrastructure strategy board returns. In future, low-carbon policies aimed at supporting that could radically reduce medium-term policy instability. investment in clean power generation technologies will The energy and transport sectors are around 70% of add £100 to the energy bill per annum of the typical this infrastructure story. household by 2020—around a 10% increase. There are opportunities to more than off-set this through energy Lord Vinson: My Lords, the noble Lord, Lord Stern efficiency improvements, particularly through more of Brentford, has failed to mention the cost of energy efficient boilers and appliances. The low-carbon policies to British industry. Is that not a vital and essential part are more likely to bring a reduction in bills by 2020 of maintaining jobs and our competitiveness, and than increases. Over the past decade, the reliance on helping us correct the huge export-import imbalance hydrocarbons has forced up prices. that we have at the moment? He has not mentioned Gas has a real contribution to make to emissions anywhere the cost to industry. Is that not a fact that reductions in substituting for coal, but the benefits of should come into his and his department’s calculations? shale gas in the UK are more likely to be in the energy security and profits that it could bring than in the Lord Stern of Brentford: I do not have a department. price impact. Prices in the UK will be largely determined I am chair of a research institute and an academic. by Europe and world markets. Gas could indeed play The cost of energy to industry is indeed an important a useful role in meeting ongoing demand for heat, factor in its competitiveness, but it is not nearly as balancing generation on the power system and gas important as the investment climate, wage rates, generation of electricity with CCS if this is shown to productivity and exchange rates. This is of fundamental be viable. It can be a valuable bridge to the medium importance. Primary energy in the UK and similar and long term but, without CCS, gas cannot be the economies is about 5% of GDP. Even a 20% increase long term. would give you a one-off 1% increase in costs. That The future is uncertain, as many have remarked, does not move industry from one place to another. and we will have to learn and be flexible. We will need You can study some of the publications on our website. a range of technologies and a smarter, more flexible If you look at what determines where people are, the and better interconnected grid. This will include improved data are made up of those issues that I have described: energy storage, more interconnection with other European investment climate, wage rates, productivity and exchange electricity networks and, crucially, better demand rates. This is an important part of the story, but a management. Additional R&D in all these areas will small one relative to other big factors. Furthermore be essential to ensure that a full portfolio of options and fundamentally, I have given reasons why over the is available in the coming decades to manage the medium term the policies that we have been describing uncertainties and opportunities that are likely to emerge. here are just as likely to force prices down over 15 or Energy efficiency must, of course, be at the heart of 20 years as to raise them, if not more likely to do so. all we do. A target for power sector decarbonisation that gives In thinking about investment, let us recognise that a crystal-clear signal to investors is essential. Without government-induced policy risk is the greatest threat such a target and with potentially mixed messages to investment around the world, wherever you look, be from government, there remains a high degree of it through threats of nationalisation, corruption, the uncertainty that will deter investors. The best way speed of the law courts or whatever. That is a lesson to address this government-induced uncertainty is to that I have learnt in a lifetime as an economist specialising include in the Energy Bill a target for power-sector in development and growth, but also in a decade that I decarbonisation, specifically a target to reduce the spent directly involved in supporting and financing carbon intensity of power generation to 50 grams of investment, particularly infrastructure investment, first CO2 per kilowatt hour by 2030, as recommended by as chief economist of the EBRD and then of the the Committee on Climate Change as being necessary World Bank. For the UK, clarity of policy is paramount to meet overall emissions reduction targets. I urge your to deliver the investment needed to decarbonise the Lordships to support the Bill. It is a wise and sensible power sector. The opportunity to leverage private step in a good direction. It would be much stronger sector investment now is potentially huge, with low and wiser with a decarbonisation target. interest rates, liquidity in much of the private sector In summary, there are five reasons for this target. It strong and investors waiting for real clarity. It is the is the responsible way to play our part in a world at noises off and the apparent vacillation—the idea of immense risk from climate change. It is necessary to constantly reviewing policy—that has undermined reach the target for emissions reduction that we have confidence. There is now a need for clarity in the wake sensibly set for ourselves. It is necessary for the credibility 177 Energy Bill[LORDS] Energy Bill 178

[LORD STERN OF BRENTFORD] The purveying intention of the Bill is to generate and clarity to foster the confidence necessary for the more electricity, but is that really the first priority? Is investment on the scale that we need. It will allow us to not the higher priority to assemble all the wit and move still more rapidly into the world markets of the skills, not least engineering and architectural skills, at future. Finally, as that investment takes place, we will our disposal to reduce the escalating need for always- find that it plays a key role in fostering the investment greater energy consumption? With the majority of and infrastructure that will deliver the energy security, the world’s population yet fully to mobilise their fair affordable energy and growth that this country sorely demand for energy, does this not become critically needs. urgent? Of course, there are genuflections in the Bill towards conservation but they are not in the engine 5.28 pm room of the Bill. They are, in effect, in an aspirational Lord Judd: My Lords, as an emeritus governor of department. Just where are the specific operational the LSE, I take great comfort in the presence of the targets and who is pinpointed to deliver them? Where noble Lord, Lord Stern, in our academic ranks. are the arrangements for the essential nationwide cultural education on personal responsibility? One has only to By the 1980s, the management of the economy walk round the House of Lords at any time, let alone of the Soviet Union had become a nightmare and in the evening, to count the number of lights and the a very sick joke. The bureaucratic jungle that stifled amount of equipment needlessly devouring power at decision-making and obscured responsibility was a unoccupied desks and in empty rooms. Where is our breeding ground of disastrous corruption, inefficiency personal example to the nation in all this? and ineffectiveness. Sometimes I wonder whether, paradoxically, the management of the UK and western The electricity industry is expressing itself clearly, economies is not increasingly being tempted into exactly well and strongly on the Bill. Others in civil society are that direction. making challenging and significant observations. I think of Which?, the WWF, the John Muir Trust, the The roots of the problem seem to me to lie in our CPRE, the RSPB, the Campaign for National Parks, becoming prisoners of ideology. What is too often of which I am glad to be an honorary vice-president, lacking is an overriding, self-evident commitment to and many others. They raise vital issues, to which I the public good, based on social-ethical values, principle, hope the Minister will respond well before Committee. pragmatism and common sense. Where for the fulfilment of that public good is public ownership more appropriate, Matters surrounding the Bill which particularly and where is private ownership better equipped to concern me and on which I hope the Minister will be deliver? There are complex challenges in trying to mix able to comment include the need for more specific the two. The private sector is driven by profitability; demand reduction measures in the Bill. While I recognise the public sector should aspire to cost-effective, high- the proposal to “bolt on” demand reduction to the quality public service. Bureaucratic structures will never capacity market, there is a remaining serious doubt sort that out. Only a deep sense of shared responsibility about just what savings will really be achieved by this, and commitment with powerful leadership will produce especially for households and small businesses. Taking the answer, but just how can that be achieved? into account the experience of the US, where only a A naive faith in market ideology has been allowed tiny percentage of capacity payments have in practice all too much to blind us to common sense. Muscular, gone to demand reduction projects while the overwhelming tough, pinpointed accountability is not always there. majority have gone to fossil fuel generation, there is We of course recognise that to leave the management clearly a lot of hard work still to be done on this front. of such a fundamental necessity for society as Investors, as has already been argued in this debate, energy to market forces alone would be unforgivable need to be confident that there will be a minimum level irresponsibility. We therefore have before us a scheme of delivered energy savings. It would be tragic to miss devised by very clever and dedicated experts which is a great opportunity of being among the world leaders intended to guide, restrain and police the market. in engineering and manufacturing capacity on all this. However, I suggest that it is a scheme which is prepared There are the dangers of a dash for gas and the need to within the context of market fatalism and which, as ensure that non-generation, interconnected capacity the right reverend Prelate the Bishop of London said, and demand reduction can participate successfully in is beyond the comprehension of all but a small number capacity auctions, receiving a growing proportion of of mandarins, politicians and academics—a scheme capacity contracts. The indispensability of supply-side which has already been described by some as “theory capacity auctions invariably requiring independent, gone mad”. It is so remote from the cut and thrust of transparent and published evidence, which must at all real life and from basic realities in human behaviour times be robust, is becoming self-evident. that it is destined, I fear, to become a dangerous It will be important for the Government to pilot minefield of controversy between the different participants. multiple EDR schemes, including those designed for Conspicuously absent is any underlying driving concern households and small businesses, to ensure thorough for the regeneration of a public service ethic of and meaningful evaluation. It is vital for an independent responsibility—an ethic which has been repeatedly panel of experts to scrutinise strike prices agreed and systematically undermined for the past half century, between government and investors before contracts and an ethic without which we shall always be in are signed. There is still a need to establish the real trouble. Long-term sustainability, environmental issues, total cost of transmitting electricity from planned care for qualitative, aesthetic and scenic dimensions of large-scale wind power installations in remote areas any civilisation worth the name, climate change and to consumers and the economic viability of such projects. security all make the ethic an imperative. Let us take, for example, the issues raised by the 179 Energy Bill[18 JUNE 2013] Energy Bill 180 escalating cost of the Beauly-Denny overhead transmission secured on the basis of direct or indirect subsidies that line. This was originally estimated at £330 million but are not available for the development of other technologies. it is already thought to be costing £557 million or It is also deeply disturbing to be entering into a new more. There are lessons to be learnt, especially about phase without yet having convincingly demonstrated the crucial importance of proper scrutiny, the proper how lethal waste, with all its hazards and acute dangers consideration of options and the pitfalls of fast-tracking. for our children and grandchildren and for very many It is imperative to take peat lands fully into account generations ahead, is to be resolved. The recent saga in in calculating targets for greenhouse gas emissions Cumbria has surely underlined beyond doubt the urgent reduction. There is the imperative of debarring new requirement for a convincing, transparent and prioritised grid systems from being routed through national parks report by highly qualified independent experts on the and areas of outstanding natural beauty. Where they most suitable and least hazardous sites in the UK. are to be adjacent to these priceless assets, let alone—God This will be for extremely long-term waste disposal. It forbid—within them, it is imperative to place them will have to cover geological suitability, climate change underground or under the sea. Equally firm provisions and its consequences, security and other key factors. are required on all forms of energy construction Meanwhile, the existing highly dangerous waste is and infrastructure. The national parks and areas of standing in the open. Radioactive birds and insects are outstanding natural beauty must be exempt from multiplying. The acute dangers of terrorism, and now permitted development rights granted for renewable drones, remain. Time is not on our side. Urgency is energy infrastructure which is likely to have a significant paramount. impact on landscape—for example, wind turbines. On the face of the Bill there should be targeted and 5.42 pm clearly identifiable responsibility for removing installations The Lord Bishop of Hereford: My Lords, as others and infrastructure when they become surplus to have said, there is much to commend in the Energy requirements or obsolete. The continued indispensability Bill, which proposes significant and welcome changes of the visual amenity allowance introduced by Ofgem to create an energy sector fit for the 21st century, not to fund the undergrounding of existing distribution least the reforms to the electricity market and the lines should be underlined, as indeed should be the attention paid to domestic tariffs. However, there are implementation of National Grid’s research findings some glaring omissions, which seem to present an that the allowance recently introduced for transmission opportunity missed. I regret that the Bill does not put lines should be doubled. There is a need for strengthened into law a requirement on the Secretary of State to set financial incentives, such as grants, payment tariffs, decarbonisation targets for the electricity sector. The green taxes and charges for the adoption of low-carbon reasons have been debated in the other place and there technologies, coupled with strengthened penalties for have been references to it in your Lordships’ House, unsustainable practices. but I would be grateful if the Minister would comment It is surely essential to tighten emission performance on simply leaving it as a power and not making it a standards still further than is envisaged at present. I requirement, a point raised by so many others. am certain of the indispensability of more research Furthermore, it seems to me that to have phased into new forms of renewable energy, not least those targets would be a benefit. There has been debate that would be appropriate for national parks and about even the 2030 target, but that is many years areas of outstanding natural beauty. The current pilot away. Given our five-year electoral cycles, I would to test the potential for underwater tidal energy generation have more confidence that we would address seriously in Pembrokeshire is very important, as indeed is the the 2030 target, let alone the 2050 target, if we were to promotion of mini hydro-generation schemes for villages give ourselves graded and stepwise targets along the and hamlets. There is a need to take the potential way, and certainly a requirement that there be at least contribution by geothermal heat far more seriously a 2030 one. than, quite inexplicably in my view, we have so far done. Given the focus on decarbonisation, I am surprised Whatever we do on energy legislation and policy that there is not more emphasis in the Bill on nuclear. should always have, as a non-negotiable principle, a The noble Lord, Lord Judd, has just referred to it in determination to avoid scarring the unique and special relation to waste products and some of the risks—I inheritance of our countryside and open spaces. These will say something about those in a moment. It saddens are essential for our national morale, spiritual regeneration, me that the newly suggested body, the Office for psychological stability and physical and mental well-being. Nuclear Regulation, is to be given tasks focusing only This should be clearly reflected in the Bill. If ever there on safety and security. Those are, of course, crucial, were a sphere of life in which an effective, comprehensive and nobody questions that. However, it leaves aside and clear-cut national plan, with detailed provision many of the other dimensions of the nuclear option for delivering its objectives, is essential, energy is exactly that I think we so greatly need. We need, not least, that. Social justice demands that it is not the already more money for research and development, and we deprived and relatively less influential sections of our need government investment. There has been a great nation that are, in the end, landed with the heaviest deal of talk from other noble Lords who know far burden of all the paraphernalia of energy production, more about the economics than me, and about the way distribution and maintenance. in which a decarbonisation target would itself help to Before I conclude, I will just say something about lever in private investment. If we are to have investment the nuclear dimension. If we are to go ahead with in nuclear energy, with further middle and longer-term another phase of nuclear energy, it must be justified by aspirations, it seems that without a government convincing economic analysis, and it must never be commitment, private money is less likely to follow. 181 Energy Bill[LORDS] Energy Bill 182

[THE LORD BISHOP OF HEREFORD] money which could be put back into the research and It is worth reflecting, perhaps, when we consider development that originally enabled some money to nuclear energy in relation to our decarbonisation targets, be released. More of that is needed for us to be able to that to produce 1 gigawatt of electricity, which would walk this path with greater confidence. power a city of about 1 million people, would take Reference has already been made, not least by my 3.2 million tonnes of coal, which itself would produce noble friend the right reverend Prelate the Bishop of 8.5 million tonnes of carbon dioxide—to say nothing London, to reducing the energy demands. A number of 900,000 cubic feet of toxic waste. Noble Lords will of other noble Lords have spoken about Clause 37. I, not be surprised to hear that, by contrast, those 3.2 million too, would encourage that. As well looking at reducing tonnes of carbon could be produced by 200 tonnes of our carbon footprint from energy, we also should look uranium or 1 tonne of thorium. The green arithmetic to complete the circle through reducing our carbon is not too difficult for us to understand. That alone, footprint by reducing our demands. notwithstanding what the noble Lord, Lord Judd, The number of lights switched on in the House has said, should surely justify putting more money into been mentioned. It may seem rather a small matter in our nuclear research. comparison with the rather grander and much greater Back in 1975, nuclear fission research and development issues in the Energy Bill, but taking small steps as received about £450 million a year. The figure reduced individuals would have a cumulative effect as well a bit in 1980, and I believe that the current levels of as give a lead. I would couple the comment about the investment are only 7% or 8% of the 1980 levels, let number of lights that are on with the fact that it alone the 1975 heyday. Sir John Beddington, until always amazes me that our printers are not set to a recently, as Members of the House will be all too well default mode of double-sided printing. We can make aware, our government Chief Scientific Adviser, said little steps. If we can get into that mindset, there would that he could not see a future for UK energy without be a cumulative contribution and effect, even if it nuclear energy. It is currently producing about 18% of seems rather removed from the arithmetic that we are our energy needs, and he anticipated, as others have, mostly addressing in this debate. that it could rise to well over the 80% that we are already Noble Lords have also spoken about fuel poverty. I seeing in France. It may be 86% here but, of course, want to close by saying that I regret that this legislation this cannot be achieved without research and development is not bolder in addressing the inequality of domestic funding. It needs the Government to lead on that. It energy tariffs. The Government go some way towards needs a joined-up approach, not just in government addressing the complex and impenetrable tariffs that money but in our national nuclear laboratories, which consumers face today, which is to be commended. I would love to see become national again. It also However, I am not confident that this sufficiently needs a joined-up approach involving the NNL, as addresses issues of fuel poverty. Members of the House well as our universities, and the encouragement of our are well aware that those who pay the most for their own industry in its development and research, both domestic energy are often the poorest in our communities. here and indeed overseas. John Beddington also said: Many of those in fuel poverty pay inflated prices “Clearly I think that if we’re going to be thinking about a through the meters in their homes or are paying for significant expansion of nuclear capacity as we move toward our goal in 2050 of an 80 percent reduction in greenhouse gas other types of fuel, which are not addressed in this emissions, we need to keep options open … And part of those legislation. Is the Minister able to assure the House options is … having the R&D to think about taking it forward”. that the Government will address these wider issues, There is reference in the Energy Bill’s summary so that those currently experiencing fuel poverty can impact assessment to decommissioning, which, I pay a fair price for their energy? understand, takes currently about 69% of DECC’s EDF recently said that it will have one domestic £2.3 billion a year. Our own view about decommissioning tariff if other energy companies follow suit. I understand is remarkably negative in that we see all the waste that Ofgem does not recommend this as a way forward. products, to which the noble Lord referred, only as It may be right. As we debate this legislation in this waste. I do not think we have enough confidence yet House, I hope that we will take the opportunity to to see them also as an asset—as a fuel. It will be quite send a clear message to Ofgem and the energy providers possible to use some of the plutonium in MOX reactors, that the pricing structure needs to be fairer, more with both uranium and thorium reactors, to make the transparent and clearer. I wonder whether this debate waste into a fuel and make it an asset rather than a also offers the opportunity to discuss again the possibility liability. Exploration of that is urgently needed. I of setting a legal framework that requires domestic understand that this is happening in Canada and customers to pay more the more energy that they use. certainly in China, to which much reference has been The current position whereby the more energy I use at made. Indeed, India, to which little reference has yet home, the more likely my tariff is to reduce, is surely been made, is also investing huge sums of money in unsustainable. There is a cost to the earth and to the precisely these routes and these options. I ask again poor of the world who are most impacted by climate whether the Minister would give consideration to that, change as a result of our energy consumption. Surely and whether a wider brief could be given to the new the Bill provides an opportunity to reflect the wider body that will be set up. costs of all our energy habits. We need, therefore, to change our mindset as well as put money into research and development. If we 5.53 pm were able to make some waste into an asset and use Earl Cathcart: My Lords, I should like to start with it for our nuclear fuels, perhaps that would help to the assumption that the Government’s primary objective reduce the decommissioning budget. It could also release for energy must be to ensure that it is available and 183 Energy Bill[18 JUNE 2013] Energy Bill 184 affordable. Self-sufficiency, sustainability, energy security Recently, my right honourable friend the Prime and green energy are equally admirable aims but they Minister, making a speech about Britain being in the are in my opinion secondary to the primary objective. global race, said that one goal is to make Britain It is no good achieving any of these secondary objectives one of, if energy is not sufficiently available or affordable. “the top five places in the world to do business”. This is an ambitious Bill and I wish for a successful Quite so, but probably not for those industries heavily outcome but I have three areas of concern. My first, reliant on fuel, especially as fuel prices in America—with shared by the right reverend Prelate the Bishop of its shale gas—China, India and no doubt others are Hereford, is the alarming number of households in already half of ours. Let us hope that our fuel prices fuel poverty: 4.5 million, or nearly one in five households. do not drive any industries heavily reliant on fuel away This is appalling, if not embarrassing, for one of the from Britain. I hope that the Minister can reassure me richest countries in the world. We are being told on this. constantly that there is no easy solution because if the This brings me to my third concern. With these present tariff system is changed it may put vulnerable huge changes proposed by the Government, have the households in a worse position. So, nothing is done. Minister and her department done the sums to ensure I would say, “Where there’s a will, there’s a way”. that there will be sufficient power available for all our Unfortunately, there does not seem to be the will. needs until such time as all the new proposed power High fuel poverty probably has something to do stations are up and running? Is there a margin of error with the fact that fuel prices have doubled in the past built into their calculations? What concerns me is that seven or eight years. That brings me to my second the Government are relying on nuclear to be a major concern. If fuel prices have doubled in the past seven part of the new mix, but the Government have yet to or eight years, what will happen to them over the next agree any contract with EDF, which, worryingly, is the seven or eight years? Some experts have argued that only player in the field. they expect them to double again, which no doubt Obviously, we hope that the new power stations go would exacerbate fuel poverty.I hope that the department ahead, but if they do it will take at least eight years, has done its sums and that the Minister can reassure if not more, before the first is commissioned. What me that prices will not double. I am quite sure that happens between now and then, especially as we will prices will go up but the question is, by how much? be taxing our existing coal-fired power stations out of The Government’s aim is that our energy will come existence before we have secured any deal with EDF? from nuclear and renewables, predominantly wind If agreement with EDF cannot be reached, is there a turbines, with gas as the back-up. Energy from wind is plan B? I am sure that some of these topics—fuel more expensive than that from fossil fuels, and offshore poverty, energy prices over the next seven or eight wind generation is more expensive than onshore wind. years and the possibility of a shortfall in energy during Also, the cost of building nuclear power stations is that time—will be raised in Committee. I look forward enormous but the Liberal Democrats will allow them to the Minister’s response. to be built only if they receive no subsidy from the taxpayer. Therefore, this huge cost of construction will no doubt be passed on to the consumer. Two 6.01 pm of our coal-fired power stations have already closed Lord Berkeley: My Lords, along with many other and the Government aim to tax the remaining ones noble Lords I welcome this Bill and think it needs out of existence. Until they finally close, no doubt support, but there does appear to be quite a lot wrong they will recover this tax charge by passing it on to the with it. It is going to be difficult to scrutinise. It seems consumer. that every clause refers to regulations yet to be identified. There is something here that I do not understand. I have checked the Bill and its schedules, and the word We are taxing our coal-fired power stations out of “regulations” appears 403 times. I do not know whether existence—admittedly they are quite old—no doubt that is a record, but it is not going to be easy to because of an EU directive, while India and China are scrutinise this legislation if it has 403 regulations. planning to build 800 new ones between them. I know However, it demonstrates the need for us to be given a that China also has huge investment in nuclear and lot more detail if we are going to do our job properly. renewables but, all the same, it is still a huge investment My noble friend Lady Worthington asked for some in coal when we are scrapping ours. If it is because of details before we get to Committee, but it would be a directive from the EU, why is it that Germany is to useful if the Minister could tell us when we are going build 20 new coal-fired powered stations? Will Germany’s to get information about the regulations. 20 new coal-fired power stations be required to have I am going to concentrate my remarks on the carbon capture and storage built in, or not? If not, industry structure, but before I do so, it is important to why are we taxing ours out of existence? I just do not support my noble friend Lord Judd, the right reverend see the logic. Prelate the Bishop of Hereford, and many others who Getting back to my concern, I do not see how have emphasised the need for greater support and prices will not continue to increase, which will further encouragement for reducing energy consumption. We pile on the agony for those already in fuel poverty and seem to have incentives to meet demand with supply; increase the number of households getting into fuel I think that is wrong. We should have incentives to poverty. However, it is not just households: what will reduce demand. It is the same with water. Why are the these rising costs do to the competitiveness of British water companies not installing meters to reduce business and industry, especially those few industries consumption and plugging the leaks? London is one that are heavily dependent on energy? of the worst offenders but, of course, they make more 185 Energy Bill[LORDS] Energy Bill 186

[LORD BERKELEY] are not going to hang on waiting for a decision for money that way. We really need to change our policies ever. Whether it is in this Bill or elsewhere I do not because there are good environmental reasons for know, but it needs to be done soon. reducing the supply of both water and electricity, and The real problem is that the market structure that thus reduce demand. we seem to have ended up with is wrong. The big six I am both interested in and worried about the generators also have retail ability. The Government negotiations with EDF on nuclear power stations policy is to deliver somewhere between 35% and 50% because we have a single supplier looking for some of generating capacity by independent renewals, which kind of firm contract for 20 or 30 years. I wonder entrenches the dependency of the independent renewal whether these are what one might call balanced energy generators on the large vertically-integrated commercial negotiations: a single supplier and a single utilities through long-term power purchase contracts. customer in the Government. The Government are up That is the big six. My understanding is that the against probably the best international negotiators in problem for the independent retailers is that the big six the world. I compare that with what went wrong a will buy from the independent generators only if they year or so ago with the West Coast Main Line negotiations cannot supply themselves. Therefore, the big six retailers on the franchise when Virgin exposed a number always buy from their own generators as long as they of serious mistakes in the Government’s handling of have the capacity; otherwise, they buy from the them. It is probably true to say that one of the causes independents. Apparently it has very little to do with was that soon after the general election, the then prices. Perhaps the Minister can put me right on this, Secretary of State announced with glee that 30% of but I am not sure how the independent generators the civil servants were to be sacked and that they were have the comfort of an open market, which they need not allowed to take any external advice, particularly to attract investment. legal advice. Therefore, it was a contract—rather larger The problem is vertical integration, which means than the contract to build one of our aircraft carriers, that the generators are also able to retail. In my book, which I think is taking place at the moment—between it promotes monopolies, higher costs and poor services. a civil service that had lost a large number of its best It happens on the railways, which I follow a lot. On the staff and was not allowed to take external advice, and railways, the Government’s policy, which I fully support, an international company that probably has some of is a total separation of the train operators and the the best lawyers in the world. I hope that that does not infrastructure manager. Youcannot have fair competition happen this time, but I do not have much confidence on the railways if the train operator also runs the that it will not. If we do not get it right, the customers infrastructure, and the same applies to electricity. Vertical are, quite frankly, going to be screwed for the next five, integration is wrong. It means that the market does 10 or 30 years. not work properly. I turn now to biomass. I have been looking into this I have information that similar things have happened quite a lot because it seems to be the short-term in Germany, where the market does not really work. It solution to the energy problem which the Government has four big suppliers and there is not much competition are proposing, and certainly before the nuclear power at the consumer end, although it depends on which station gets up and running in 10 years’ time—if we part of Germany you live in. However, the big four do get it. As noble Lords will know, biomass requires a very nicely and prices are high. It is interesting that the large investment. For Drax and Eggborough, two of German Government are doing their best to make the power stations doing it, it has certainly been a big sure that that the vertical integration model still applies investment: there is the plant, the special handling to the railways across Europe, so they clearly know facilities and the trains—I was involved as chairman something, but I hope we do not have to continue with of the Rail Freight Group. One possibility is to import it in the UK. There is a serious risk to investment by biomass from north America into Milford Haven, the independents, as the noble Lord, Lord Teverson, which has some of the deepest water in the UK, and said, and I question what Ofgem is doing about it. I that will need 42 trains a day. That is a big investment, thought Ofgem had a duty to protect consumer interests plus all the handling equipment at both ends and, of but, as it stands, this seems to be a Bill to allow the big course, the ships. six to print money, which I am sure they will love. I do I understand that Drax and Eggborough together not see much competition. I see higher prices than will produce somewhere between 8% and 10% of our there would need to be if there was a functioning capacity. If the agreement with the Government on market. the selling price for electricity which is contained in In the course of scrutinising the Bill, I hope that this Bill does not go ahead, the investment will not go we will discuss how to break the dependency of the ahead. I also understand that this biomass negotiation independent generators on the large, vertically-integrated cannot be completed until the nuclear one is completed. utilities for long-term contracts. That would send a What is going to happen next winter and the one after clear price signal to the market that would encourage that? According to Ofgem, last winter we had 15% as many new entrants as possible to participate. It spare capacity over demand, but apparently this coming would enable them to sell their power in an open winter it is going to go down to 3%. If Drax and market rather than coming second to the big six once Eggborough do not go ahead, I think we will need they have got rid of their own electricity at whatever some candles; it is going to be quite serious. I hope price. Otherwise, the independents will not be able to that the Minister can tell me what the timescale is for invest and we will be looking at such a reduction in the nuclear negotiations and for any relating to biomass supply that I suggest we all go out and buy candles for because I think we ought to know. These companies next winter. 187 Energy Bill[18 JUNE 2013] Energy Bill 188

6.12 pm of costs, particularly by making more efficient use of renewable energy. This view was strongly endorsed Baroness Parminter: My Lords, like others, I welcome by the recent report of the House of Lords EU Sub- the Bill. It is critical that investment in the energy Committee on Agriculture, Fisheries, Environment sector is procured and any policy inertia or uncertainty and Energy on European energy policy. now will have a crippling effect on delivering that, securing the energy we need and meeting our legally Levels of interconnection between the UK and binding carbon reduction targets. It is the only sustainable mainland Europe are much more limited than, for way to help keep energy affordable for hard-pressed example, the 20-30% of interconnection between Belgium consumers. and the Netherlands. I applaud the Secretary of State for the recent memorandum of understanding with It is naïve to think that policy makers can control the Irish Government to trade renewable energy but price volatility but action can mitigate its impacts, there are outstanding barriers to better interconnection. particularly those of volatile fuel supplies. Customer Ofgem has highlighted the problem of congestion in bills are likely to increase long term if we do not the south of England which would require the existing develop a clear policy framework to ensure adequate onshore grid to be strengthened to accommodate major investment in low-carbon sources. trade flows. This is about bills and about jobs. The CBI recently The full benefit of interconnection can be delivered reported that in trying economic times the UK’s green only from greater deployment of high voltage direct businesses have continued to grow in real terms, carving current lines which allow electricity to be transported out a £122 billion share of a global market worth over long distances economically. The Bill does not £3.3 trillion and employing close to 1 million people. say anything about the potential of interconnection, We have heard today from some climate sceptics—one or how necessary grid strengthening can be financed particularly vocal noble Lord is no longer in his place—but or, as crucially, how public support can be gained for they are in a minority in this House and around the significantly higher pylons than are currently used. I globe. It is interesting that in the United States some hope that in Committee we seek clarification from the of the strongest climate sceptics, including Karl Rove, Government on their policy intentions on interconnection, support government initiatives for renewable projects, on overcoming the barriers to building up the European such as wind energy credits, given that wind power electricity grid and on enabling Britain to benefit from generates well paying, desirable jobs in rural areas. It is increased security of supply. also seen as a cost-effective insurance against the There is much to be welcomed in the Bill but I am growing number of climate change disasters. Insurers disappointed that it is a vehicle to provide public said that last year was the second most expensive in subsidy for the nuclear industry. Nuclear may be low American history for disasters related to climate change, carbon but that fact cannot hide the astronomical costing them $139 billion. However, private insurance costs of building—and, indeed, decommissioning, as paid only a quarter of those costs, leaving taxpayers to the right reverend Prelate the Bishop of Hereford ably cover the rest. As the Economist highlighted last week, pointed out—nuclear sites or the failure, after 60 years, by comparison, funding renewable energy properly to find solutions to storing high-level radioactive waste. seems rather cheap. That was the point that my noble All this on top of the fact that the British taxpayer is friend Lord Deben, who is not in his place, made liable for any clean up of a major nuclear accident. earlier in stating that this Bill is UK plc’s insurance Corporate liability for any nuclear accident is capped policy. at around £1 billion—a derisory sum given that the The majority of us accept that the Bill is right to estimated total clean-up costs for the Fukushima nuclear introduce a capacity mechanism that seeks to ensure accident are likely to top £160 billion. domestic security of energy supply. It is also clear I wish the Bill well, but as we are not an energy around the House that there is a majority in favour of island a strong European energy policy framework is demand side response measures. Like others, I am critical. I commend the Secretary of State for his pleased that that issue was addressed on Report in the leadership in Europe and for arguing strongly for a other place through the introduction of an amendment binding emissions reductions target of 50% on 1990 for a pilot scheme for electricity demand management. levels by 2030 in the context of an ambitious global However, given the limited opportunity to scrutinise climate deal. Such leadership will be aided by the these demand management proposals, I add my voice successful passage of this Bill and help move us to the near unanimous number in this House who have towards the all- important global climate deal in Paris called for a close scrutiny of the proposals in Committee. in 2015. I support the call made by a number of my noble friends and noble Lords on the other side of the Chamber for more than one pilot scheme to be a critical part of 6.19 pm the Bill. Lord Davies of Stamford: My Lords, I always listen There is one difference between myself and my to the noble Baroness, Lady Parminter, on these subjects noble friend Lord Deben, who is not in his place, in with great interest and respect. She has great command that I would not say that sovereignty is the only means of the subject. I think what she said about interconnection of ensuring energy security. Yes, it is important, but it was a very valuable contribution to the debate. is not the only means. Measures better to exploit the I do not think that anyone who has read the report benefits of co-operation with our European neighbours of the noble Lord, Lord Stern, published a few years through interconnection are omitted from the Bill. ago, or least of all who, like me, has seen the dramatic Greater interconnection could help with the reduction retreat of glaciers in the Alps and the Himalayas 189 Energy Bill[LORDS] Energy Bill 190

[LORD DAVIES OF STAMFORD] 20%. It was 25% a few years ago. If the proportion evidenced in photographs taken only 50 years ago, can does not go up to 80%, as the right reverend Prelate be in any doubt at all about the reality of climate would like, I would certainly want to see it above 25% change and the challenges we face. very rapidly and it should be 30% or 40%. I see the purpose of this Bill to provide the country If I asked the Government why we do not build with a diversified and secure basis for future energy 20 new 1.6 gigawatt nuclear stations rather than 10—they supplies on the one hand and to achieve our international have not got round to signing a contract for one obligations on decarbonisation on the other. I totally yet—they would probably give two answers. I have support both objectives and I certainly will be voting never asked them so I am probably putting words into for the Bill on Second Reading in the very unlikely their mouths. First, they would say that it would be event that there is a vote. inordinately expensive and, secondly, that there is very However, there are at least four respects in which I limited appetite in the private sector for this type of very much disagree with the Government’s approach risk. This has been demonstrated by the difficulty they to energy, and I rather think that the noble Baroness, have had in getting people to bid for their business in Lady Parminter, has persuaded me to add a fifth to my this context already. The two German potential partners, list: the need for greater investment in interconnection. E.ON and RWE, have walked away. First, this Bill does not require the Minister to produce The Government have produced this situation by a decarbonisation target. In this respect, I totally agree their own errors. They have adopted the wrong model with the right reverend Prelate the Bishop of Hereford for nuclear generation—one that is based on misallocation and others who have said that this Bill should be of risk and which consequently is unnecessarily and prescriptive and not permissive on this point. Secondly, excessively expensive and deters potential private sector I am very disappointed that the Bill says nothing about investors. The risk of design, construction and operation demand reduction. I have yet to hear the Government should be borne by private sector investors and set out their strategy quite clearly on that. Certainly I contractors. It is vital that the same partner is responsible cannot find such a strategy in this Bill and we definitely for all three so that design and construction are informed need it. at every stage by the need for maximally safe and My third problem with the Government’s energy efficient operation. That is clearly a role for a contractor, policy is that we have made a probably excessive but the Government are quite wrong to think that it is commitment to wind power, certainly to offshore wind better for the private sector contractor to manage the power. It seems to me that the Government, under commercial risks involved. pressure from their Back-Benchers, are using the planning The Government have already retreated and accept system to stop more developments of onshore wind now that the counterparty for contracts for differences power and are pushing it all offshore. However, offshore must be a single counterparty backed by the state. is an extremely expensive form of energy and it does Previously they were saying that the generators could not make any sense at all. The usual comparisons are just deal with the suppliers in an open market. They that the cost of nuclear energy is somewhere between got that completely wrong. They have realised now 6p and 10p per kilowatt-hour and offshore wind power that they have to take back that risk for the Government, is somewhere between 11p and 16p, which is about so they have already accepted the logic of my argument. twice as great. However, you are not comparing two However, there are many other respects in which comparable things. Wind energy is not base load. It is commercial risks are better handled by the Government. not even a reliable peak load that you can turn on and For example, anything to do with network risk, the off as you require, which you can with a combined-cycle, failure of the system, and difficulties with suppliers or natural-gas-fired, thermal power station. It is extremely distributors or anything of that sort is probably better expensive for something that is not that valuable. handled by the Government as they have the means to I think we have gone perhaps too far in that direction. intervene. My real quarrel with the Government is about If there were a shortage of uranium in the world—very nuclear power. What they propose is not in any way unlikely at present but we are talking 60 or 70 years adequate. I would not go quite so far as the right ahead—the Government are much better able than a reverend Prelate the Bishop of Hereford who wants to private sector contractor to deal with that. We have see 80% of our electricity generated by nuclear fission. our own sources of uranium. I speak as the former That is, as he rightly said, the case in France. That is Minister responsible for the Atomic Weapons Research going quite far and would deprive us of the potential Establishment. We have international agreements and quite considerable advantage of benefiting from shale so forth. There are many respects in which the state is oil fracking to produce gas in the future. It looks as better able to handle those risks than a private sector though gas prices are going to come down quite body. dramatically as a result of that. We have large reserves Some risks have already been mentioned. The noble in this country and it would be a pity to give up that Baroness, Lady Parminter, referred to one of them, bonanza. which the taxpayer or the energy consumer cannot What is more, for the reasons I have just mentioned, walk away from anyway. For example, there are the there are advantages in flexibility in having in your risks of an accident costing beyond £1 billion and the portfolio a considerable degree of capacity from risks of decommissioning. It is all very well to say that combined-cycle natural gas generation as well as nuclear. a contractor has to make provisions. Under the contracts It is very alarming that the proportion of our electricity that have now been negotiated he will have to provide produced by nuclear fission has now fallen to below for the costs of decommissioning, but who knows 191 Energy Bill[18 JUNE 2013] Energy Bill 192 what they are going to be in 60 or 70 years time, or we might have had to build much greater nuclear what the value of the fund accumulated in EDF Energy capacity. That is a great mistake and we should look or any other contractor will be by that time. Again, in very critically at what the Government come up with practice the state will be standing behind those risks in energy policy because, up till now, they have shown and reinsuring them. There will be a contingent liability something very much less than the competence one on the state. would like to see. What does all this mean? If you construct a model 6.30 pm on that basis, you are passing to the private sector risks that it can less efficiently manage than you can Lord Browne of Madingley: My Lords, I declare my yourself. Therefore they are going to cost more by very extensive financial and non-financial interests in definition. You are passing to the private sector risks, the energy sector, which are all set out in the Register some of which remain with you anyway, so you are of Lords’ Interests. I particularly draw your Lordships’ paying double for them. It is not a very intelligent attention to my position as partner and managing policy. The private sector contractor will factor in director at Riverstone Holdings, which manages several those risks in his costing, which will be very expensive. energy-focused private investment funds with stakes in What is more, because of the lack of competition in a range of UK-based and international companies. this business he will expect a very high profit and get Those companies operate at all stages of the supply away with a very high return, so the cost of capital is chain and in almost all energy markets. going to be extremely high. When the Bill was first published, I wrote that it With the long lead time in constructing nuclear was complex and that it introduced a range of new power stations, the cost of capital will be a major risks into the market, threatening to deter planned factor, if not the most important factor, in the total investment. Since then, some of my concerns have cost. The Government have created the problem of been satisfied. For example, the move to a single the extreme cost of this business. I will give a simple counterparty CFD is particularly welcome, and lends example so that noble Lords can do their own calculation. the financial instrument at the heart of the Bill a The impact assessment predicts a cost of capital of creditworthiness that it was lacking. There remain 10% for nuclear power stations. I think that might be a risks in the Bill, such as the danger that the new regime little less than the likely level. The cost of equity is will make it more difficult for smaller, independent vastly more than that, I would have thought twice that generators to sell their power in a market dominated at least. What the weighted average cost of capital will by large, vertically integrated utilities. Risks such as end up being I do not know. Take the 10%—do not that must be assessed carefully and adjustments made take any figures that I might suggest—that is used in if necessary. the impact assessment. That 10% is four times the I want to make two further points about the Government’s cost of capital—2.5% is the 10-year gilt Bill. The first concerns any amendment to add a rate at the moment. The Government are paying four decarbonisation target. In my experience as a businessman times more than they need. I think that is bad and investor, a decarbonisation target for 2030 would Government. It is a great mistake and they have gone have little impact. Decarbonisation is just a means to for the wrong model. the essential and, indeed, existentially important end of reducing carbon dioxide emissions. Companies do I am sure that if you put that to the Government or not listen or react to long-term political aspirations, to the Treasury, they will say that they could not have because there are too many technological, economic the state owning the stations and raising the finance and political unknowns for them to be taken seriously. from the gilt market because that would mean an increase in our total debt ratio, our debt to GDP ratio, The incentive structures contained in the Bill are far and cause us problems in the markets. That is very more important than targets or aspirations, because naïve. First, it means that we are paying a very considerable they are the mechanism for action. Only credible, price in economic terms for purely presentational consistent and creditworthy incentive structures can advantage; and, secondly, that argument depends on unlock the investment needed. Take carbon capture the markets being so stupid that they cannot look and storage, for example. CCS is a young technology through the presentation for the reality and do not which requires the state to underwrite some risk so actually know what is happening. that it is developed here in Britain. That will enable us to benefit in an even more environmentally sustainable Of course, the markets are perfectly capable of way from our abundant domestic gas reserves, which, doing that. The markets will factor in the contingent in any case, have a lower carbon footprint than imported liabilities of the state for the environmental risk that I gas. mentioned. They will factor in the contingent liability However, investment in CCS, gas or renewables will that the Government are now incurring in standing not come from a decarbonisation target. It will come behind the counterparty for contracts of difference. from simple incentive structures which allow different That is obviously a contingent liability in itself. That is energy technologies to compete on a level playing not a sensible answer; it is also a reflection of not very field, with their full set of externalities taken into intelligent government. account, and which are implemented reliably, transparently I fear to say that we have sold the pass on that. Of and quickly. It is therefore critical that the Bill is not course, we cannot go back to any other model for the subject to yet more delay from wrangling over a construction of those vital nuclear power stations, decarbonisation target. Uncertainty about the direction but we should be aware that by going down this road and speed of travel has been far more damaging to we have deprived ourselves of a lot of investment that investment than questions about the detail of policy. 193 Energy Bill[LORDS] Energy Bill 194

[LORD BROWNE OF MADINGLEY] electricity and asking people to replace gas with electric My second point concerns the broader strategic space heating. That can only drive more people into framework within which the Bill sits. Decisions fuel poverty. on energy policy and public investment in energy We have heard a lot about the needs of energy infrastructure are based on criteria which change investors and producers. We have not heard enough frequently, depending on the people in charge and the about consumers. If the industry gets an 8% return on priorities they decide to pursue. That has proven to be the £200 billion to be spent, just two offshore wind inefficient and damaging to investment in the North farms or one nuclear plant would be declaring profits Sea, for example, which has seen cycles of windfall similar to what British Gas declares today. That will taxes followed by tax breaks followed by more windfall be an uncomfortable position for the Government of taxes. There is no need to reinvent the context every the day. time an investment or policy decision is made. It would be sensible to set an overall strategy just once The Bill is a dash for wood and wind—two medieval and then make subsequent decisions with those long-term technologies—and it is twice as big as the dash for gas strategic goals in mind. of the 1990s. Between 6 and 9 gigawatts will have to be built a year for the next 16 years, compared with The London School of Economics Growth 2 gigawatts a year during the dash for gas. I am not Commission, of which I was a member with the noble sure it can be done, let alone affordably. In the case of Lord, Lord Stern, proposed an infrastructure strategy biomass, the only way we can source enough is by board to provide independent advice to policy-makers felling trees overseas. As the noble Lord, Lord Berkeley, about strategic priorities. That would not be a radical said, Drax will soon be taking more than 40 trains a innovation. It is the model followed by NICE, the day of wood pellets from North America. That is not healthcare body, and the Monetary Policy Committee. energy security. A panel of independent experts with knowledge, expertise and experience of the industry could consistently check Under the Bill, everyday decisions against the long-term strategy set “‘low carbon electricity generation’ means electricity generation by the Government. That would be enormously helpful which in the opinion of the Secretary of State will contribute to a in the energy sector, where different technologies and reduction in emissions of greenhouse gases”. fuels cannot be assessed in isolation. They are part Shades of Humpty Dumpty: a word means just what I of a system. Independent and expert advice could choose it to mean. We are being asked to pretend that help to turn a set of disparate and often conflicting the most carbon rich fuel of all, wood, is not a source energy policy decisions into a real energy strategy. In of carbon. According to Princeton University, trees this regard, I support the comments of the noble used for biomass electricity generation increase carbon Lord, Lord Oxburgh, and I hope that the Minister dioxide emissions by 79% compared with coal over will consider in her response whether that will deliver 20 years and by 49% over 40 years, even if you replant strategy. the forest. We are through the looking glass. We must judge the efficacy of the Bill by its results. Offshore wind, meanwhile, is a risky technology Success will come from higher quality investment from with a track record of engineering problems, sky- a diverse set of investors; investment in a greater range high costs, disappointing lifespan and problems of of energy sources, including hydrocarbons used for decommissioning. At the moment, we generate less power, such as gas and the encouragement of CCS; than 1% of total energy, or 6% of electricity, from respecting existing commitments, such as the phasing wind, despite all the damage it has already done to our out of coal; and an electricity price that maintains countryside and economy. We are to increase that the competitive nature of British industry. Those are to something like 30% in just a decade or so, may be the tests against which the Bill should be judged. We more if nuclear is delayed. It is a huge gamble, and if it have spent almost three years debating the structure fails, the only fallback is carbon capture and storage, a of this reform package. I believe that it is now time for technology that has repeatedly failed to meet its promises implementation and action. at all, let alone affordably, a point made earlier by the noble Baroness, Lady Liddell. 6.37 pm Even if this wood and wind dash is possible, under Viscount Ridley: My Lords, I begin by declaring an the contract for a different system proposed in this interest in coal-mining on my family’s property, as Bill, while better than the renewable obligations that detailed in the register, but I shall not be arguing for preceded it, the subsidy to renewable energy will quadruple coal today but for its most prominent rival, gas, in by 2020. That is only the start. On top of that, there which I have no interest. are system costs for balancing the unpredictability of I thank my noble friend the Minister for her courtesy wind; transmission costs for getting wind from remote in discussing the Bill and welcome the fact that the areas to where it is needed; VAT; the carbon floor Government have grasped the nettle of energy policy, price; not to mention the cost of subsiding renewable especially on the issue of nuclear power, after the heat and renewable transport fuels. Hence, at a conservative deplorable vacuum left by the previous Government. estimate, the Renewable Energy Foundation thinks However, I am concerned that we are being asked in that we will be imposing costs of £16 billion a year on the Bill to spend £200 billion, mainly on the wrong our hard-pressed economy for several decades. technologies, and that we will come to regret that. We Why are we doing this? We are doing this because are being asked to put in place a system that will of four assumptions that were valid in 2010 but, as my guarantee far into the future rich rewards for landowners noble friend Lord Lawson pointed out, are no longer and capitalists, while eventually doubling the price of valid to the same extent. First, we assumed we would 195 Energy Bill[18 JUNE 2013] Energy Bill 196 not be acting alone, so we would not damage our past 50 years and the best evidence from the top-of-the- competitiveness. Instead, not only is there no longer a atmosphere radiation about climate sensitivity are both Kyoto treaty, but China is planning to build 363 coal- very clearly pointing to carbon dioxide having its full fired power stations; India 455. On top of that, the greenhouse effect but without significant net positive European trading system has collapsed to less than feedback of the kind on which all the alarm is based. ¤5 a tonne of carbon. Our carbon floor price is more The noble Baroness, Lady Worthington, and the noble than three times that: £16 a tonne, rising to £32 a Lord, Lord Stern, both mentioned Professor Myles tonne in 2020 and £76 a tonne in 2030. Acting unilaterally Allen and they will be aware, therefore, of his recent in this way does not save carbon emissions. It paper, which found significantly reduced climate sensitivity. merely exports them and the jobs go with them. If that is the case, the dash to wind and biomass may Northumberland’s largest employer, the aluminium well continue to do more harm to the environment as smelter at Lynemouth, has closed with the loss of well as to the economy for many decades than climate 500 jobs, almost entirely because of carbon policies. change itself will do. The second assumption behind the Bill was that the However, leaving that on one side, as my noble cost of gas would rise, thus making the cost of energy friend Lord Lawson said, the argument against subsidising rise anyway. The Committee on Climate Change said wind and biomass does not depend on a benign view recently in a report that: of climate change. It stands powerfully on its own “Consensus projections are that gas prices will rise in future”. merits, even if you think dangerous climate change This remark has been described by the utilities team at is imminent. In 1981, my noble friend Lord Lawson, Liberum Capital as “genuinely amazing” in the light ignoring the prevailing wisdom of the day, as he of recent events. Now that we know that gas prices sometimes does, decided against the predict-and-provide have plummeted in the United States to roughly one- central planning philosophy and instead embraced the quarter of ours, thanks to shale gas; now that we idea of letting the market discover the best way to know that Britain probably has many decades worth provide electricity. The result was the cheapest and of shale gas itself; now that we know that enormous most flexible energy sector of any western country. reserves of offshore gas near Israel, Brazil and parts of We have progressively turned our backs on that. Africa are going to come on line in years to come; now Under this Bill, the location, the technology and the that we know that conventional gas producers such as price of each power source is determined by one Russia and Qatar are facing increasing competition person—the omniscient Secretary of State. Recent from unconventional and offshore gas; now that we occupants of that position have an unhappy history of know that methane hydrates on the ocean floor are not making wise decisions. Remember ground source more abundant than all other fossil fuels put together heat pumps? They do not work as advertised. Remember and that the Japanese are planning to explore them; in electric vehicles? They have been a flop. Remember short, now that we know we are nowhere near peak biofuels? They have caused rainforest destruction and gas, it is surely folly to hold our economy hostage to hunger. Remember the Green Deal? Must we go on an assumption that gas prices must rise. making these mistakes? We will need the gas anyway. The intermittent We have returned to a philosophy of picking winners, nature of wind means that we will require increasing or rather, from the point of view of the consumer, of back-up and we cannot get it from nuclear because it picking losers. Not even just picking losers, but hobbling is not responsive enough to fill the lulls when the wind winners, because of the obstacles we have put in the drops. Far from replacing fossil fuels, a dash for wood way of shale gas. America has cut its carbon emissions and wind means a dash for gas too, only this time we by far more than we have, almost entirely because of will have to subsidise it because the plants will stand shale gas displacing coal. By pursuing a strategy that idle for most of the time and pay a rising carbon floor encouraged unabated gas, we could halve emissions price when they do operate. Having distorted the and cut bills at the same time. Instead, I very much markets to disastrous effect with subsidies to renewables, fear we will find we have spent a fortune to achieve we are now being asked, under the capacity market neither. mechanism, to introduce compensating countersubsidies to fossil fuels. 6.47 pm The third assumption was that the cost of renewables Viscount Hanworth: My Lords, this Energy Bill is would fall rapidly as we rolled them out. This has the product of economic doctrines that have misled proved untrue and, indeed, as the Oxford Institute of a generation of Conservative politicians and have Energy Studies has shown, the cost curve for renewables penetrated deeply into the Civil Service. For a while, inevitably rises as the best sites are used up, not least in they also strongly affected the thinking of Labour the North Sea. I am told by those who work in the politicians. The project of energy market reform, which offshore wind industry that, at the moment, the industry the Bill promotes, is an ongoing attempt to subject the has every incentive to keep its costs up not down, as it circumstances of energy production and supply to sets out to strike a contract with the Government. the nostrums of free market economics. They will not have to try very hard. Even at low The project is being pursued in circumstances that estimates, offshore wind is stratospherically expensive. have been strongly influenced by a previous ideologically The fourth assumption on which this Bill is based motivated reform, namely the privatisation of the was that the climate would change dangerously and country’s electricity industry that occurred in the closing soon. Once again, this assumption is looking much years of the Thatcher Administration. The doctrines shakier than it did five years ago. The slow rate at in question derive from the ideology of neoclassical which the temperature has been changing over the economics, which envisages a world composed of perfectly 197 Energy Bill[LORDS] Energy Bill 198

[VISCOUNT HANWORTH] power generation. This mix would be discovered by competitive agents operating in free markets, which the market, as if by the operation of a hidden hand, are devoid of government interference and regulation and the outcome, according to the theory, would be an and have been purged of state monopolies. In this optimal one. In my opinion, this is an absurd idea. The world, efficient financial markets operate in such a costs and benefits of the various technologies in question way as to ensure that investment projects, with very have very different profiles through time. Notwithstanding different profiles of costs and benefits, can be placed the hypothesis of efficient markets, these incommensurable on an equal footing. In effect, future costs and benefits futures cannot be mediated solely by commercial and are to be discounted by a factor that declines as one financial transactions. Instead, they should be determined advances into the future and is directly related to the in the light of some careful strategic planning. Indeed, market rate of interest, which is the reward for lending the markets have no perception of the future, other money. than as an aggregate of the dim perceptions of the The resulting discount factor may be equated, in majority of their agents. theory, to the marginal social rate of discount—if one Gas-powered electricity generation has the shortest is prepared to postulate such a thing—but some believers of the time horizons and, for that reason, it accords are keen to assert that there is no such thing as society. best with the short-term preferences of financial and However, a basic proposition of the doctrine, which commercial markets. Its capital costs are the lowest must surely be rejected in the context of a national and its running costs are the highest. However, an energy policy, is that public investment can and ought imponderable aspect of this option is the future price to be evaluated according to the desiderata that govern of the fuel. There are some highly contradictory private and commercial investment. By adhering to predictions of what will eventuate. There are anxieties this proposition, one is bound to favour short-term about the security of supply given that, at present, the commercial gain at the expense of long-term social principal sources are in Russia and the Middle East. benefit. The actual world is not the ideal world that There is also an expectation of rapidly rising prices in neoclassical economics envisages—and it never will the face of an increasing world demand. On the other be—but the proponents of the ideology pay scant hand, it is observed that gas prices in the US have been attention to realities. When the opportunity arises and falling in consequence of fracking. The optimists imagine whenever they are in a position to do so, they are liable that an ample supply of shale gas can somehow be to attempt to make the reality conform to their idealistic magicked out of the ground on which this nation visions. stands to replace the depleted supplies of North Sea The free market ideology suffuses the Bill but, as gas. time has passed, some of the more implausible aspects Those sceptical of the reality of climate change, of its original design have been amended and obscured. who include the Chancellor of the Exchequer, also I shall begin my critique by looking at its central envisage the exploitation of Arctic oil and methane, concept, which is a contract for differences to be the supplies of which are presently uncharted and applied to the price of electricity. This terminology undiscovered. For them, the discovery and exploitation has been borrowed from financial markets, where a of ample supplies of hydrocarbons is an exciting prospect. contract for differences is a financial derivative designed For the rest of us, who constitute the majority, this is a to indemnify the party who has purchased it against terrifying prospect. the effects of fluctuations in the price of a financial The second technology to be reviewed is that of asset, measured as departures from a so-called strike wind-powered electricity generation. Here, the capital price. The writer of the contract is described as the costs are high, but the energy that drives the windmills counterparty. is free. However, the power supply of windmills is The Bill originally envisaged a multitude of intermittent and must be balanced by a compensatory counterparties, constituting a free market. In that supply, which is liable to be gas-powered. The intermittency case, the terms of the contracts for differences would implies that a very large renewables capacity is required be discovered or revealed by the market; and, given to guarantee a minimum level of supply. The costs of that markets are deemed to be efficient, it was imagined wind-powered electricity cannot be assessed in isolation that this would create an optimal outcome. The idea and the severity of the problem of intermittency will has gone into abeyance. The critics have asserted that, be a function of the proportion of electricity supplied, in reality, such a market would be beset by risks of on average, by the windmills. To propose that mindless confusion and by dangers of default and bankruptcy. markets should be capable, on their own, of adjudicating The outcome is that there will now be a single these matters so as to determine the optimal proportion government-owned counterparty and that the terms seems absurd. of the contracts will be set through an administrative The third technology that needs to be considered is process. nuclear power generation. Here, the capital costs come However, it remains the Government’s intention in large indivisible lumps and the stations are of such that the strike price will eventually be set through a longevity that we should be considering 60 years of competitive free market process. An expectation of the operation following a period of as long as 10 years designers of the Bill appears to have been that a for their planning, construction and commissioning. competitive environment would generate a single strike Once the nuclear power stations are in place, their price that would be applicable to all electricity generators, operating costs are the lowest of all. The outstanding regardless of the technology. The beautiful idea here difficulty affecting a nuclear project is the size of the was that there would be no need for strategic decisions lumps of the capital costs. In one way or another, regarding the appropriate technology mix of our future national Governments have hitherto been involved in 199 Energy Bill[18 JUNE 2013] Energy Bill 200 the construction of every nuclear power station. For a the feed-in tariff limit from 5 megawatts to 10 megawatts variety of reasons, which are a mixture of ideological is very welcome, while the early release next month of predispositions and budgetary restrictions, the present the draft EMR delivery plan, with the information on Government have resolved that the capital costs of the strike price for the contracts for difference, will nuclear power should be borne entirely by commercial be crucial. In the short to medium term, the capacity suppliers. There are few suppliers willing to bear such market for gas will be crucial in keeping the lights on. costs, and the majority of those who originally expressed The capacity market has not been an issue of huge an interest have withdrawn. political debate. It does not get hearts racing in the We are left with one major potential contractor, other place or on the Floor of this House, but it is very which is a French nationalised industry in commercial important to get it right. The first thing to happen will disguise. This is EDF, or Électricité de France. It is an not be a switching-off of the lights; it will be instructions outstanding irony that their pursuit of a free market to major industrial users to stop using electricity. That ideology has brought the Government face to face will be very serious for our economy and for the with a foreign state-owned monopolist. This supplier messages that it sends out. is expecting to assess the future costs and benefits All those are good points in relation to the detail. according to the criteria of a short-term commercial In relation to the capacity market, I would be very investment appraisal that envisages a rate of return in pleased if more were being said—particularly in the double figures. In such an appraisal, the future benefits medium to long term—to encourage the storage of of a nuclear power station, which are delayed in time renewable power. That is crucial to the credibility and subject to a heavy discount, must be weighed of the renewable sector. More could start to be done in against the current up-front costs. In order that the the Bill to encourage that. benefits should outweigh the costs in such a calculation, All of this represents a huge opportunity to the an exorbitant rate of return is demanded. Moreover, UK economy. The Minister said that there will be this return is being demanded for an extended period. £110 billion of investment this decade and £7.6 billion We believe that a contract for differences, designed to per year by 2020. However, it has not happened yet. There provide secure revenue, would be extended over 35 years. needs to be real industry confidence. That confidence This would be a perilous commitment for any Government has been severely dented by delay and by the DECC to make. versus the Treasury battle—the Conservative-Liberal There is an obvious recourse that should be available Democrat battle—that we have witnessed over recent to any Government who are not blinded by their months and has been played out in the media. That ideology or hamstrung by their fiscal anxieties. It is sort of squabbling has done real damage. It is crucial that the Government should, at their own expense, to get not only a confirmed strike price but also EU commission the building of nuclear power stations clearance and political harmony on all of this. which should then be owned by the nation. If need be, I worry about EU clearance. It would be the stations could be leased out to commercial operators straightforward to get state aid clearance if this were but, given their low operating costs, such arrangements only about renewables but it is not only about renewables, would be a matter of minor detail. In assessing the it is about nuclear as well. I worry about the potential benefits of nuclear power, a marginal rate of social delay and the impact that that could have on final discount should be used that is considerably below investment decisions in the renewables sector. It is both the commercial rate of discount and the 10% crucial to have continuity, consistency, clarity of political that has been used by the Department of Energy and purpose and political support. In too many aspects of Climate Change in its calculations of the so-called the industry, investment is stalled right now. Major comparative levelised costs of electricity generation. international investors are voting with their feet and I am an ardent protagonist of nuclear power generation going elsewhere. I would predict that some of the big and of the yet to be realised superior nuclear technologies announcements that have been made—for example by that would be available to us if we were actively to turbine manufacturers—about inward investments into pursue their research and development, as the right the UK will not happen due to the lack of continuity reverend Prelate the Bishop of Hereford so eloquently and the lack of clear political commitment. That is a enjoined us to do. Nevertheless, I have difficulty in real cause for worry. evincing any enthusiasm for the way in which the Tackling climate change is urgent. It cannot wait. Government are approaching our nuclear future and There is overwhelming evidence and overwhelming our energy future in general. agreement about that among the scientists, the economists and other experts. We have heard it from the very good 6.58 pm contributions made by the noble Lords, Lord Stern Lord Stephen: My Lords, I start by referring to my and Lord Deben. Global warming and climate change interests as listed in the Members’ register. is perhaps an inconvenient truth but it is a truth This is an overwhelmingly positive Bill with nevertheless—and it is one that must be tackled now. overwhelming but not—as we have seen clearly today— The climate change deniers have got to be challenged. unanimous support across the political parties and, Do they have overwhelming, incontrovertible, infallible indeed, the Cross Benches. Many positive changes have evidence on their side? To that I would say, “No, no been made to the detail of the Bill and much of that and no again”. The Bill is a crucial and very major detail is now absolutely correct. Some of the changes—for reform. example in relation to the counterparty—have been The ROC system is far from ideal. It is a system referenced already. Having the Government underwrite under which subsidy stays high even if electricity the counterparty role is vital. The proposal to move prices rise. Consumers’ money can therefore be very 201 Energy Bill[LORDS] Energy Bill 202

[LORD STEPHEN] practical world of finance—the current problems with considerably wasted. It was a pretty complex and very the Co-operative Bank could be very damaging to British—solely British—solution. However, ROCs did many community projects. I believe that a great deal at least create certainty and confidence in the industry. will have to be done to keep these projects alive. A Bill Contracts for difference are theoretically better, but on its own will not be enough. the change has to be well handled to maintain confidence. In summary, we need to get on with it. Let us have So far that has not happened. Squabbling, as I mentioned, no more delays or divisions but instead show political has led to a loss of confidence and the delay has clarity and unity in order to deliver the confidence created the sort of uncertainty that no industrial sector needed to create thousands of jobs and billions of likes. pounds of new investment and cleaner, greener and There is also a degree of illogicality in those who more secure energy for everyone in the UK—for business talk about being anti-onshore wind but in favour of and for consumers. There are many other countries offshore wind. If you want to protect the consumer investing in renewable energy where the sort of political and keep prices down, offshore wind is—as has been divisions that we have witnessed this afternoon simply mentioned already today—much more expensive than do not happen. They are going for it and doing so with onshore wind. absolute determination, conviction and commitment. As for nuclear, I still have very serious concerns. It The Bill can help us to do that in the United Kingdom, is slow to deliver. It is expensive. More than 60% of and it must do exactly that. It should therefore be DECC’s budget is currently spent on nuclear. The supported. nuclear waste is toxic and dangerous. It has a very long half-life. The nuclear sector relies on a depleting 7.08 pm uranium supply from uncertain sources in politically Lord Kerr of Kinlochard: My Lords, I mention my unstable nations. Fusion would be a wholly different entry in the register of interests, particularly that it thing but we are far from there yet. Perhaps most includes a mining company and a power company. importantly, investment in nuclear tends to reduce the I will not detain your Lordships long. My urgency of the investment in renewables. As I have understanding of this complex Bill is as yet incomplete, already mentioned, it could also lead to a delay in but it is a very different Bill from the one that the state aid clearance for contracts for difference, and committee chaired by the noble Lord, Lord Oxburgh, clearly a huge amount of government resource has reported on last July. It is a very different Bill from the been taken up in the negotiations with EDF on the one that turned up in the other place seven months whole nuclear issue. ago. It is a very different Bill from the one that finished We need a simple and clear determination to stop Committee stage in the other place at the end of the burning fossil fuels. It is a declining resource. It will last session. More than 90 clauses were added at also be increasingly expensive, even if there are short-term Report stage without substantive debate. reductions. It is a very damaging and polluting resource It is also an extremely dense text; a very complex that causes climate change and global warming. There text describing a very complex structure. With great is no bigger issue facing the future of our planet, trepidation, I have to disagree with the noble Lord, which is why this debate today is so important. Lord Lawson of Blaby, who exempted me today— That brings us to decarbonisation. I would far extraordinarily—from his strictures on everybody else rather see a decarbonisation target coming sooner. It in the House, the Bill, the Government and the Opposition. is another area of coalition dispute—another Treasury I was very grateful for what he said, but when he said versus DECC battle. There was no target in the original that Dieter Helm was right to describe this as the Bill, however, and I am very pleased that there is now Gosplan solution, he was wrong. I spent some time in provision for a decarbonisation target. Although I Moscow as a young man and used to read a lot of would be prepared to wait until 2016, the acid test will Gosplan texts. They were clear, straightforward, decisive, be the response and the attitude of others. Major precise and detailed. They were all wrong, of course, investors, manufacturers of turbines, those involved in but it was all there with tremendous clarity. This text, the renewable sector, those who make the final investment and indeed the whole structure, seems to be a sort of decisions, have made it very clear that they are looking magic toyshop with something for everyone, and a for a strong decarbonisation target to support their sometimes awkward balance between environmental investments. I certainly believe that it should not be an aspiration and traces of the market here and there. It enabling or an optional provision. There should be a seems sometimes to put a little more emphasis on the requirement on the Government to fix a decarbonisation greening of the economy than on cutting costs and target. keeping the lights on. I want to make two final points. The first is on The Bill will take a lot of studying. Nevertheless, I energy efficiency and demand reduction. There is welcome it because at least the long period of investment huge potential in these areas, which are vital. They hiatus may be about to end. Companies cannot spend have been neglected areas of energy policy for too shareholders’ money unless the rules of the game are long. However, switching from fossil fuel—not just for clear. Although I may not agree with all the rules of electricity but also for our heating and our transport—will the game as proposed, clarity will be important. Without require very significant amounts of electric energy. substantial investment soon, the lights will indeed go That always has to be remembered. out. If and when the Bill passes, as I hope it will, a Secondly, community renewable schemes are vital. modicum of clarity will exist. It is not in the Bill now The Bill rightly encourages them and will do more to because the details on capacity mechanism and contracts support them. However, in the real world—in the for difference are apparently to be set out in subordinate 203 Energy Bill[18 JUNE 2013] Energy Bill 204 legislation that we have not yet seen. I understand that United Kingdom would influence the energy and the detail on CFDs, including draft strike prices, may environmental policy of China. I agree that there is a appear in a draft delivery plan next month. Getting fly-on-the-wheel problem that one sees from time to this right will be crucial to ensuring that investment in time in such language. But the Chinese, too, deserve low-cost generation is cost-effective, and it is very the Lawson lash because they seem to believe in climate important that this work should not be based on change and to believe that it is at least partly man-made. aspiration but should be founded on evidence-based They are building one nuclear plant every month, and analysis. investing hugely in LNG. They, like the noble Lord, As for the capacity mechanism, I understand that Lord Lawson, are strong advocates of shale, and they the consultation on its design and the draft legislation have a huge exploration programme across China is planned for the autumn and that the first auction now; it is at an early stage but they clearly believe, like will be next year, but that the first delivery year will the noble Lord, that it too is the technology of the not be until 2018-19, which puzzles me. Why the future. They have invested massively in solar power delay? Presumably, the Government are thinking about and have wiped out the European industry. They have the construction of new capacity. However, the lights a massive investment in wind power, and of course could go out well before 2018, and companies need to they are still burning enormous amounts of coal. consider whether to run on or phase out existing They believe that the exponential increase in their plant. I hope that in Committee we will learn a bit more demand, and the need to try to avoid dustbowls and about how the auction system is to work and its timing. desertification in northern China and poor air quality Three points arise from the debate. First, I agree in the great Chinese cities force them to be as green as with virtually everything that the noble Lord, Lord possible, and they would like to reduce their reliance Oxburgh, says on this subject but, again with great on coal. Unlike us, they do not hang around. Like us, trepidation, I need to register a note of dissent from they think that they need to use every available source what he and the noble Lord, Lord Stephen, have of supply. I hope that we will not hang around much said about the 2030 decarbonisation target and the longer and I look forward to the progress of the Bill in absence of such a target in the new Clause 1 in Part 1 Committee and an end to the investment hiatus. of the Bill. Here I agree 100% with the noble Lord, Lord Browne of Madingley. With all due respect to 7.18 pm the argument advanced by the noble Lord, Lord Cameron Lord Jenkin of Roding: My Lords, I start with a of Dillington, from these Benches, companies like word of thanks to my noble friend Lady Verma and Siemens are not impressed by 2030 targets. Such the noble Lord, Lord Oxburgh, for the several extremely companies make their decisions on what capacity they useful meetings that we have had about the Bill over need and where they should site their plant on the the past couple of months. I have found it invaluable basis of clear commitments. They are pretty cynical to see what the departmental view is. We have had the about targets, as am I about the idea of a legally opportunity of talking to many of the Minister’s officials. binding target 16 or 17 years out. Bindings fray, and I also have another source of advice. I try to talk as no Parliament can bind its successor. What matters much as I can with the companies that would actually for investors, as the noble Lord, Lord Stephen, says, have to make this system work. At a breakfast meeting is certainty and continuity. They need to see the chaired by the noble Lord, Lord Oxburgh, it emerged underpinning of any targets by credible costings and a in our discussions with the wind industry, the CCS credible commitment to meet those costs. Realistically, people and the nuclear industry that the Bill is essential that would not be attainable by 1 April 2014, and I do if there is to be any hope of attracting the capital that not think we are foolish to have failed to add to the is needed for the huge investment that many noble Bill a requirement by 2014 to set a 2030 target. If that Lords have talked about. Somebody went on to ask a arises in Committee, I will be arguing against including rather awkward question: if we get the Bill in the form such a target . that the industry would like—and there is plenty of Secondly, I disagree with what the noble Lord, evidence that they like much of what they see—will we Lord Deben, said about carbon capture and storage, get the investment? The noble Lord, Lord Oxburgh, and here I am disagreeing also with the noble Lord, will remember that there was a long pause, then all the Lord Browne of Madingley. I am sure they are right parties said, “No, we cannot guarantee that”. We have that CCS is the technology of the future. A number to have the Bill because without it there is no hope of of great companies have already spent a long time getting the investment, but even with it, there is still no and large sums of money in trying to make it work guarantee. I endorse totally what has been said by a economically, but no one has succeeded. I am sure number of noble Lords during the course of this that in 10 years’ time CCS will have a very important debate, that the greatest danger is uncertainty. People, role to play, and I am as sure of that as I was 10 years firms and companies will not invest when they are ago when I first said it. It is the technology of the faced with uncertainty. We have been going through future and it may stay that way for a very long time quite a period of uncertainty in this country and it has into the future—alas, because it looks like a marvellous resulted in a considerable downturn in investment in solution, but it is extremely hard to make it work. the generation of energy. Somebody said a moment Thirdly—this is very daring because here I am ago that they hope that that period is now ending. We disagreeing with my old boss—the noble Lord, Lord shall have to wait and see. Lawson, was kind enough to exempt me from his I certainly support the principle that we have to get strictures on my old department and DECC for what this Bill through. I hope that we will be able to finish sounded like rather absurd language about how the the Committee stage before the long Recess. I foresee 205 Energy Bill[LORDS] Energy Bill 206

[LORD JENKIN OF RODING] that day’s debate. I have no doubt, however, that this four or five weeks of pretty hard work. I have tried to particular paragraph was drafted by my noble friend’s cancel as many of my other engagements as I can to department. I quote this letter of 3 June: make room for it. I have been refusing things left, right “The government welcomes Ofgem’s actions to improve and centre for the last couple of weeks. competition by addressing poor liquidity in the wholesale electricity market. We agree that liquidity, especially in the forward markets, One point by the noble Baroness, Lady Worthington, needs to improve and this Government is pleased to see Ofgem that I very much support is that this is in some ways a indicate a strong preference for intervention with a decision skeleton Bill that eventually will be filled in with expected by Summer 2013”. various things, including a large number of regulations. It may not feel like it, but we are nearly there. However, I make a very firm plea: we may not get these regulations perhaps we have had a decision on this—I will come in Committee, but we must know what they are by the back to that. I am puzzled about the concept of time we reach Report in the autumn. It will be impossible liquidity, so I asked for advice on that from the department, for the House to debate this in any meaningful way if which defined it as, we do not have a greater degree of certainty as to what “the ability to quickly buy or sell a desired asset, commodity or is actually going to happen. financial instrument without causing a significant change in its I started by thanking my noble friend Lady Verma. price and without incurring significant transaction costs”. Having listened to the speeches, I do not envy her the I am not sure how much wiser that leaves me. I prefer problem of having to wind up this debate. It is a task to look at this in terms of competition. If there is a that I did for various things over a number of years, market—and much of this Bill is based on the proposition and it is very difficult to do. After having listened to so that there will be markets operating, albeit in the many diverse views, often based on great experience future—then we start from the position, as many and expertise, I do not envy her. noble Lords have already mentioned, of having the big There is a general view that we face a very considerable six. They have a 98% share of the domestic retail problem. There is likely to be a 40% increase in demand market, a 78% share of the industrial retail market for electricity by 2050, but we are facing the closure of and a 93% share of the commercial retail market. about 30% of our existing generating capacity by Estimates typically show that the big six have a market 2025. Wind power is becoming more intermittent. In share of 65% to 70%. They are an enormously dominant the opposite direction, the nuclear programme is less force in our electricity industry. I have had a number flexible. However, it is equally essential and we must of meetings with the independents and those who have it. I believe that we are bound to face higher support them, and they constantly complain about electricity prices for a variety of reasons. I do not how difficult it is to break into this market. These big think that we are going to find ourselves imitating the vertically integrated companies have enormous power. Americans. Even if we are able to develop our shale However, it may be that help is on the way. Many gas deposits, nobody knows how much is recoverable. noble Lords will have seen the announcement by We also have our environmental obligations, so these Ofgem less than a week ago opening up the electricity are very great challenges. market to effective competition. I quote from the Ofgem I find myself increasingly worried about security of press release: supply for the next four or five years. Somebody “Ofgem proposes to establish a more level playing field so mentioned the closure of power stations. I have been independent suppliers can compete effectively with the big six … Big six suppliers and largest independent generators must trade given a list of power stations that were running on fairly with small suppliers or face financial penalties … Wholesale 12 December 2012, but all of which are now closed: energy prices to be more transparent with big six required to post Didcot A—a huge one, Fawley, Littlebrook, Cockenzie, prices two years in advance … Ofgem’s proposed reforms build Kingsnorth, Uskmouth and Tilbury. That is a huge on progress made by the industry, but seek to increase competition reduction in our generating capacity. Some have talked and address issues of fairness and transparency”. about a number of plants being put into mothballs. That is a beacon of hope in an otherwise quite difficult The problem with mothballing is that it takes time to situation. Will the Government support it? They always start up again. The figures I have been given suggest talk about having more competition in the industry. If that of 9.2 gigawatts of UK gas capacity that is now they support it, will that require further amendment of mothballed, 2.6 gigawatts are unlikely ever to operate the Bill or will it be covered by the powers that were again because they have been effectively dismantled. added in the other place—now Clauses 43 to 45? I Of the rest, it will take anything from three to 18 months think that something more is required: a requirement before they can become operational, because one has to promote competition actually needs to be written dispersed the labour force. The thing has been wound into the Bill. I give my noble friend notice that I am down, and it takes time to start up again. I have contemplating an amendment to the clauses on the anxieties about this and I hope that my noble friend capacity market to add a requirement; in addition may be able to offer us some reassurance. to the objectives of the capacity market set out in In the debate on the gracious Speech, I raised the Clause 21 they should have an objective to promote question of the future competitiveness of our energy and encourage competition in the generating market. industries. In particular, I asked about the Ofgem I hope that I am pushing at an open door. My right letter that had been sent out in February to all the honourable friend Michael Fallon had a meeting the bodies concerned—a very wide distribution—proposing other day with a number of people who have been what it called “future trading arrangements”. The arguing for this. A report of the meeting states that: answer came in a paragraph of that long letter written “Michael Fallon noted that he expects a number of amendments by my noble friend Earl Howe after he had wound up to be tabled to the Energy Bill during its passage through the 207 Energy Bill[18 JUNE 2013] Energy Bill 208

Lords, and did not have any objection in principle to the Secondly, it does not apply to old coal-powered recommendation for a clause stating that one of the objectives of stations that decide to fit new filtration equipment the capacity market should be to encourage competition”. to allow them to operate post-2023. Old, inefficient Again, I hope that I am pushing at an open door and coal stations may remain indefinitely on the system, I look forward to hearing my noble friend’s reply. unconstrained. That could not be compatible with carbon budgets or decarbonisation targets. A similar backstop to the one now proposed for new coal is 7.32 pm needed for old coal. The Government may well look at Lord Grantchester: My Lords, after much anticipation, this for marginal back-up, as peaking plant, and may the Energy Bill is before your Lordships’ House. I provide capacity payment via the capacity mechanism, thank the Minister for her remarks explaining remarks rather than being able to base-load. Thirdly, in support that the Bill is intended to establish a framework for of the Carbon Capture and Storage Association, CCS delivering secure, affordable and low-carbon energy. plant may need a three-year exemption from the EPS I also thank the noble Lord, Lord Oxburgh, for his while CCS equipment is being commissioned. chairing of the cross-party seminars on the Bill, which The further challenge concerns the position of have been extremely helpful. renewables by 2050 and how they can be encouraged These are vital moments for the transformation of to be a rightful part of the UK’s energy mix. We can Britain’s energy market. At the core of the Bill is the have renewable power only when we have them. Some necessity, as older power plants become obsolete, for say they are largely useless because of their inherent Britain to have enough power at a competitive price, unreliability. However, they are vital because the resource with new infrastructure that could cost more than is there and free. Will all technologies in the Bill be £100 billion, while mitigating the effects of climate equal on the starting line? Indeed, should the Bill get change. It is always difficult to meet more than one target all renewable technologies to the starting line? at once. All elements must therefore be taken into There is widespread agreement that the Energy Bill account in a multifaceted market where all technologies must empower a wide range of new entrants to enter will be needed. While these supply-side solutions the electricity sector. If a more competitive, innovative necessarily take up much debate, efficiency measures, and diversified electricity sector is to be part of the together with management and reduction of demand, energy mix, all contributions must be encouraged to must not be allowed to slip from consideration. take part. However, the Bill delivers top-down solutions The main players for 2050 are well known. I that favour centralised generation, reinforcing current will first address nuclear. As my noble friend Lady patterns of ownership. Yet in Germany, myriad new Worthington said in her opening remarks, the Energy types of investor are entering the market, often for Bill has been characterised as a nuclear-led Bill. Nuclear lower returns than large utilities expect. In Britain, has huge up-front costs, which are then fixed for life. however, independent generators find themselves However, on the negative side, it can be undercut by challenged to ensure that the Energy Bill is viable for gas. By nature it is a base-load player, as it is not very them. flexible. I am concerned about the lack of detail in the Solar power currently finds itself in a very difficult Bill and the wide-ranging enabling powers it gives to position. Investment has stalled following the EU-China the Secretary of State. How will a strike price be set trade dispute. Furthermore, all solar projects of more that is fair in the long term—measured in decades—strikes than 50 kilowatts are severely constrained by the very a balance between risk and reward, and is a good deal modest capacity limits. When these modest limits are for future citizens? We do not know, because the Bill is exceeded, support reduces. The Energy Bill requires silent on power/price comparability, between price support for solar to be either through feed-in tariffs or reductions from the progress in renewable technologies, contracts for difference. Given the severe constraints with set returns to be guaranteed to nuclear. on FITs, this needs to be looked at again. The generation Into this mix comes the impact of shale gas. We profile of wind and solar is very complimentary. If have yet to determine the extent of possible supplies taken together, there are fewer extremes in capacity; and its environmental sustainability, which must be intermittency need not be an unmanageable problem. strictly adhered to with regulation. It can be safely A multifaceted energy mix must not end up in a said that falling prices are a long way off. At best, it mentality of silo solutions. A more inclusive approach, seems that shale gas may achieve only a delay in price whereby everybody is aware of their energy needs and rises, rather than being a game-changer. The effect of is encouraged to participate, could encourage up to shale gas in the US is to provide excess coal for export 30% of the UK’s energy needs to be met by community that is now being used as base load. Industrial emissions schemes and small businesses; for example, farming targets for coal and gas have resulted in the energy and rural enterprises. That could be necessary for their performance standard. However, there are a number own long-term survival. of concerns about these proposals. First, the level An important aspect of how the Bill will bring proposed is very generous and would not require gas forward different technologies is contained in the stations to constrain their emissions until 2044—the levy control framework, a cap on the total amount of last possible moment that could be compatible with additional charges that can be added to consumer the UK’s legally binding target. Large amounts of bills. The limit to this spending review period is £7.6 billion, unabated gas would not be compatible with the kind which dictates the total value of CFD contracts that of decarbonisation targets the Committee on Climate the Department of Energy and Climate Change can Change suggests are necessary to take the country on enter into. Yet the Bill is unclear about how the control a cost-efficient path to the target. framework and CFDs will work together. For example, 209 Energy Bill[LORDS] Energy Bill 210

[LORD GRANTCHESTER] improvements to buildings and houses, cost savings when will the projects that have assigned contracts and a reduction in demand. It is a great concern that start to be counted towards a control framework? investment has not been forthcoming, leading to a How equal and rigid is the allocation of support to massive drop in jobs in the sector. The figures expected different technologies and what will happen in the on the situation on 27 June underline the work that event of underallocation in one technology? needs to be done. On Report in the other place, the key Will money be carried forward into future spending element of interconnectors to and from the European rounds or will it be lost if it is not spent? The existence market was introduced. This will enable a strategic of a cap encourages early application, yet what happens rethink of the levels and efficiency of supply-side when a technology’s allocation is used up? Lastly, generation. It will have the benefit of increasing the renewable projects can apply either for the renewable geographical spread of balancing energy, as so well obligation or the CFD. Will projects essentially be argued by the noble Lord, Lord Oxburgh. As before, forced to opt for the CFD, for fear of the cut-off much detail has to come forward for assessment of deadline in the RO and being at the back of the CFD how this can be made effective. queue with no guarantee of funding? The Treasury The Bill is welcome. My noble friend Lady Worthington appears to be trying to control low-carbon spending, has outlined the approach that we on this side of the while allowing uncapped spending on new centralised House will take. Once again, we will work constructively capacity on the grounds of security of supply, since to clarify and improve many aspects contained in money allocated under the capacity market mechanism the Bill. is proposed to be outside the control framework. There are concerns that the complex design of the 7.45 pm capacity market means that only the large energy suppliers are likely to participate. To achieve the full Lord Empey: My Lords, some time ago I had the potential electricity savings identified by the Minister’s opportunity to be Energy Minister in Northern Ireland department, it is vital that savings from SMEs and for three years. Although it was only one part of my homes are captured too. The capacity market rewards enterprise portfolio, it took up an amazing amount of energy efficiency only for its security benefits, not for time. Many noble Lords here today have served as other, much larger benefits. A variety of policy instruments Ministers and will be familiar with receiving a first-day is vital to encourage innovative solutions to all the brief from the Civil Service. In my case, I was advised targets. An additional policy is required to ensure that because energy was largely privatised, there would access to market, where funding for payments is decoupled be little call on my time, merely a few regulatory functions from the capacity auctions and sits outside the control to perform. How wrong that turned out to be. framework. Energy supply is a vital economic as well as a Rewarding alternative energy efficiency would reduce national security consideration, and this has become the level of capacity payments needed for security of an even greater governmental responsibility in recent supply. This can be explored in Committee, along with years. We read stories that the UK nearly ran out of ideas for more technology-neutral policies, in order to gas during a recent cold spell that coincided with a set clear objectives to decarbonise. It is certainly easier breakdown in some part of the distribution and storage to get smaller projects away than to finance the huge system. Whatever the truth, the point remains that construct. These rewards are necessarily focused on ensuring a secure and affordable energy supply is one the supply side. As the Committee on Climate Change of the key requirements of good government. said in its pre-legislative scrutiny report, the draft The Government insist that this Bill is about Energy Bill was, establishing a framework for delivering secure, affordable “fundamentally flawed by the lack of consideration given to and low-carbon energy. This is a sentiment that I am demand-side measures, which are potentially the cheapest methods sure we all share. However, there needs to be a close of decarbonising our electricity system”. examination of some of the aims and targets that we I am therefore pleased that the Government eventually as a nation are being asked to sign up to. I know from brought forward measures on demand-side reduction, our experience in Ulster that those same sentiments through amendments on Report in another place. were shared in the 1980s and 1990s when the then However, as with much of the Bill, the new clauses Government signed us up to availability contracts, leave us little clearer on the Government’s plans in this which have stifled competitiveness and kept energy area, amounting to no more than an order-making prices unnecessarily high in Northern Ireland for nearly power for the Secretary of State to embark on pilot two decades. projects. However, the idea to allow “negawatts” to Let us stand back for a moment from the complicated compete against traditional megawatts is welcome. clauses in the Bill and look at what we should be doing There are concerns, though, that the capacity market will and why. As a nation, the UK already suffers from a remain the only solution to access to market. It would lack of economic competitiveness. We have to charge be vital for the department to undertake a number of out to our customers the cost of our growing debt pilots using other mechanisms to allow diversity and burden as well as our expensive welfare system. Despite innovation. So far there has been little opportunity to the rhetoric of the Government and all parties, the debate these proposals, but they can now be peer-reviewed export-led recovery has not yet happened. This is in your Lordships’ House in Committee. because we no longer produce enough manufactures This side of the House welcomed the previous and services at prices that international customers are Energy Bill, which had energy efficiency at its heart. It prepared to pay. In this regard, therefore, what does this introduced the Green Deal to bring about energy Bill do to our international competitiveness? Does it 211 Energy Bill[18 JUNE 2013] Energy Bill 212 help us or hinder us? What does it do to reduce the we increase the amount of renewable energy from overall amount of carbons pumped into the world’s wind and other sources, we will still have to maintain atmosphere? every single megawatt of traditionally produced electricity, My contention is that the Bill leads to a reduction plus an amount to allow for breakdowns. We know in the one and merely to redistribution of the other. I that wind does not survive high pressure and that the shall explain. Our competitiveness and the reduction other sources of renewables are vastly underdeveloped. of carbon dioxide in the atmosphere are inextricably Wind generation will reduce the amount of energy linked. I believe that unilaterally adding cost to our that is produced by traditional sources when it is energy supply for the genuine and admirable purposes functioning, but, when it is not functioning, you need of reducing carbon emissions here in the UK merely to have the back-up. Therefore, the amount of generating transfers the carbon emissions to China and other capacity from traditional sources, whether fossil or parts of Asia and the world. By making our already nuclear, is not going to be amended significantly in the high cost base higher, it could be said that we will foreseeable future for that reason. produce more of our energy from clean sources. That People are not going to tolerate the electricity supply may be right. But the net effect is that, unless it is going off. I often joke with colleagues that if the done simultaneously and universally by the major electricity went off during cup final people would be manufacturing nations, we reduce the amount of prepared to burn Chippendale furniture in the power manufactures we produce and transfer that production stations to keep their lights on. The more wind that you to other places. While strides are being made in China have, the less efficient become the traditional sources to control emissions, there will be increased emissions, of fossil fuel and nuclear supply, because that reserve, because China will be making the goods that we are whether it is spinning or not spinning, will become less no longer competitively making and in addition it will competitive. So the irony is that we will vastly increase take a lot of energy to get those products to our shores the amount of electricity capacity in this country from from the other side of the world. renewables and non-renewables, but we still have to Climate change can be addressed only internationally have the back-up. There could be five weeks of bad and the EU and UK cannot allow themselves to get weather coming down the road and, if you have a too far ahead of other nations. Otherwise, they will series of breakdowns, you have to have power stations merely make themselves uncompetitive for no valid spinning, and they are spinning as we debate this Bill purpose. I believe that the climate is changing and that today. I do not see that people grasp that fact. man is contributing to that change. We are certainly Energy from wind is great. In my own city, Harland making a contribution, but its scale is hard to judge. and Wolff does not build ships any more—it builds Nevertheless, I do not accept the idea that it is purely windmills, and that is great. But the fact is that you manmade. Climate change is natural, but I believe that have to have them backed up. Unfortunately, in a we are accelerating it. We can make a difference, and relatively small geographic area such as the British we already have. For instance, we took lead out of Isles, you have these weather patterns. Yes, we can do a petrol, which has reduced dramatically the amount of certain amount with interconnection. I pioneered the lead in the atmosphere throughout the world. So we gas and electric interconnectors with the Irish Republic, can make a difference, but let us keep it in proportion. and we have an interconnector with Scotland. I am On the generation of renewable energy as well as all for that, but the electricity interconnector has two nuclear, we are talking about adding a charge to 250 megawatt cables, and one of them is bust. So consumers’ energy bills to subsidise the cost of renewables nothing is totally reliable; you have to have redundancy and nuclear-generated electricity. This is not a new built in whatever the source, and you cannot have idea, but we have to enable generators to produce enough of it. That is the experience we all have. electricity at a price that will allow them to borrow the In economies like India, the lights go on and off, money to provide the service. There is nothing wrong and all the major universities and hospitals have huge with that in principle, but the cut-in and cut-out points amounts of generator back-up. In this country we pride on the subsidy are critical. There is a lot of widely ourselves on having a constant supply, which makes a inaccurate speculation about what can be achieved by huge difference to certain industries and activities that all this. The truth is that no alternative sources of simply have to have constant, reliable supplies of electricity energy come anywhere near the point where they at affordable prices. I fully support the concept of could provide the UK with a constant and reliable reducing our carbon footprint as best we can—but we source of energy. Wind is currently the major alternative, all know that it is vehicles that produce most carbon whether onshore or offshore. There is no doubt that it emissions, and not Mrs Bloggs at number 33. So this has a part to play, as do other forms of renewables, but deals with only part of it. let us not exaggerate its potential. In this country, We have indigenous potential in this country. Shale energy demand rises during cold spells, which often gas has been mentioned. At home in Northern Ireland coincide with high pressure in the atmosphere. High we have vast resources of lignite from Lough Neagh pressure usually means little or no wind. The classic right up through County Antrim. An Australian mining example of this was in the winter of 2010-11 when we company came to me a few years ago to say, “We had five weeks of freezing weather and little wind. could open-cast mine it, because it is high-quality and Without the traditional source of generation, we would low sulphur. We could build a big trench up the centre effectively have been out of business. of County Antrim from Lough Neagh up to Ballymoney. I agree with the noble Viscount, Lord Ridley, We would put in an 800 megawatt power station and who is no longer in his place. I cannot understand fill the hole in as we go along”. You can imagine the the difficulty in people grasping the fact that, even if amount of interest that that had from the local community, 213 Energy Bill[LORDS] Energy Bill 214

[LORD EMPEY] For these reasons, the business of reassuring investors who saw their towns, farms and everything disappearing is a far greater challenge than we have had before. We into this great hole. Campaigns were launched, and I have been told that we are going to get the grand have to say that I took a far-sighted and courageous design in July—we will have the delivery plan, the decision as Energy Minister to do nothing. I took the strike prices and the accommodation of capacity view that it should mature in the ground and that it payments. We would like to have most of those things was there if we needed it. But the truth is that we have before the House rises. I take the point that this is to be resources and we may have to deploy them. Mr Putin incorporated within a market system. Perhaps not all and others have been mentioned, and there is no of us have been students of the United Kingdom doubt in my mind that this is a national security issue, energy markets over the past 20 years but this is the apart from anything else. We cannot allow ourselves to fourth attempt that we have made at having a market. be at somebody’s mercy. It is by far the most challenging one. We have had the Research and development has not been mentioned pool system, NETA and BETTA, the three predecessors, very much. The European Union has significant resources each of which tried to correct something that was in this area, and we have to do far more R&D into the wrong with the other one. There was gaming or it technologies. All that we are doing at the moment is to was pooled; the next one was not quite good enough use sticking plaster and adding bits on here and there. but the one after that would be better. This is the We are not putting enough money into the R&D of first arrangement that is actively seeking to incorporate energy supply. I hope that as we go into Committee within the market system questions of climate and on to Report we can drill down into some of these sustainability and emission reduction. issues and perhaps improve the Bill as it passes through As a consequence of this and European decisions, the House. we have to reject the coal option until such time as we have carbon capture and storage. Like fusion, that is 7.58 pm always going to be 15 or 25 years away, depending on Lord O’Neill of Clackmannan: My Lords, this is an how optimistic you are. Coal is not an option, so we ambitious and important Bill. It is ambitious in that it have hydrocarbons, nuclear and a range of as yet, in is trying to achieve a unique objective—the establishment many instances, interruptable or unproven renewables. of a monitored and regulated market, which would I am happy to have a mixture of gas and nuclear as the incorporate carbon emission reduction and environmental main components. I am not sure that we really want to sustainability by harnessing a variety of seemingly change the character of this Bill to have, at the top, incompatible technologies—baseload generation involving competition at all costs. That was part of the philosophy nuclear and gas-fired CCGTs, along with biomass-adapted of the privatisers in the 1980s and early 1990s. We had coal stations and smaller renewable thermals. Alongside a system then that, had it been taken to its logical that there will be interruptible renewables, such as on conclusion, would have produced electricity generation and offshore wind, hydro and small-scale, and probably along the lines of pre-Cavour Italy, when there was a as yet unproven, technologies, claiming to be renewable— succession of city states all running little power stations. and, of course, if you claim to be renewable, that is Our system never quite got to that state, but it acceptable. Renewable is cuddly, small and nice. It is created entities that were easy to absorb and take over. akin to WC Fields’ snake oil. There is basically no Now we rail against—or some people rail against—the illness that it cannot cure. It can create jobs and reduce fact that there are six utilities, six big players, which unemployment; it can increase productivity—it can do pretty well dictate everything. It is an oligopoly but it almost anything. The only thing that it cannot do is to is a regulated oligopoly, and it could be better regulated. produce electricity on a reliable basis in great amounts. We could have clearer bills. We could have better tariffs. The basic amount of electricity that we require has We could have systems with greater transparency. In to come from baseload generation. The rest can be of some respects it is the toothlessness of Ofgem over the assistance, but it cannot be a realistic substitute. years which has allowed a number of these excesses to It is fair to say, however, before we go any further, take place. We have to recognise that we are trying to that all these different technologies have inconveniently keep many more balls in the air with our new market different timescales for development or for the life of system than we have attempted before. That will carry the stations involved. Each different form of investment risks. If we can get it, however, we will be able to secure will require a different form of reassurance. This is the the assurance that a number of investors are waiting for. fundamental challenge in the creation of a new market. I am not totally pessimistic about the investment Utilities have been seen historically as a fairly safe situation. When E.ON and RWE, in the shape of form of investment. You get a return of 7% to 9% one Horizon, its nuclear company, decided to get out of year after another. They can be long term. They can nuclear, they found a buyer, Hitachi, which was prepared be pretty safe. Demand is likely to be constant. Today, to pay rather a lot of money, albeit at this stage for real technical uncertainty, because of the relative newness estate. Nevertheless, it was prepared to buy access to of some of the equipment, raises questions about the the sites and the possibilities that those offered. As far possibilities of a dependence on unproven technology, as nuclear is concerned, people are not totally pessimistic or questions of access and the interruptability of one and running away from it all the time. It is essential, technology against another. We do not really know however, that by July we get a clear indication of the about the maintenance of a lot of the technologies strike price, the capacity payments and the nature of that we are talking about. We might therefore have what the market structure will be. If we can get those unreliability of a technical character that we have not with clarity and transparency we will get the beginnings yet experienced. of the investment that we require. 215 Energy Bill[18 JUNE 2013] Energy Bill 216

This is a large Bill. It covers a lot of areas. There is On renewables, far from being world leaders, we one point about the nuclear industry that has not currently languish just above Malta in the relegation really been made, although the Minister did refer to zone of the EU nations league for the proportion of the establishment of the new nuclear regulatory authority. national power produced from renewable sources. Many This is long overdue. When I was the chairman of the other EU countries, large and small, produce getting Nuclear Industry Association, I argued that it was on for 10 times the proportion that we do in the UK. frightening that we were seeing the departure of so On nuclear, we overcame our temporary reluctance in many nuclear inspectors from the regulatory body to 2005, but eight years later we have yet to contract a the potential players in the British nuclear industry. new generation of nuclear plants. Our storage capacity We now have a body that will allow the regulatory for gas, as others have mentioned, is notably low, functions to be carried out in an appropriate way and especially by comparison with other countries, such as the staff to be paid at the rates that the market would Germany. And we have failed, too, to build sufficient wear. It is highly appropriate that we are able to interconnectors with other electricity markets overseas, do that. which would enable us to import more power, as the Under Mike Weightman, the chief executive, this noble Baroness, Lady Parminter, mentioned earlier. body has achieved an international standing that not a The well flagged consequence of those shortcomings lot of people fully appreciate. Mike Weightman went is that the UK faces potential blackouts in the mid to Japan after Fukushima and produced a report that term and possibly even in the short term. If they did not necessarily give consolation, but it was of a happened, that would be a terrible indictment of our rigour and authority that established once again the system of government—our ability to think and to very important position that the British nuclear industry plan ahead. Indeed, it would be a national shame. Will has in the world. We talk about quangos and government this Energy Bill put us on the right track? bodies, but this is one that will be going out to bat for The Bill sets out a new approach to the operation of Britain in a variety of circumstances when other countries the electricity market. Its cornerstones are tight emission are getting into the nuclear business in a big way. standards, greater certainty over the long term on It would be churlish of me, before I finish my carbon pricing, more revenue assurance for low-carbon remarks, not to thank the Minister and her staff for generation, and a mechanism to encourage reserve the briefings that they have given us. I have to say, generating capacity. The Bill, as I think most have however, that I am reminded of F.E. Smith’s words observed, is directionally sound but, by itself, will not when he said, “I may not be much the wiser but at meet the stiff challenges that the UK faces. least I’m a lot better informed by the process”. We I have long supported the value of market mechanisms know that there will be a lot of complexity in the Bill. in both the public and private sectors, and I have long For that reason the Committee stage will be exciting belonged to a consensus that is wary of the state and interesting. However, I reiterate a point that has picking winners, of state-owned and state-run enterprises, been made by colleagues this evening. We want to see and of a strong directive role for government—of the a lot more of the flesh that there should be on the kind that we still see, for instance, across the channel skeleton of the Bill before we get to Report. In Committee in France. However, the complexity of our national it may not be in quite the form that we want, but we energy goals, embracing security and climate change, can look at it carefully. If we can get a market settlement as well as economic efficiency, obliges us to find the with the delivery plan in the public domain before the right blend of market mechanisms and government recess, we will have an interesting time in Committee direction, and that is very difficult to do. We need and at Report. I wish the Bill well. to see real and speedy progress towards nuclear commissioning, towards renewable rollout, towards 8.09 pm greater interconnection and towards improved storage Lord Birt: My Lords, I declare an interest as a capacity and stand-by power. director of a UK renewable energy company and as an Government will have to ascertain that the measures adviser to a fund that is a leading global investor in in the Bill do in practice give investors confidence, renewable power. Both bodies are noted in the register. as the noble Lord, Lord Stephen, and others have In the past 50 years, the UK has seriously lost its emphasised. This is critical because modernising our way with infrastructure. As my noble friend Lord Kerr power infrastructure probably requires—I suspect that reminded us a little while ago, unlike the Chinese, we the figure is far higher than the Government have so do hang around. We have the least developed road and far estimated—something of the order of £250 billion rail networks of any major country, we have struggled to £300 billion of private sector capital over the next to expand our strategic airport capacity, and we have 10 to 15 years, most of which will come from outside been slow to create an electricity grid and generation the UK and from investors who, as others have noted, system fit for modern circumstances. This latter task is have other choices, not least as worldwide investment not easy. As we have heard during this long debate, we in this sector simply mushrooms the world over. have to migrate from an era of plentiful but high-emitting The risk is that the new construct of CFD and coal and gas in the UK to a power system that capacity payments, which is difficult to understand, as balances three equally valid but competing objectives: the noble Baroness, Lady Liddell, mentioned earlier—it security and reliability of supply; a substantial reduction is a construct designed to incentivise both nuclear in carbon emissions; and the need for economically and renewables—will prove, on the one hand, overcomplex priced electricity both for business and for consumers. for renewables, yet, on the other, insufficient to encourage The task may not be easy but we have addressed it the replacement of our existing fleet of nuclear with too little dispatch. plants. With the intermittency of renewables, about 217 Energy Bill[LORDS] Energy Bill 218

[LORD BIRT] that give carbon emissions, or carbon-equivalent emissions, which many have spoken, and the uncertainty of gas that are so essential that they will have to continue supply in a volatile world, which I think has been beyond that date. underemphasised, a substantial contribution from nuclear My list of industries is as follows. First, there is is necessary to help manage national risk. Of course, I metal smelting; I cannot envisage how we will survive entirely acknowledge the challenge and difficulty of without that. Next, there is cement manufacture; again, doing that. I cannot envisage how we will survive without it. Next, Moreover, as we move forward, our politicians will there is agriculture, particularly with regard to livestock. have to be brave, as well as wise, and hold their nerve, I declare an interest as a farmer, but I have no livestock for this transformation will be expensive, as the noble other than two children and seven grandchildren. Lord, Lord Jenkin, mentioned earlier. Power prices Agriculture, of course, is a surprisingly large creator will rise, even though the cost of some technologies—some of carbon-equivalent emissions. Next, there is aviation. renewables, for instance—is reducing very rapidly and There is a great problem of energy density, and I rule is converging on parity with hydrocarbon technologies. out biofuels because we cannot today feed our existing Therefore, much beyond the passage of this Bill remains population on this planet properly, and by 2050 there to be settled, and there is many a slip ‘twixt cup and will be 2 billion more of us to deal with. Therefore, lip. I do not think biofuels will be a viable alternative. I I echo the noble Lord, Lord Browne, in saying that include shipping for a similar reason. Energy density we will need to be vigilant to ensure—to paraphrase is very important to those in that industry because Jonathan Powell—that we execute, execute, execute. ships carry cargo, so the less space that is taken up by We need to monitor not just the introduction of fuel tanks the better. the complex new systems proposed in the Bill but Once you have gone through that list, you are a very the outcomes, and whether these measures before us long way towards the 20% target that we have set. If put us on a rapid track to a far more robust power that is the case, everything else we do must become infrastructure for the UK than we have now. zero. All land-based transport, all our buildings and all our industries must have zero emissions. That is fundamentally important. Encouragingly, there is already 8.17 pm a basket of technologies that could make that possible, Lord Dixon-Smith: My Lords, it is many years since but we do not know what technologies will win the the late Lord Flowers, who knew a great deal about economic race, as opposed to the calendar race. the nuclear industry, said to me that mankind had That brings me back to the Bill for a moment. The only one source of energy, and that was nuclear. contracts for difference established by the Bill, it seems However, mankind had a choice, which was to have his to me, are designed to guarantee a return to investors nuclear power station here or 98 million miles away. for investing in new nuclear power stations in particular. Lord Flowers knew which he preferred. I often wonder, In addition, there are safeguards in the contracts for when I get up in the morning, how many years’ worth difference to provide some protection for consumers—as of geologically stored solar energy mankind burns off far as I am concerned, consumers and taxpayers are every day to enable us to live the lives that we do. one and the same—as regards long-term price increases. Carbon dioxide was locked in in such a way that it I do not envy those who are responsible for negotiating ultimately enabled the evolution of mankind. We need those contracts. An apparently high price today could to think about that. appear to be a very reasonable price in the longer term. In the Bill before us this evening, we are discussing I should explain that my view is coloured by my how to provide what I would call the procedural lifetime in farming. I shall use the example of farm infrastructure to enable us to renew and refresh the tractor red diesel because its duty is heavily taken electricity and energy generating industry after 15 years away. I began by paying one shilling and three and of what can be described only as gross neglect. However, three-eighths pence for a gallon of farm tractor red that time was not totally wasted because it gave us the diesel. That price was equivalent to about 1.3p. At Climate Change Act, which establishes a CO2 target present, the price is between 77p and 78p per litre. for 2050. We have to be extremely careful about what Those with quick minds will realise that we are talking we do because everything we do must be consistent about a price increase of several thousand per cent for with that target. That target is 80% of our 1990 energy, and we have been worrying about whether it emissions. It is the amount of emissions that this might go up by 10% or 20%. Frankly, I find that quite country was producing in the 1850s, when the population difficult. In fact, we do not pay society a sufficient was 22 million. Today we have three times the population compliment for adaptability. I am not saying that we and it is five times the energy consumption that should be complacent because we should do everything keeps modern society going. It is quite an interesting to keep prices down. Returning to the contracts, a comparison. price that looks unreasonably high today might, in Energy investments by their nature are long-term, 20 years’ time, be an extremely good deal for the and 2050 is less than half my lifetime away now. We consumer. Therefore, it adds to the burden of responsibility heard lifetimes discussed in political terms a little on those responsible for negotiations. while ago, but I prefer the calendar. What we do, The other thing that has happened, which could therefore, must be consistent with that target. We need not have been imagined during the passage of the to think through what that target means. I have not Climate Change Bill, was the advent of shale gas, and seen that done, so I will suggest some conclusions. We shale oil in the United States. We know now that we need to determine what industries we have at present have large quantities in this country. They have not yet 219 Energy Bill[18 JUNE 2013] Energy Bill 220 been totally confirmed and defined but they are there. Leaving that aside, what we have in the powerful We know that they exist in large parts of mainland argument of the noble Lord, Lord Stern, is what he Europe and under the eastern Mediterranean. We actually said and what we all know: that thousands of know also that there are considerable quantities in scientists have come to a view about the connection China. One way or another, if we can overcome the with climate change. One can say that they are all problems of providing that, it may be a very useful wrong, but the odd voice against them does not lead interim energy source. me to think, “Which side of the argument should I Shale is much cleaner than coal. More importantly, take?”. I am for the connection. I think the evidence of using combined-cycle gas generators, it would be possible the weather is there, but that debate is ongoing. However, to use carbon capture and storage and to make it there is quite clearly a connection. If the connection virtually emission-free. In addition, because you could between the level of greenhouse gases and carbon is produce clean smaller-scale power stations, you could accepted, and if we want to prevent an increase in site them near communities so that the waste heat global temperatures, then it has to be kept at that level. could be used and they would become combined heat As the noble Lord, Lord Stern, has constantly pointed and power stations. That would be a revolution in out, we are at a dangerous level. One can reject the power generation. At present, most of our power argument; once that is done, it is easy to do anything. stations release nearly the same amount of energy to They can attack every proposal around because they the atmosphere in the form of waste heat as they want to leave it to the market to decide. Evidence supply to the customer in the form of electricity. We shows us that the market cannot determine everything really need to find a way around that problem. in these matters, and it often means that a regulated framework has to be found. All that may be daydreaming but the point is that we do not need more interim targets for carbon emissions Much of this debate is about the balance of the because that final target already rules everything we regulated framework of the market and government. do. It is not simply that that determines it; I am sure There are many examples. I remember when I was in that there are still unknown technologies, which we Government and we convinced the industry of the will have to learn about and adapt to. Some of them need for a climate change levy. I remember Tony Blair, may be more helpful than anything we yet know. the Prime Minister, ringing me up when I was abroad and telling me that we were going to introduce a climate levy. I said, “Oh, you mean an energy tax”. 8.28 pm “We don’t call it an energy tax”, he said. That may be Lord Prescott: My Lords, I feel most inadequate as so, but the important point was that industry administered I have no commercial interests to record either in the that climate change. The levy that was imposed actually register or anywhere else, except perhaps one: I was helped to make industries more efficient, and that was the UK and European negotiator at Kyoto. Therefore, what was proved by it. I understand that there is a my interest is to continue to argue the case for climate balance in the regulatory form between what governments change—the scientific argument and the connection might do and what the private sector might do and I between carbon and the increase in climate change. am prepared to concede that there may well be something This very good debate has reflected the different interests in the way that the market operates. and the division between those who believe in the The criticisms have been genuine and informative, climate change argument and those who say, “No, it is and I am sure that in Committee there will be good a nonsense and we should not take any notice of it”. debates on serious issues. No one is actually speaking That was probably very much reflected in the evidence out against the Bill. Those who criticised parts of it and clash of views between the noble Lords, Lord were saying, “I support the Bill, but there are some Lawson and Lord Stern. I think that the noble Lord, things that I don’t like”. I will not go into all the Lord Stern, well won that argument, but I am in that details because they have been mentioned in an excellent school of thought. I am an admirer of the comprehensive manner. However, I suppose I find myself in the same work that the noble Lord, Lord Stern, has done and boat. I agree with a lot of the criticism. It is not as the major contribution he has made to the climate good as it could be, but it is a Bill worth supporting change argument. and I want to say why that is so. The noble Lord, Lord Lawson, was referred to by One of my criticisms is that there is no balance of the noble Lord, Lord Deben, not as a sceptic but as a energy policy; there is doubt in all the areas. We do not denier. You could tell from his speech that there is no know what is going to happen with nuclear and we are doubt that he is a denier. Perhaps I could add the in separate negotiations with a French state company noble Viscount, Lord Ridley, to that argument. The as to whether we are prepared to give them sufficient noble Viscount is indicating that he is not and I take money to provide us with nuclear energy in about his correction. However, basically, they believe in leaving 20 years’ time, even though the energy gap is coming it to the market. I did not hear an alternative from in the next 10 years. For wind turbines we have Siemens, either of them. There is a great deal of rejection about who want to put massive investment into my industry the science, what we should be doing, how it should be and my area, but it is always complaining about cheaper and how much more efficient it should be. I uncertainty, as indeed is the case with solar power. must say to him that the coal industry and perhaps a number of the banks are not the most perfect examples I rather agree with the noble Lord, Lord Teverson, of the operation of the perfect market. At the end of that there is a role for coal. It might mean that a lot of the day, the state comes in and has to find the money money has to go into carbon capture, but we should for them. be prepared to recognise the role that coal plays. Some 221 Energy Bill[LORDS] Energy Bill 222

[LORD PRESCOTT] On the same argument, I can remember people 40% of the energy in this country comes from coal. It saying that targets are not important. I believe that might not come from our own coal fields, but it is they are important, but we should not depend on certainly coming from somewhere. There is going to targets because what we need is certainty. The noble be a lot more about as the Asian countries begin Lord, Lord Browne, and others have said that we to develop their demand for oil and coal because it should have more certainty than targets. However, I is where 60% of their energy will come from, and that still believe that we need the targets we set at Kyoto. By will lead to increased prices. This Bill is not going to the way, many countries have achieved them. In the prevent an increase in prices; that is one of the realities United Kingdom, not only did we achieve twice the that we are going to have to live with. levels set for us at Kyoto, but a million more jobs, Biomass has also been criticised. It is all right not to growth in the economy and a reduction in gases. The believe in it and to attack every kind of industry for argument that somehow Kyoto was a threat to every kind of reason, but the reality is that if you do employment and growth is not borne out by the facts not accept the argument about carbon, then you can in Europe, which is an important part of it. That was forget about the increase in carbon and just talk about Kyoto 1 and we have to find an agreement on Kyoto 2, price, production and security. But if you do believe in make no mistake about it, by 2016. The Americans do carbon, you have got to adjust the whole system, not not like it. There is no difference between Obama and only in this country but globally. That is what Kyoto is Bush on this matter, although Obama puts it in different all about: to find an agreement to reduce the amount words. They are still not co-operating on getting an of greenhouse gases so that we can reduce carbon. agreement. The international negotiations are a challenge There are challenges coming with climate change and for us, but they are important. the horrific circumstances that people are telling us Britain became the leader in most of these matters. about will come if we fail to achieve that. It became the leader at Kyoto in 1997 and we set up The uncertainty produces real problems. In my area the climate change levy in 2001. In 2006 we introduced of Humberside we have 27% of the UK’s oil refinery the Climate Change and Sustainable Energy Act, and capacity, 20% of its natural gas, 38% of its imported the Climate Change Act in 2008. In 2006, EU emissions coal and 17% of UK electricity generation. All of trading was established, which was copied from us—it those are an important part of the industrial base. Of was not as good, but that is life—and the current course, the Siemens investment, which is now considering Government have continued with their Green Investment coming into this area, is plagued with uncertainty. Are Bank and this Energy Bill. Britain leads in trying to we still going to have an energy policy? Are we going find a proper regulatory framework. into wind turbines? I think the nimbys have more I have been happy to be involved—I notice the influence—and this Government gives them more—to noble Lord, Lord Deben, is in his place—with a group actually turn against wind turbines. Whatever the called GLOBE International. I have been working arguments, whether or not they blow all the time, if with it for 12 months. The group has been working you are prepared to accept that carbon is one of the with parliamentarians in many countries. I am amazed limitations in the balance of your policy, you will end that 33 countries have followed the lead, in different up with a different policy and leave it to the market. I forms, that Britain has given. They can see that a know from historical experience that leaving it to the statutory framework is essential if you are to get market will not provide a global solution to global a global solution. It is coming from the back benches, problems. Why is that? Because when I was at Kyoto 1 not the Governments, because Governments are caught there were only 46 nations; now there are 190 nations. up with their civil servants. As our leader said before, It is the politicians who have forced through some there may be too much agreement and not enough agreements, so let us not knock the politicians’ role in common sense about it. these matters, but getting a global solution to a clearly There is a way. We are leading the way towards the global problem requires a framework of consensus global solution which is needed for a global problem. that is not easy to achieve. We have to recognise that We cannot look the other way and we cannot bury our developing countries which are looking to develop heads in the sand. I am proud that Britain is leading their riches, as we did in our industrial past, will have a and that this Government are following the same high carbon growth. They depend on coal and oil and framework. The criticisms I have of this Bill are similar will go through our process of high carbon production. to the ones I have of other legislation, but at least We poisoned the world and moved on, and now we Britain continues to lead the way on the most essential want to continue doing it but feel that they have not and difficult problem of how to deal with climate got a place in it. If that race goes on, it will threaten change. We need a regulatory framework. Britain is any kind of global solution. leading the way on that and I am glad that this Bill The Siemens investment, which will bring billions continues the process. of pounds into our area, is an important factor that should be taken into account. I doubt that this Bill will 8.39 pm achieve the kinds of things it seeks to achieve. Perhaps Lord Redesdale: My Lords, I am very honoured to it will change in Committee. I am not sure that it will take part in this debate because it shows how unique secure our energy or that it will reduce prices—I hope the House of Lords is. I do a lot of discussions about that it will—but in Committee we can discuss the energy and climate change and I have not been in a process and find out more about the details, something debate recently where the fundamental basis of climate that everyone has been calling for, so that we can change has been questioned. Almost everybody believes understand it. that climate change is taking place. We had more than 223 Energy Bill[18 JUNE 2013] Energy Bill 224

200% of our normal rainfall last year. We are facing This is the reality of what we are facing. We are climate change and its consequences. How do we deal very dependent on our generating capacity at the with that and how do we deal with energy generation, moment. Many noble Lords said that Europe is going which is one of the biggest emitters of greenhouse to close down our coal-fired power stations. That is gases? not the case. We have not built any for a very long We are acting as if the Energy Bill will solve the time. The existing ones are very old, they are at the end problem. It does not matter how well drafted this Bill of their run cycle and, in fact, we are increasing the is, it will not solve the problem. We have not built rate at which they are shutting. The price of American enough generating capacity for a long time. I was coal has fallen as it has been displaced by shale gas so trying to explain this to a business audience. Politicians we have been firing up a lot of coal-fired power will not bite the bullet and build generating capacity stations to run that generating capacity cheaply. This because a power station lasts 50 years. The decision reduces the life-cycle of the coal-fired power stations has to be made, the money has to be found and we had in reserve in moth balls. planning permission has to be obtained. It has to be We will be reliant on natural gas. That is why I have built, it is used and then it is decommissioned. A an issue about decarbonising the electricity grid, because Government with a maximum life of five years have to if you are doing it through natural gas, 70% of the make that decision. They have to explain it to a press energy is being thrown up the chimney of the power running a 24-hour news cycle, which has to explain to stations producing electricity. It is far better to put it in its readers, who are worried about last month’s bill not the grid and burn it in condensing boilers, which are next year’s. about 94% efficient and are at the point of use. There The culmination of that is that we have not built is only about a 0.5% loss on the gas grid compared any power stations. There has been great talk about it with the transmission loss on the electricity wires. but we are going to face a generating gap. Brownouts I am not certain that contract for difference will and blackouts are round the corner, as has been mentioned even work. I know that that probably puts me in a by a number of noble Lords. I declare an interest as minority on this side of the House, where we are chief executive of the Energy Managers’ Association. saying that it will work. Before everyone gets excited, I My interests are set out in the register. At a recent remember discussing the EMR years ago. The policy conference I put up a slide and asked whether people started before this Government were in power. That is thought there would be an energy brownout in 2015, the problem with energy policy. Even though it might 2016 or 2017. We all had those clickers and more than not work, it is still coming through. I know that there 80% answered 2015. British business is beginning to are a number of reservations. get very worried about our ability to supply power and I do not think that anyone will object to the Bill as investors in British industry see it as a major financial we need to push forward with the investment and the risk. regulatory framework that means that people will There is no panacea. Many noble Lords have raised invest in generating capacity. It has been the constant the issue of fracking as if it is going to solve our call of those who want to invest enormous amounts of energy needs. The original estimate for our reserves of money in the industry that we have a secure regulatory shale gas was that, if we used it all, we would be energy framework and security for investment. independent for a whole six months. Recently a report The Bill must address the difference that we are re-estimated the amount of shale gas at between seven facing in society today. The concept is that energy and 10 years’ worth. It is an estimate, so let us take the prices will remain at the historic low of the past lower figure. If we use fracking and get shale gas, that 20 years. That will probably not be the case. We will is fantastic. We are independent until 2020 for gas, probably go back to a position where energy is a far after which it might all be gone. We just do not know. greater proportion of take-home pay than it has been In Poland, where the Government have not been so in recent times. An opportunity arises from the rise in worried about the environmental constraints, they have energy prices. A recent report stated that 44% of all been looking at pushing ahead with fracking but they energy used in this country is wasted. The simplest have found that the gas is unrecoverable economically way to reduce the cost of energy is not efficiency but in the form it is in. America has an enormous amount demand management at every level. We need to change of shale gas but it is in geological fields above shale oil. the way that we view energy and instead of saying that It was previously seen as a waste product and the we need to provide more and more energy at ever difficulty of getting the oil out was that the gas was in cheaper prices, we should start to pay realistic prices. the way. Now they are going after the gas. We do not It does not matter that there may be more finds of gas. have the same geology and we cannot claim that we Our problem is that China and India are starting to are going to have a sudden bonanza. There may well consider converting their coal-fired power stations be shale gas but in its present form it is more expensive to gas, and they are closer to the gas fields than we are. to get out than would be economic at the moment. I am secretary of the All-Party Qatar Group, and It might be the panacea for the future but it probably had a meeting with the Emir. I am not saying that just will not be. To get the shale gas out we have to drill to drop names, although I am a very important person, 140 test wells and we do not have the planning permission of course. This was a while back. As I went in, he had to do that. To recover the gas we need to drill 1,000 wells a smile on his face because a Japanese delegation was in the north-west. Members of Greenpeace will have a leaving. He said, “Do you know what is really amusing? field day at all those planning permission hearings You are coming to talk to me about gas, but they just unless we change the law on planning permission. wanted to try to steal all your gas”. That was after 225 Energy Bill[LORDS] Energy Bill 226

[LORD REDESDALE] I intend to take a slightly different tack from other Fukushima and the Japanese delegation was trying to noble Lords, but first I should like to say that I get as much LNG as it could because they had to run wholeheartedly agree with the remarks of the noble their power stations. He was laughing. I found that Lord, Lord Oxburgh. We are now reaping the rewards quite scary, because it sent the price of gas up. Many of government inaction in not renewing our nuclear areas will be looking for large supplies. There are not capacity when it should have done so. That is a tragic enormous supplies of gas out there that we can go to mistake. When I came into this House some 38 years buy easily without political consequences. ago, we had the greatest experts in the world on The Bill is important. An important aspect of it nuclear energy among our membership. Alas, where should not be overlooked. The Government have said are they now? All gone—we have lost that expertise that they will be tabling amendments to address electricity and that is to be greatly regretted. demand reduction. Instead of just talking about one I entirely agree with the right reverend Prelate the pilot, we should be looking at how we get the whole of Bishop of London and others who said that more the population to start changing the way that they use effort should be made to reduce demand. The noble electricity. The place to start is business. The organisation Lord, Lord Redesdale, who has just sat down, mentioned that I run will start by introducing a concept called that as well. There are many ways in which we can low-energy companies, where it trains a proportion of educate people that electricity simply does not grow all staff up to energy management level 1 or 2, which on trees, and that when they turn on a switch everything involves the awareness of energy managers, and then will happen. Great strides should be made in educating starts to introduce energy managers. The importance people in how to reduce their demand for and reliance of that is that very few businesses have energy managers. on electricity. The last time we started hiring energy managers was Solar power has been mentioned only briefly. Living in the 1970s, when the oil shock hit and prices were in the south-west, where the sun is supposed to shine rising. We can create a vast numbers of energy managers rather more than in other parts of the country, I find it who can massively reduce the amount of energy that very strange that new towns being developed outside we use in British industry. That is very attractive to Exeter are not mandatorily fitted with solar panels by large companies, and we are launching it in London the property developers. That is something that should Zoo, in front of the penguin pool. We are launching it be done automatically, certainly in the case of commercial there because the penguin pool has a problem, which developments. is that the penguins tend to defecate in the water. There are 100,000 litres of water in the penguin pool. I said that I would take a slightly different tack and The pool has to be filtered three times a day, which has I will direct the major thrust of my remarks to the a massive energy cost. You have to understand how to nautical side of power generation—that is, offshore keep the animals fit and healthy, but if you are running wind, tide and wave. The first is the most prominent a business, you also have to understand where the cost today, as it was the only alternative green energy of the energy is. That is quite an interesting one. source available following the Kyoto treaty. It is, as we have heard, an expensive and unpredictable way of We are bringing companies with more than 2 million generating power and the installation of offshore wind employees who want to do it with their employers and farms is considerably more expensive than that of they want then to push it on to their supply companies. onshore ones. That expense will increase as the future The very real reason is financial risk. A number of planned farms move further offshore into deeper waters. these companies have been told by their suppliers that The industry is aware of this and is now looking to energy prices will probably rise by 20% a year for the develop floating turbines to reduce the installation next four years. That is quite a frightening statistic. costs. Speaking as a mariner who has witnessed the Most people are talking about much smaller rises, but odd storm in his time—I am sure one or two other the energy companies have started to say that these noble Lords may have done so as well—I have grave larger price rises are coming down the line. If that is doubts about floating wind turbines surviving a major the case, British industry is going to have to do a vast storm at sea, particularly in deeper water. My doubts amount more to make itself efficient, or it is going to also extend to the development of wave power, where go out of business. However, the other aspect of this the same situation applies. To be really effective, wave is, of course, that it is not just a British problem. Other power has to be some way offshore, where the waves countries around the world are facing rising energy are largest. A major Atlantic storm off the south-west prices. Companies that think they can get cheap offshore would simply blow the whole thing away. energy prices are in for a shock in the future. I hope this Bill is a success. I obviously believe that One of the unintended side-effects of the proliferation it will not be held up a great deal as there are incredibly of offshore wind farms relates to navigation. This important elements in it. I very much hope that we do has certainly been exercising Trinity House, which is not lose sight of making sure that one of the biggest responsible for the provision and maintenance of aids gains in reducing energy prices is by not using energy to navigation. I declare a non-pecuniary interest as in the first place. an Elder Brother of that organisation, which will be celebrating its 500th anniversary next year. Initially, the Crown Estate and the developers of offshore wind 8.51 pm farms had little knowledge of where ships went and Lord Greenway: My Lords, as the last Back-Bench proposed sites that cut right across well used shipping speaker in this debate, I must admit to a certain lanes. I am happy to say that things have moved on amount of trepidation, especially when faced by a since then, and that Trinity House and the other two barrier of such expertise on the other Cross Benches. general lighthouse authorities are now properly consulted 227 Energy Bill[18 JUNE 2013] Energy Bill 228 beforehand. However, the positioning of some offshore for fast-flowing estuaries such as the Severn, Thames, wind farms has meant that shipping has often had to Humber and Mersey—areas where, as we heard from make considerable deviations around them, which of the noble Lord, Lord Prescott, power demand is already course leads to greater use of fuel and therefore greater large and where existing power stations would enable emissions from ships. relatively easy connection to the national grid. They In other cases, shipping is squeezed into comparatively would have the additional benefits of operating near narrow channels between wind farms. It is estimated the surface, where the tidal flow is strongest, and that at these choke points, the risk of collision is would be comparatively easy to install and maintain. increased by more than 400%. I have said on a number I know that the Government are aware of the work of occasions in this House that if you place an object being done in this field, but I should like the Minister in the sea, either a fixed structure or a floating one, to confirm that they will not ignore the potential of sooner or later a ship is bound to hit it. Thankfully, tidal power. I am sure that the Government are only many of the wind farms in the Thames Estuary are too well aware of the paltry sums that are being put built on sandbanks, so a ship would run aground long into research and development in this field, compared before it ran into one of the turbines. However, as with the money being lavished on offshore wind. these wind farms move further offshore that will not The noble Lord, Lord Cameron of Dillington, said be the case, so there is a danger that two large ships that it is a question of which technology will succeed could collide and drift out of control through a wind in the UK. The jury is out on that and I suspect it will farm, which would be rather akin to two large balls be out for some further time. More importantly, will it rolling through a skittle alley. be British-made? It certainly is not at the moment. Great play has been made of the production of jobs but I see no real evidence of it, certainly not in 9.01 pm offshore wind. Once the farm is built, it requires only Lord Whitty: My Lords, this has been a fascinating, 100 or so people to maintain it. As one noble Lord interesting and well informed debate. I pity the Minister mentioned, maintenance is a problem. It is not often who has to sum it up, so I will try to help her out by mentioned but in offshore wind, between 20% and giving my view of the debate. 30% of the time people are unable to get out and do My thanks to the Minister and her staff for all the the maintenance because it is too rough. They are information that she has given to us, in particular to either sick or unable to climb the ladders if the swell is the noble Lord, Lord Oxburgh, and his group. That too big. I can only hesitate at what it would be like if was a good preparation for this debate, and it is something you had a floating wind turbine, which would be that we perhaps should follow in other circumstances. moving. Anybody who has tried to get from one ship This is a radical Bill. It needs to be a radical Bill to another at sea will know the problem of getting on because we have a serious problem. However, it is also to that turbine from a moving ship. a flawed Bill. Many noble Lords have pointed to some I turn now to tidal power, which has received only a of the flaws and suggested ways of addressing them. brief mention; I think it was from the noble Lord, Going back to first principles, there are three reasons Lord Judd. We are blessed with a fairly good tidal why we need the Bill so urgently. The first reason—and range in this country. In two areas, the Bristol Channel the one that has been the most remarked on—is that it and the Channel Islands, we enjoy tidal ranges of should be a means of achieving our decarbonisation around 40 feet at spring tides, which are second in the targets. To decarbonise our economy we need to world only to the Bay of Fundy. There is enormous decarbonise electricity supply first. Without that, we potential for tidal power generation. Unlike wind, cannot decarbonise transport and we cannot decarbonise tides are predictable for many years ahead and there building heating. are effectively four movements a day—two flood tides I was pleased that my noble friend Lady Worthington, and two ebb tides. followed by other noble Lords including the noble I am surprised that no noble Lord has mentioned Lords, Lord Teverson, Lord Stern and Lord Deben, the proposed Severn barrage, about which we had a and latterly by my noble friend Lord Prescott, set out debate a few weeks back, which may be because the the case for us to take climate change seriously. It Select Committee in another place rubbished the idea was a minority view within this House that argued rather effectively a week or so ago. I have never been in against that. The noble Lord, Lord Lawson, and the favour of a fixed barrier but there are alternatives. I noble Viscount, Lord Ridley, did not express a general understand that other developers are now looking at view in the House. However, I would caution the alternatives such as tidal lagoons or tidal fences, as I Government that that does not necessarily reflect the believe they are called. Tidal generation is proven. We degree of difficulty in explaining our commitment to know that the technology works; the Strangford Lough decarbonisation targets to the country. There is some installation has been working for around four years. scepticism there. While most of us may disagree with That, however, is a column-based installation. These the noble Lord, Lord Lawson, that does not mean that suffer from the same problems as offshore wind turbines, there is not a resonance out there, and a political in that they are very expensive to install. problem for the Government in providing a narrative To my mind, floating structures, which are being that can take consumers and business along with them developed at the moment, are better propositions. in delivering the objectives of the Bill. These vary but one example is that being developed by The second main reason, which is connected, is that Scotrenewables of Orkney. This is essentially a floating a very large amount of investment is needed regardless tube with two extending arms, each of which has a of whether we are meeting decarbonisation targets— propeller in it. Systems such as this have great potential £110 billion is the figure that has been referred to. We 229 Energy Bill[LORDS] Energy Bill 230

[LORD WHITTY] actually get work. That is aggravated because of the need to ensure that it is brought here. To get it, as slow take-up of the Green Deal, but it would have many noble Lords have said, we need greater certainty applied in any case. At the moment the ECO is not in what the regulatory framework will be, or at least quite a poll tax but it is close to one, and it is deeply significantly less uncertainty. We need that to keep the regretted. It also disproportionately falls on electricity lights on and to provide for our longer-term energy consumers as against gas consumers. There is no real security. logic in that. If we are discussing tariff reform, these The third reason goes back to those who use the issues also need to be tackled. electricity—to household consumers and to British Tackling fuel poverty and providing for improved business. As it stands, and I cannot see any other way domestic energy efficiency need to be a central part of of doing it, the Bill places the whole burden of paying the energy strategy, as the noble Baroness, Lady Maddock, for the investment that is needed on consumers. That and my noble friend Lord Judd emphasised. The needs to be done in a way that does not damage original part of the Bill concerned with consumers, British industrial competitiveness, that is fair to domestic when it first went to the House of Commons, was individual consumers and, in particular, that will not timely and related to redress. Indeed, we need to do worsen the terrible situation with regard to fuel poverty. something about redress; my noble friend Lady Liddell I am afraid that there is virtually nothing in the Bill was pointing to the number of cases where there are that provides a new regulatory framework to achieve problems of mis-selling to consumers. However, the that. provisions are pretty weak, as is the enforcement. For I therefore want to start on Part 2 of the Bill, which example, I do not understand why mis-selling redress is the most important part, on the issue of consumers. is limited to five years. That is not the situation with The provisions on consumers in Part 5 of the Bill are, financial services; a lot of the PPI claims that are frankly, woefully inadequate. The Government, the going on go back years and years, so I do not understand industry and the regulator are all under scrutiny by why energy should be restricted in this way. There is consumers, and the Government need that credible also no provision for collective redress, which would narrative in explaining their Bills, their choices and be the most effective way of dealing with past problems. their need for energy efficiency measures. A number of noble Lords, particularly the noble Baroness, Lady I intend to come back pretty heavily on these consumer Maddock, referred to this issue. It is not only a question matters. My general approach is very similar to that of of energy efficiency but a question of fuel poverty. my noble friend Lord O’Neill, who has regarded, as I have, Ofgem as being pretty toothless in this area over We could have used the Bill to greatly strengthen many years. the regulatory framework for the tariffs that we charge to domestic consumers, but it was very late in the I turn to a couple of other parts of the Bill that proceedings in another place that we introduced have been less remarked on. On nuclear regulation, Clauses 127 to 130, I think it is, on simplified tariffs. again I agree with my noble friend Lord O’Neill that The Bill is still pretty vague about how they are going we need the ONR to be set up and that all parties are to work. I appreciate that there are political problems. key to that. However, I do not understand why we The Prime Minister committed himself rather rashly a have 50 clauses setting up the ONR when it is essentially few months ago to simplifying tariffs, and Ofgem and a simple task of transferring the responsibilities from DECC have been struggling to find a way of delivering what was an agency of the HSE and putting it on to a that ever since. As yet, the Bill does not actually statutory basis. We have 50 clauses and, I think, 60 pages deliver that. The late addition regarding simplified of schedule setting up the ONR. Before we come to tariffs is welcome, obviously.We all welcome simplification, that part of the Bill in Committee, I think that the but simplification in itself does not improve either Minister and her officials need to set out where the fairness or effectiveness in driving consumers to better responsibilities, duties and resources are actually different choices with regard to how they use their electricity. from those of the HSE and the ONR acting in shadow At present, and the noble Earl, Lord Cathcart, and form within the HSE. Obviously there are advantages the right reverend Prelate the Bishop of Hereford in having an independent quango of a new sort with particularly emphasised this, we have a tariff structure new governance, as it can escape some of the restrictions that is illogical in that it both encourages the use of on civil service pay and attract nuclear inspectors and electricity, since the marginal cost of electricity falls as others with expertise at rates which the market is now you use more, and is socially unjust as it hits the poor throwing up. This would keep it out of the restraints more than it does the better off. That needs to be that are being imposed by the Treasury. I do not changed but the Bill does nothing to change it. As I suppose that that was greatly remarked upon in Treasury understand it, the Ofgem activity to try to deliver the circles, but it is the main and most immediate advantage simplified tariff structure does not do anything either. of having the ONR put on a new basis. I largely approve of that. However, does it require all this Nor does the structure ensure that the ECO superstructure? mechanism, which is still in its infancy, performs in a way to reduce fuel poverty. At the moment there are Very briefly, I also ask whether the Minister can fewer resources being devoted to fuel poverty than point out where these requirements on provisions for there were under the old system if you combine EEC, strategy and policy statements differ from the requirement CERT and expenditure on Warm Front. They are also on national policy statements that we already have on being used inefficiently. Unit costs for cavity walls, energy matters. I am not sure whether this is a step for example, are going up. At the same time, there forwards or a step backwards in terms of the transparency are installers and workers in that area who cannot of the Government’s strategic thinking. 231 Energy Bill[18 JUNE 2013] Energy Bill 232

I go back to Part 2 and energy market reform. low carbon because it reused what would otherwise be Contracts for difference is a bold innovation, as has waste heat, would that also qualify under CFD? Will been pointed out, and in this exact form it has no the Minister respond to the questions about state aid parallel anywhere else in the world. When first proposed, and say something about the likely timescale? Will the it was greeted with scepticism by supply companies investment contracts provisions, designed in part to and others, but we have moved on and seem to be cover a period when we might still be clarifying state accepting that this is the only show in town. I agree aid, run into the same kind of problem as CFDs? with that. However, we have to recognise that it is, in The Government have to answer a lot of questions some ways, a very odd proposition—particularly, if I on CFDs, as well as some on the capacity mechanism. may say so, coming from what is supposed to be a free A major improvement appears to be the recognition market oriented Government. by the Government in Clause 37 that energy demand It is neither a free market nor, of course, a command reduction and energy efficiency in general should be economy, but it has aspects of both. At the moment, it part of the approach of the capacity mechanism. The is all about the Government providing very long-term provision of energy demand reduction within the electricity contracts that are technology-specific and, in many distribution system itself—as distinct from action at cases, location-specific, to large individual oligopolistic the user end—must surely be a standard part of the companies, effectively giving them a price guarantee capacity mechanism procedure. We therefore do not for 10, 25 or 35 years. While that is not quite Gosplan, want just one, two or three pilot projects, but to work it is, shall we say, a little more Vladimir Putin than towards a situation where that is part of the capacity Milton Friedman. It is a partially centrally controlled mechanism as a whole. system operated through an oligopoly. During the We need to see the regulations on the capacity course of the Bill and once we have seen the draft mechanism. The noble Lord, Lord Teverson, and my delivery plan, we hope to be able to insert a little more noble friend Lord Grantchester said that we need to competition and choice into this process, and a clarify the position of unabated coal-fired power stations little more ability to have break points in the that are extending their lives beyond 2023, when the contracts where we can review, in the light of economic, EPS does not apply to them. They could benefit from technological and environmental change, whether they the capacity mechanism if they made their capacity are still appropriate. However, that depends on a proper available. regulatory framework. I, like many other Lords, hope Several noble Lords asked questions relating to that the Minister can guarantee that if we get to interconnection. I asked whether the capacity mechanism Report stage in the autumn, we will have at least some would be capable of being delivered via arrangements of the major pieces of draft secondary legislation on interconnections with the French nuclear system before us so that we can see what we are doing. or Irish wind farms. If so, would they be treated as Probably all I can do now is put to the Minister the available energy or capacity in roughly the same way questions that have largely already been asked and as domestic-based generation? The noble Lord, Lord ensure that she covers all these points. On CFDs, that Oxburgh, also asked about storage, which is a part of includes whether she can give us an indication of the the availability of capacity. likely length of the contracts, whether there will be a The Government have a number of questions to break point and what exactly is the role of this rather answer. Colleagues will be pleased to hear that I have shadowy counter body. Is it correct that it will be a not gone through my full list and that I do not intend public body now and that there will be only one of to do so. However, I will return in part to one of the them? I believe that is the case, but we need to be quite most contentious issues: the decarbonisation target. I clear what the nature of the body is and whether, even am in favour of strengthening the commitment to a if it is a semi-private body, it clearly has the backing of decarbonisation target. The very weak provision in the Government, as my noble friend Lord Davies asked. Clause 1(5) which simply allows the possibility of a Can independent generators easily access this system 2030 target but does not require it, and in any case not and bring different technologies into it? How do individual before 2016, has already had a detrimental effect on site-based generators or community generating projects confidence and understanding. Investors need to know fit into the scheme? Is there scope for a green market that we are on a clear trajectory on this. Most of the auction or is the Minister prepared to extend the investment decisions that will be contemplated in the ceiling for FITs above the five megawatt limit so that next two or three years will relate to a period beyond they can provide for community and other one-off the current target of 2020. If the House alters nothing generation schemes? Other noble Lords pointed to a else in the Bill, assuredly we must alter that. potentially damaging hiatus between the ending of the ROCs system and the full effects of CFDs coming into 9.20 pm play.Are the Government prepared to envisage extending The Parliamentary Under-Secretary of State, Department the demise of ROCs beyond 2017? If not, a number of of Energy and Climate Change (Baroness Verma): My serious investment projects will be stalled. There needs Lords, I start by thanking all noble Lords for their to be some overlap until 2020 or even beyond. contributions in this debate. They have been wide-ranging CFDs are essentially for nuclear and renewable but very informative. I particularly thank noble Lords low-carbon technologies, so I am not clear how carbon who worked with me through the informal scrutiny group. capture and storage fitted to gas appliances fits into Overall, I agree with the noble Lord, Lord Whitty, that this. The noble Lord, Lord Dixon-Smith, referred to there seems to be an overall sense of support for the using the heat from gas or biomass generators. If we Bill. Of course, there will be plenty of opportunity to were to come up with a proposition that was seriously scrutinise it thoroughly in Committee. 233 Energy Bill[LORDS] Energy Bill 234

[BARONESS VERMA] record that both prepayment and a capacity market At the start of this debate, I emphasised how vital approach are similar, in that they provide a payment this Bill is, not just for the UK’s growth and jobs but, for proving efficiency savings and are agnostic about as noble Lords have said, for consumers across the where those savings are delivered. However, on balance, country. This legislation marks a significant reform of a capacity market was preferred, as it enables you to the electricity market and it is important for industry, target reduction during valuable peak periods, and investors and consumers that we get it right. With that allows electricity demand reduction to compete against in mind, I look forward to debating the Bill in the supply, ensuring that EDR is rewarded for the value spirit of collaboration. A large number of questions that it provides to the system. It also avoids the need to have been raised today and I will cover as many as I create an additional delivery mechanism for electricity can in the time given, but I am sure that in the coming demand reduction. days I will have many opportunities to answer in more The right reverend Prelate the Bishop of London detail the questions that may not be answered today. and others asked about the flexibility to run more I thank the noble Baroness, Lady Worthington, for than one type of pilot for EDR. The spending power her overall support for the Bill, but I was slightly set out in Clause 37 allows the Government flexibility surprised and perhaps a little disappointed that she to run a pilot to test different approaches to incentivise made a political point and overlooked the absence of electricity demand reduction. The Government will investment and forward planning under the previous provide further detail on the pilot proposals as soon as Government. The noble Lord, Lord Redesdale, made possible. the point that the Bill is not a panacea but goes a long Many noble Lords are concerned about putting the way to building long-term certainty for investment interests of consumers at the heart of what we are and energy security. As I listened to the noble Lord, doing, and I agree completely that it is crucially important. Lord Prescott, I thought that this was perhaps the That is why we have other measures alongside the only Bill on which he and I will have so much in Energy Bill that put consumers at the heart of being common. He is absolutely right. Without political will able to control their energy usage. That is why we are we cannot build political consensus. Globally, we have rolling out the smart meter programme alongside other become the leaders in this area because we have gone measures such as the Green Deal, enabling people to out to build political consensus. change behaviour, which will assist in ensuring that we Beginning with the decarbonisation target range, a reduce our energy use. We have to inform consumers number of noble Lords asked why we do not set it about how their energy is being utilised. now. As I said in my opening speech, the Bill enables I turn to climate change, and noble Lords who are the Secretary of State to set a legally binding slightly sceptical about global warming and climate decarbonisation target range for the power sector in change. I am not a scientist, and I suspect that many in Great Britain. This should be in 2016, when we are this Chamber today are not scientists, but renowned due to set in law the level of our economy-wide fifth scientists are showing us that much is going on that is carbon budget, covering the corresponding period. At evidence of climate change. The summer extent of that point, we will receive advice from the Committee Arctic sea ice has declined by a staggering 40%. The on Climate Change on the level of the fifth carbon Antarctic peninsula has warmed by more than 3 degrees budget. centigrade. Glaciers in the high Canadian Arctic lost However, it is important that we do not set a target 580 gigatons of ice between 2004 and 2011 alone. range in isolation. It must be done in the context of These are serious figures, and we need to ensure that considering the pathway of the whole economy towards we take seriously climate science and the evidence and our 2050 target. It will also make sure that we do it in a advice from climate scientists. way that minimises costs both to the economy and to taxpayers as a whole. Noble Lords said that it would The noble Lord, Lord Stern, made a compelling be detrimental to investor certainty. I agree that investor argument on China’s commitment to act, and his certainty is absolutely essential to delivering our energy expert opinion is recognised globally. We welcome the and climate goals at least cost, and considering investor commitment that China is making and we are working certainty must be a fundamental part of our policy. closely with China to ensure that we are part of the We will continue to take practical steps to decarbonise process of assisting that country. That gives us a very the economy, while ensuring security of supply at the good negotiating and bargaining position in the world, least cost to the consumer. as the noble Lord, Lord Prescott, said. Investors recognise and welcome this. John Cridland, A number of noble Lords talked about fuel poverty, the director-general of the CBI, said that the Energy among them my noble friend Lord Cathcart, the noble Bill, Baroness, Lady Liddell, and my noble friend Lady Maddock. The coalition is committed to doing all that “will send a strong signal to investors that the Government is is reasonably practical to end fuel poverty in England serious about providing firms with the certainty they need to invest in affordable secure low-carbon energy”. by 2016 and to helping people, especially low-income, vulnerable households, to heat their homes more I am grateful to the noble Lord, Lord Browne, and affordably. The number of households in fuel poverty others for explaining why setting the target in isolation reduced in 2010 and again in 2011, although fuel would be unwise. poverty remains a huge challenge. A combination of Turning to electricity demand reduction, the right rising wholesale energy prices and poor quality housing reverend Prelate the Bishop of London and others stock in Britain has meant that, despite significant asked about the prepayment schemes. I want to put on investment, a large number of households are still in 235 Energy Bill[18 JUNE 2013] Energy Bill 236 fuel poverty. I congratulate the previous Government and institutions. A panel of technical experts will for trying very hard to tackle that issue, and we are scrutinise the analysis informing government decisions working and building on that. However, with energy before they are made. National Grid will be the delivery prices projected to continue to rise, improving the body for EMR and is providing expert advice to the thermal efficiency of Britain’s housing stock is key to department. That does not stop noble Lords from addressing that urgent issue. That is why the Green contributing and giving advice to the department. Deal and the energy company obligation are flagship My noble friend Lord Cathcart asked about the policies for improving the energy efficiency of our cost of EMR to business. We have said that we will nation’s housing stock. In addition, the Government exempt the most energy-intensive industries from the have a range of policies to address other contributing costs of electricity market reform to ensure UK business factors of fuel poverty, including the one-house discount, can remain competitive. The Government will publish which helps around 2 million households per year, as shortly a consultation on the scope of the exemption. well as winter fuel payments and cold weather payments. The noble Lord, Lord Davies, my noble friend I will also touch on domestic tariffs, which a number Lord Ridley and other noble Lords mentioned shale of noble Lords talked about. The proposals are to gas. They asked whether this will reduce gas prices and deliver the Prime Minister’s commitment and ensure whether government modelling of gas price rises is that customers are offered the cheapest tariff. They realistic. We expect electricity bills to rise as a result of will ensure that customers are on the cheapest tariff in rises in global gas prices. The potential impact of shale line with their preference, the payment method that gas on gas prices is still uncertain. It is unclear how they have chosen and whether they have opted for easy or cost effective it may be to extract shale gas or standard variable rate tariffs, or a fixed-term or fixed-price what will be available globally. tariff. The power in the Bill will allow us to require The noble Lord, Lord Grantchester, and other customers on poor, value-dead tariffs to be moved on noble Lords asked about the emissions performance to the cheapest standard variable rate tariff that the standard and grandfathering. The level of the EPS supplier offers. It will also require customers on fixed-price will be maintained until 2045 for plant consented under tariffs to be moved to the cheapest standard variable the 450 gram per kilowatt base level. It is essential to rate tariff that the supplier offers if they do not opt for provide sufficient certainty to those investing in gas-fired another fixed-price tariff. generation that we will need over the coming years to We are also capping the number of live tariffs that maintain security of supply. Grandfathering will not suppliers can offer. This package of measures means prevent us meeting our objectives. that consumers will be on the cheapest tariff that is Turning to the capacity market, my noble friend line with their preferences, but noble Lords are right; Lord Jenkin and other noble Lords asked about proposals there is much more that energy companies can do and for a new clause to encourage competition. I agree should be doing, and we will work with them to ensure with my noble friend that the capacity market should that they are able to provide the best possible value for encourage competition between incumbents and new money for consumers. entrants, between technologies, including generation The EMR part of the Bill will be the substantial and demand-side response, and between new and existing part of it after decarbonisation. The noble Baroness, plant. I look forward to discussing this in detail in Lady Worthington, the noble Lord, Lord Roper, and Committee with him and other noble Lords. other noble Lords asked whether we would commit to The noble Lord, Lord Kerr, and others asked publishing the delivery plan ahead of the Committee about the capacity market timings. The Government scrutiny of EMR. We intend to publish the draft are minded to run the first capacity auction in 2014 for delivery plan before the Committee scrutiny of the the delivery year of 2018-19. This is to allow new plant contracts for difference provisions. We are working to compete alongside existing capacity to enable a through the usual channels to agree a satisfactory competitive auction. order of consideration on this basis. However, as Noble Lords raised the question of interconnection. noble Lords know, it is critical that this Bill progresses The Government are fully supportive of increased as swiftly as possible. interconnection and are working with Ofgem to ensure We will have the opportunity to scrutinise the detail that we have the right conditions to bring forward the when secondary legislation comes before the House. planned significant increase. We do not think that a Although further detail in the delivery plan will no financial incentive is needed to bring forward this doubt be helpful for informing consideration of the already-planned investment. It is very important that plan, it is important that we do not delay the Bill. That the Bill does not adversely impact on interconnection, would risk investment, jobs and the security of electricity and this is a key requirement in designing electricity supply. I encourage responsible debate that balances market reform. the detailed scrutiny, for which this House is renowned, I shall touch very quickly on nuclear. My noble with the need to get this legislation on the statute friends Lord Cathcart and Lord Ridley and other book. noble Lords asked about plan B if there is no new The noble Lord, Lord Oxburgh, and other noble nuclear. The aim of EMR is to bring forward a diverse Lords questioned the Government’s expertise to undertake mix of low-carbon generation, including renewables, electricity market reform. I can reassure the noble nuclear, CCS and demand-side measures. We can meet Lord that we are not undertaking this singlehandedly. climate goals without new nuclear, and we have been The department has established expert groups for the clear that we will reach an agreement on a contract three main policy areas of the CFDs, capacity market only if it provides value for money and is affordable. 237 Energy Bill[LORDS] Energy Bill 238

[BARONESS VERMA] clauses in the Bill. It is absolutely right that the ONR The noble Lord, Lord Judd, asked about GDF. I should be a stand-alone body and that it goes through know that the noble Lord takes a keen interest in this a full scrutiny process. That will give it a full mandate and we have had many conversations about it over as a stand-alone body. He also asked about the feed-in recent months. The Government remain committed tariffs from five megawatts to 10 megawatts. I am to the policy of geological disposal. Following their currently looking at that and I hope to have some reflections and the continuing “lessons learnt” exercise, further details to impart in Committee. the Government have confirmed that they believe that I am being told that I have only a minute to speak, the site selection process can be improved on. On so I will very quickly close. Once again, I commit to 13 May this year we announced a call for evidence, having further discussions inside and outside the Chamber which ran until 10 June. That will be followed by a on the concerns that noble Lords have raised. There public consultation later in the year, and I hope very have been many excellent contributions today. I look much that the noble Lord will take part in that. forward very much to the debates that are going to However, GDF will be the Government’s preferred follow. In the mean time, I hope that the Lords’ option in dealing with long-term nuclear waste. informal scrutiny committee continues to work closely with me, and if any other noble Lord wishes to raise a In reference to the ONR, the noble Lord, Lord concern, my doors are always open. I encourage noble Whitty, asked why the Government are creating quangos Lords to use either or both of these avenues in order when their intention is to do away with them. The that the Bill might make progress to Royal Assent ONR currently exists as an agency of the Health and without delay. I am sure that noble Lords will concur Safety Executive, and the Energy Bill will establish it, with the statement that I have made, and on that note rightly, as a stand-alone body outside the Civil Service. I urge the House to support this Bill and give it a I think that the noble Lord himself agreed that that is Second Reading. the right place for the body. In that way, the expertise of those who serve in the ONR will be reflected in Bill read a second time and committed to a Grand financial packages suitable to a body that has to Committee. deliver world-leading advice to a sector that requires that advice. The noble Lord asked why we had so many House adjourned at 9.40 pm. GC 41 Intellectual Property Bill [HL][18 JUNE 2013] Intellectual Property Bill [HL] GC 42

jobs and create more than £36 billion annually to UK Grand Committee GVA, calculated by the DCMS creative industries group. As a result of our belief in the importance of Tuesday, 18 June 2013. the creative industries, we believe that the annual report should not be limited, as the Government propose, 3.30 pm to a view from the IPO, interesting though that undoubtedly would be. Surely the effect of the annual The Deputy Chairman of Committees (Baroness report should be a much broader review of the state of Pitkeathley): My Lords, I remind you that if there is a the copyright industries in the United Kingdom. The Division in the Chamber while we are sitting, the test is whether such a report will provide sufficient Committee will adjourn as soon as the Division Bell material to provide a discussion of how we are doing has rung and resume after 10 minutes. as a nation. It is not sufficient merely to hear how the IPO is doing in relation to its role of balancing the interests of intellectual property holders with the wider Intellectual Property Bill [HL] interests that the public may have in the extensive Committee (3rd Day) benefit that can be received from the early dissemination of information, knowledge and material. 3.30 pm In our view, it will be necessary for the annual report to cover plans for changes to legislation relating Relevant document: 3rd Report from the Delegated to IP and copyright; details of the expected impact on Powers Committee job creation; progress in supporting innovation; the impact of policy on economic growth more generally Clause 20 : Reporting Duty in the United Kingdom; engagement with other related government departments; engagement with stakeholders and details of lobbyists who have been in contact with Amendment 25F the IPO; information concerning consumer behaviour and habits regarding the use of and access to copyright- Moved by Lord Stevenson of Balmacara infringing material and the subsequent economic impact; 25F: Clause 20, page 18, line 1, after “to” insert “job creation information containing manipulation of the internet and” search market; the impact of voluntary and non-voluntary action in tackling copyright infringement; and information Lord Stevenson of Balmacara: My Lords, this group about cross-border co-operation between our own of amendments all relate to the proposed reporting jurisdiction and jurisdictions in the European Union duty placed on the Secretary of State in Clause 20 in and elsewhere. That is a long list, but it makes the relation to the creative industries. We welcome this point that what is needed is not so much a single point proposal but the amendments, taken collectively, do of view from the IPO but a broader conspectus of the two things: they build on the proposals in the Bill and current and future situation in this vital sector of our they offer some alternatives for the focus of the reports economy. that are to be made to Parliament. A report along the lines we are suggesting in these Your Lordships will recall that the seeds of this amendments will be an important first step in making debate are to be found in the discussions held on the our copyright industries a central part of our economic Enterprise and Regulatory Reform Bill last Session, in focus and ensuring that Parliament becomes better particular the amendments put down to the Bill in informed and can debate properly our progress. As Committee by the noble Lords, Lord Jenkin of Roding my noble friend Lord Howarth of Newport said on and Lord Clement-Jones, and others, which led the Report on the ERR Bill, welcoming the Minister’s Minister to convene various meetings and, after discussion, commitment that an annual report should be published to agree to introduce this proposal. Discussions of this by the IPO: type always make for better legislation, do they not? “It may not reach the top of the bestseller lists, but it is right in However, rereading the debate reminds me that then, principle that the public should have the opportunity to be as now, our aspirations were for a rather more expansive informed about what the current issues are and what developments report than is currently proposed. in policy are or may be”. —[Official Report, 6/3/13; col. 1597.] Like the Government, our amendments start from I beg to move. the position that IP is a hugely important component of this country’s economy. As the letter sent to the Lord Jenkin of Roding: My Lords, along with a Times last March signed by members of the Creative number of other noble Lords, I have several amendments Coalition Campaign said: in this group to which I would like to speak. “Copyright is the central intellectual property right that underpins the creative and knowledge economy. Films, music, games, books, The noble Lord, Lord Stevenson, has reminded the could not get made in their present quantity and quality without Committee that the origin of some of this was in the a robust system of copyright. It provides the legal foundation for debates on the Enterprise and Regulatory Reform Bill. the ability of companies to license or sell works, and to invest and One of the things we debated at some length was how to innovate”. far the IPO had a role to protect and promote the As we heard during the discussion of the ERR Bill, interests of intellectual property owners. With respect IP is at the heart of our economic success in this to my noble friend, we had an answer that was half sector. The creative industries support around 1.5 million dusty and half satisfactory. The dusty point was that GC 43 Intellectual Property Bill [HL][LORDS] Intellectual Property Bill [HL] GC 44

[LORD JENKIN OF RODING] Amendment 26, to which I am grateful that others he was not going to accept that the IPO should have have added their names, is intended to make it completely that role and that was why we proposed having a clear that the report has to show that it is, director-general. “the creation and exploitation of intellectual property”, I am intrigued to see that the noble Lord, Lord that has contributed to growth and innovation. If it is Stevenson, has tabled what looks like exactly the same not protected, if there are too many exceptions, the amendment as my noble friend Lord Clement-Jones incentive for people to do the work that creates and and I tabled on that Bill. generates IP is to that extent weakened. As the noble Lord has already said, if we are a country that has to Lord Stevenson of Balmacara: If I may help the live on its wits and depend on its inventions and noble Lord, I asked his permission—this is an intellectual innovation to keep ahead of the rest of the world—in property Bill, after all—and I thought that he had some cases I fear that we need to be catching up with granted it. If he has not, I must apologise because I the rest of the world, but that is very much part of this wanted to have exactly that point raised as it is on the Government’s whole approach to these matters—we agenda later on. I thought that if he would not do it, I must recognise the very important role that IP plays in would. all this. The issues were raised very dramatically at Second Reading by my noble friend Lord Clement-Jones; I will not repeat the words but they are at col. 858. Lord Jenkin of Roding: I am most grateful to the noble Lord for his e-mail. I did not interpret it as I will deal with the other two amendments rather asking for my permission because no permission would more briefly. The clause says that the Secretary of be needed. I treated it as a matter of courtesy that he State should lay the report before Parliament. I do not was letting me know that he had tabled a similar think that that is enough. The legislation should call amendment. for a Statement, including the findings of the report and the action the Government intend to take. It At this point I should say that I am in some should not just be lost in the tangled undergrowth of personal difficulty today. I am speaking on the Energy the huge tide—sorry, I am mixing my metaphors—of Bill later and I ought to try to get back to the Second written reports to Parliament, of which there appear Reading debate as swiftly as I can. I will do my best to to be an increasing number. This is sufficiently important listen when the noble Lord, Lord Stevenson, moves that we should require a Statement by a Minister in that amendment but I am sure that he will understand the House, which can of course be subject to question if I have to desert the Committee for the Chamber. and answer. It will be open then to individual Members Returning to Amendment 25F—I have amendments to decide if they wish to take steps to have the report in the same group—the encouraging point in my noble debated. friend’s reply in the debates on the ERR Bill was that Amendment 28 seeks to demonstrate the link between he described himself as the Minister with the duty to the role in promoting innovation and economic growth promote and encourage intellectual property. We have and the protection and promotion of IP; otherwise, taken that to heart. So I say at once that we welcome one may find that intellectual property and rights the clauses in the Bill which now provide for the owners’ ability to protect and monetise their rights will annual report because this seems to be a valuable be seriously weakened in what it appears will be presented addition to the armoury of measures which are necessary in the guise of pursuing economic growth. The to encourage and promote intellectual property in all Government are consulting on how they define and its forms. measure the creative industries in such a way that The noble Lord, Lord Stevenson, was quite right to digital and tech companies will be classified as creative say that we think the report ought to go wider than the industries. I look forward to my noble friend correcting Government have so far envisaged. I attach a lot of me, but I am concerned that, taken together, these two importance to that. I am grateful to the noble Lords, things could mean that the relaxation of IP rights, Lord Stevenson and Lord Young of Norwood Green, particularly copyright, would actually benefit the creative who have added their names to our amendment. Perhaps industries, when in truth they would benefit US-based I should have added mine to theirs but that would have and, increasingly, China-based global tech companies meant that I would have to stay, which may be difficult to the detriment of the UK creatives. Therefore, this in the circumstances. amendment is intended as a safeguard for UK creatives The imposition of a duty to produce an annual and to ensure that the IPO takes into account how its report on the work of the IPO in that form is welcome. actions affect those who create and own intellectual It reflects the words that were used by the IPO’s chief property. executive John Alty, when he gave evidence to the As I have said, Clause 20 is a very welcome step Committee in the other place, forward and I would not want anything I have said to “as ensuring the IP framework supported innovation and growth”. detract from that. But, as the noble Lord, Lord Stevenson, These are now reflected in the words in the Bill. said, it needs to make it more explicit that the objectives However, it does expose one of the difficulties we face are dependent on safeguarding the rights of IP owners. and which was faced to some extent at the last sitting of the Committee. The IPO has always claimed that 3.45 pm weakening copyright with more and more exceptions will generate economic growth. This attitude has fuelled Lord Howarth of Newport: My Lords, Clause 20 the anxieties of those who depend on the protection of requires the Secretary of State to report to Parliament IP for their living. annually on how the activities of the Intellectual Property GC 45 Intellectual Property Bill [HL][18 JUNE 2013] Intellectual Property Bill [HL] GC 46

Office and legislation have supported innovation and to the movement of agricultural enclosures in the 18th economic growth in the United Kingdom. I very much century. Do we want intellectual enclosures or do we welcome the Minister’s commitment to the production want commons? of an annual report, but the requirement in Clause 20 is too narrow. The responsibilities of government range A monopoly-holder protected from competition more widely than the wording suggests. Amendment 26A will be under less pressure to innovate again. That would require the report to cover how, result is surely perverse. Monopoly-holders may move aggressively to squash budding competitors by taking “legislation, the policy of the government and the activities of the lawsuits against them or taking them over. Microsoft Patent Office have balanced the interests of the owners of intellectual has practised those techniques over many years. The property and the wider interests of society”. consequence of those practices is that research and By “society” I mean not only in this country but innovation have been discouraged. Research efforts across the world. can be distorted where patents exist. A competitor New inventions and techniques have improved lives business may be more attracted to coming as close as again and again, particularly since the Industrial it can to copying an existing patent that is seen to be a Revolution. Intellectual property laws and their intelligent money-spinner than to developing a new product or enforcement are essential for the stimulation of innovation. embarking on innovation in a new area. We have seen As my noble friend Lord Stevenson said, we need a that in the pharmaceutical field. Where there are dense robust system of intellectual property legislation. However, patent thickets, it is particularly discouraging to new I contend that it is not always the case that strong entrants and competitors. intellectual property rights—and their strong assertion— I will say a word about genes. I was Minister for improve economic performance or are an unmixed Science between 1990 and 1992. The most difficult benefit to society. Incentives and rewards to inventors, decision I had to take as a Minister in government was innovators, creative people and investors need to be whether we should allow gene patenting in this country. balanced against the public benefit of wider and quicker All my instincts and values were against it, but I was diffusion of knowledge, and the lower prices that may driven to take the view that we had to do it. We had result from early competition. unfortunately had poor funding settlements for science We should seek in policy to balance the interests of from the Treasury in recent years and it was difficult to businesses with those of consumers and academics. A see how British scientists would be able to stay in the judgment always has to be made about the costs and game of the human genome project. At the same time, benefits of monopoly, and, where monopoly is mitigated, the US Supreme Court and subsequently the US of licensing. It has to be made on the appropriate Patent and Trademark Office had made it clear that length and breadth of a particular patent. It has to be they would grant patents for discovery of genes in made on whether the price in economic inefficiency of certain conditions. restricting the diffusion and use of knowledge is However, what was “discovery of genes”? It was outweighed by the benefit of increased innovation. not the invention of genes; it was precisely discovery. The appropriate balance will vary according to the It seemed to me wrong that natural genes should be context. patentable. Knowledge of that kind ought to be A longer duration of intellectual property rights disseminated as rapidly as possible for the benefit of seems more appropriate in literature and the arts than humanity. There were vast potential benefits, obviously, in manufacturing. There may be differences, too, with in the field of health. Of course, when patenting luxuries as opposed to necessities, and in the advanced became established, there was a headlong rush to world as against the developing world. We should also patent. Among the companies that were successful in ask what proportion of patents in any field a business that competition, Myriad Genetics patented two human should be permitted: for example, in the field of genetic gene mutations that affect the susceptibility of people modification. I believe that there are enormous benefits to breast cancer and ovarian cancer. Having secured to GM, but it is legitimate to ask whether Monsanto those patents, they demanded licence fees even from should hold patents for the vast majority of seeds not-for-profit laboratories. In that way, the existence planted in the world. of patents discouraged screening and discouraged the search for improved screening technologies. The medical There are risks and disbenefits in granting patents benefits arising from the human genome project were too easily, and there are reasons to be sceptical when restricted. we look at applications for patents. There are definitional problems. What is new? What is original? The great Yet I do not think that those businesses made more Jewish sage Maimonides said that there was nothing money internationally, because poor countries could new under the sun. Delacroix said of Raphael: not pay the higher costs that arose from the existence of patents. I therefore welcome wholeheartedly the “Nowhere did he reveal his originality so forcefully as in the ideas he borrowed”. recent judgment of the US Supreme Court written by Judge Clarence Thomas which, as I understand it, True originality is indeed rare. reverses the position that the court took in 1980. Much research is publicly funded. Should the first Sandra Park of the American Civil Liberties Union private interest to exploit that research gain a large has said about the judgment: advantage over the rest? It has been suggested, rather “Because of this ruling, patients will have greater access to colourfully, that the application of intellectual property genetic testing, and scientists can engage in research on these law in the 20th and 21st centuries should be compared genes without fear of being sued”. GC 47 Intellectual Property Bill [HL][LORDS] Intellectual Property Bill [HL] GC 48

[LORD HOWARTH OF NEWPORT] noble friend Lord Stevenson said, the annual report The annual report will, I hope, reflect on issues ought to reflect a broad view from government as a such as that. I hope that it will reflect on what policy whole—not just from the business department and the ought to be in the life sciences now and in the future. IPO but very much from the DCMS, with its particular We face the possibility of new techniques of so-called responsibilities to promote creativity, and also from “human enhancement”—adjustments to the brain and the ODA, because we have responsibilities, which I other parts of the human anatomy—which there will have mentioned, in relation to poverty and the no doubt be attempts to patent. The Chinese are advancement of human interests across the world. I investing enormous resources in the field of life sciences. hope that the annual report will share the Government’s We will want to know what the Government’s view is vision and analysis in these respects. That is why we on appropriate policy in this field. I hope that the need to amend Clause 20. annual review will provide an opportunity for the I will very briefly set out the reasons for Government to share their thinking with us. Amendment 28ZA, also in my name, which are obvious. What will the annual report say about graphene? The ears of the Intellectual Property Office must be Graphene is said to be the new miracle material: deafened by the clamour of lobbyists. The office must single-atom-layer carbon. It is the thinnest, strongest be pushed and tugged this way and that and be continually material with high conductivity and flexibility. It has under massive pressures, although I am certain that it potential uses in desalination, solar power, waste cleaning, does its best to arrive at a sensible, appropriate and packaging, super-fast computers, and super-strong and balanced policy amid all this melee. In a democracy, super-light composite materials. Graphene is hardly everybody is entitled to put their point of view to the yet commercially viable, but the race is on to patent in IPO but everybody also ought to be entitled to know the area of graphene. I understand that, in May, UK who is seeking influence. We need to be sure that businesses and universities held 54 patents in relation policy does not echo who shouts loudest. I believe that to graphene; US businesses and universities held 1,754; Amendment 28ZA would strengthen the IPO and the and Chinese businesses and universities held 2,204. business department in their search for a balanced What intellectual property regime in relation to graphene policy, would encourage confidence in the intellectual will be in Britain’s and in the world’s interests? I hope property regime and would assist the Government in that the annual report will expound the Government’s the very difficult task they have of arriving at an policy in this kind of area and the principles upon appropriate policy in relation to lobbying. which they make their judgment. The business department and the IPO do not assume, I hope, that the more UK Lord Clement-Jones: My Lords, as the noble Lord, patents there are, the better. When Jonas Salk, the Lord Stevenson, said, the debate on the Enterprise discoverer of the polio vaccine, was asked in a television and Regulatory Reform Bill was a very useful start to interview who held the patent, he said: this whole discussion about the IPO report to Parliament. “The American people, I guess”. We have built up a considerable degree of consensus about what that report should contain. I welcome He chose not to exploit that massively important and Clause 20 as a step in the right direction but the noble beneficial discovery. Tim Berners-Lee did not seek to Lord, Lord Jenkin, put the points extremely well on patent the world wide web and, indeed, considers that Amendments 26, 27 and 28, to which I have also put software patents stifle innovation. my name. If we are going to have such a clause in a Inequality of access to knowledge often compounds piece of primary legislation, we need to be explicit the evils of inequality of access to income. We should about the kind of reporting requirement that the not, in this country, take a narrow view of our national Secretary of State has. I entirely agree with the noble interest and should not ignore the interests of the Lord, Lord Jenkin, that those are absolutely essential developing world, particularly where medicines are requirements, particularly as regards Amendment 26, concerned. To do so would be short-sighted, even in and that the report should be about the promotion of our own interest. We do not know whether the population innovation and economic growth, of the globe at the end of this century will be 10 billion “arising from the creation and exploitation of intellectual property”. or 11 billion people, although these are the sorts of After all, that is what the Intellectual Property Office projections. We should not deprive the developing is all about. world of the knowledge that will enable its economies to grow and allow them to be rescued from poverty. If 4pm billions and billions of people are to live in poverty Our discussion has diverged to some degree and I unnecessarily, because of the restriction of knowledge am certainly not going to follow the noble Lord, Lord to the advanced, wealthy, western countries, that would Howarth, in referring to dense patent thickets or using be wrong in itself and very perverse in terms of our any such language as I think we are on opposite sides own interest. At the World Trade Organisation, I hope of the fence. However, I agree with him that these that the United Kingdom will seek to remodel and matters need to be evidence based. I do not resile very liberalise TRIPS. Clause 20 should not just be about much from what he said about the need to achieve a the Intellectual Property Office and legislation—the balance. I also quoted him on Second Reading on this requirements of the report should relate to wider policy. point. We cannot deny that these are monopoly property Cost-benefit analysis in this area is never easy. It rights. They have to be proportionate and designed in needs economic far-sightedness, ethical judgment and such a way as to encourage future innovation and wisdom. We need a regime that is flexible and pragmatic, growth and to reward creators. Sometimes a balance not schematic, and yet clear and comprehensible. As my needs to be struck and the evidence needs to be there. GC 49 Intellectual Property Bill [HL][18 JUNE 2013] Intellectual Property Bill [HL] GC 50

I disagree with some of the examples that the noble My noble friend’s amendment is clear. He gave full Lord gave but I agree that the genes example was an examples of the way in which the balance would work extremely unhelpful start to the whole issue of genetic out. It is a vital part of the Bill, if it is to generously research and work on DNA. The ability to patent notice that there are things other than those with certain genes was unhelpful in many respects. However, which the Bill deals. I will not go into that in any great detail. I am concerned that the point mentioned in the The Parliamentary Under-Secretary of State, Department Explanatory Notes, which include specific reference to for Business, Innovation and Skills (Viscount Younger developments in copyright licensing being included in of Leckie): My Lords, before I begin I thank noble an annual report—this follows on from the Hooper Lords for their engagement on the new reporting duty. report—is not explicitly stated in the Bill, even in This has given me an opportunity to clarify the general terms. Government’s intentions for this report. Noble Lords The noble Lord, Lord Stevenson, talked about will, I trust, excuse a relatively long response, but cross-border co-operation, which is very important. many important issues have been raised during the Indeed, the Minister encouraged us to think that the course of this debate. I also hope that my noble friend report would also include updates on the protection of Lord Jenkin is able to stay to hear my full response metadata, which I believe will become increasingly and that—how shall I put it?—a different sense of important as time goes on. Therefore, I think there are energy does not intervene. Many questions have been flaws in Clause 20. I very much hope that the Minister raised, and I will attempt to answer them all at the will look sympathetically on a number of the amendments, end. even if he does not take on board all the precise detail Amendments 25F, 26, 26ZA, 26A, 26B, 26C, 27, of the amendment of the noble Lord, Lord Stevenson. 28 and 28ZA seek to broaden the scope of the proposed They are all heading in the right direction and seek to annual report and detail what the contents of the establish the robust system of intellectual property report should contain. I will address the amendments that we all wish to see. in turn. Amendments 25F, 26ZA, 26B and 26C, in the names of the noble Lords, Lord Stevenson of Balmacara Lord Borrie: My Lords, I am delighted that the and Lord Young of Norwood Green, would require noble Lord, Lord Clement-Jones, indicated that he the scope of the report to include an assessment of the supports most of the proposed amendments to this impact of the Intellectual Property Office’s activities clause, and that the Minister looks kindly upon them. on job creation, in addition to their impact on innovation I take the same view but I want to discuss the amendment and growth. A direct relationship between intellectual proposed by my noble friend Lord Howarth of Newport property and job creation is practically impossible to more fully because this is the only place in the Bill so draw. There are many different factors that will influence far where we have discussed the question of balance whether a business creates jobs. However, where there between the interests of the owner of intellectual is evidence to suggest that the IPO’s activities may property and those of the wider society, as he put it. have had an impact on job creation, the report will This is the third day in Committee but, right from the indeed state this. Amendment 26C raises other questions start of our proceedings on the Bill, the rights and to which I shall return later in my reply. values of the creative industry relating to patents, Amendment 26 tabled by my noble friends Lord designs and copyright have not been balanced with the Jenkin of Roding and Lord Clement-Jones, and to wider interests of society. The various things that my which the noble Lords, Lord Stevenson of Balmacara noble friend and, indeed, the noble Lord, Lord Clement- and Lord Young of Norwood Green, have added their Jones, mentioned, including the interests of society in names, would restrict the focus of the report to innovation there being more general competition and an absence and growth arising from the creation and exploitation of restrictive attitudes towards intellectual property, of intellectual property. This point was raised during have not been considered. the Government’s consultation. In response, the One of the most vital matters, it seems—a whole Government said: area that is not being considered—is the length of “The report will cover IPO activities which promote growth time for which intellectual property rights should last. and innovation arising from the creation and exploitation of IP The Government have not felt it necessary—indeed, in but the Government cannot restrict its focus to existing industries the wording of the Bill it is not necessary—to explain and business models. It needs to look at how the IP framework why UK-registered design rights can last up to 25 years, fits with technological change and the development of new business that an unregistered design right can last up to 15 years models. The report will therefore aim to present a fuller picture of and that a registered community design right can last the impact of the IPO’s activities on growth and innovation”. for 25 years; I am relying on a government briefing I will explain what I mean by the expression “a fuller paper that I have in front of me. Surely each of those picture”. The report will also therefore contain an things ought to be justified if one is looking at intellectual assessment of the Intellectual Property Office’s activities property and the way in which it fits into our desire for on growth and innovation arising from the use of a prosperous Britain and creative industry, while being intellectual property by third parties. concerned that others who may want to be rivals in Let me give the Committee an example. Last year, producing similar designs or objects should be considered the Government consulted on proposals to amend as well—in the interests of the consumer and of the Section 60(5) of the Patents Act 1977 to provide an future, not just in the narrower interests which have exception to patent infringement for activities involved prevailed under these years of monopoly which I have in preparing or running clinical or field trials, which just mentioned. use innovative drugs. This change would allow third GC 51 Intellectual Property Bill [HL][LORDS] Intellectual Property Bill [HL] GC 52

[VISCOUNT YOUNGER OF LECKIE] in the Enterprise and Regulatory Reform Act and the parties to carry out a limited set of activities using designs consultation that has resulted in the measures another person’s patent-protected product in order to that we have already debated in this Committee. develop and assess the safety and efficacy of new Secondly, the report will address the Intellectual pharmaceuticals. Responses to the consultation suggested Property Office’s activities in international negotiations that current UK legislation makes the UK a less and cross-border co-operation. An example is the attractive location to carry out this work compared work that is being done to deliver a unitary patent and with countries with broader exceptions. This may have unified patent court. economic implications for the pharmaceutical and Thirdly, the report will discuss policy development clinical trials sectors, including loss of skills and expertise work that has been undertaken to address the challenges if trials are run abroad. The report will need to consider facing the intellectual property system. These will examples such as these where the use of intellectual change as time passes, but copyright licensing in the property may help stimulate growth in the economy as digital age is a good example of a current challenge a whole. I can assure noble Lords that in such cases it that the IPO has been working on and which, therefore, will indicate how the Intellectual Property Office has the annual report would cover next year and for as sought to balance the interests of rights holders and long as it remains relevant. users. Fourthly, the report will highlight the main outputs Amendment 26A in the name of the noble Lord, of the Intellectual Property Office’s economic research Lord Howarth of Newport, seeks to include a requirement programme and how they relate to innovation and that the report should provide an assessment of how growth. Recent studies, for example, have examined the Intellectual Property Office has, the incentives provided by patents and the use of alternative methods of protecting innovation. The report “balanced the interests of rights holders with the wider interests of society”. will also summarise the findings of evaluation exercises. The first of these was published last month and I am grateful that the noble Lord has defined this concerns the Lambert toolkit, which contains model phrase to be not just UK-focused but global in scope. I agreements and a framework for university and business entirely agree with what I believe is the principle collaborations. The toolkit was developed by a working behind the noble Lord’s amendment, that the wider group of interested parties, supported by the IPO. The interests of society are important in the context of IP research showed that the toolkit has had a positive rights. I can assure the noble Lord that the report will influence on some innovative research partnerships indicate where other policy objectives have been taken between UK universities and businesses. into account, alongside economic considerations—for example, where, say, freedom of speech, public health, or international development considerations have taken 4.15 pm priority over economic ones. This is in line with the Fifthly, the report will provide an assessment of the ethos of the report, transparency. IPO’s activities that support businesses and raise awareness of the importance of protecting intellectual property. Amendment 26C, tabled by the noble Lords, Lord Through its seminars, exhibitions and workshops, the Stevenson of Balmacara and Lord Youngof Norwood IPO reaches over 25,000 businesses per year, including Green, seeks to place some requirements on the detailed around 18,000 direct contacts. The report will include contents of the report. Before responding directly, I information on the work the office has undertaken in should like to take the opportunity give the Committee partnership with other organisations, such as the MusicBiz some detail on what the report will contain. I will add competition for young people, run with UK Music, that, as with all government agencies, the IPO already and IP audits provided to small and medium-sized produces an annual report and accounts, containing enterprises and funded by the IPO. When data are an assessment of the development and performance of available, it will provide an assessment of the impact the organisation throughout the year, together with that such work has had. The report will also contain financial accounts. The IPO’s future plans are contained data that support the assessment made in the report. in the corporate plan published in spring each year This will include statistics on the number of IP rights and agreed with me as IP Minister on behalf of the granted by the office, the use of international systems, Secretary of State. This plan also contains the targets such as those run by the World Intellectual Property that I set for the IPO and by which its performance is Organisation, and any relevant evidence on enforcement to be judged. and infringement. I have described the current reports and plans that Amendment 26C would specify particular issues to the Intellectual Property Office produces. I turn now be reported on. Where the IPO has acted on those to the new reporting requirements that are the subject issues, I assure noble Lords that they will be included of this clause. I will set out the parameters of the in the report. However, as I have already noted, the report and give some examples to illustrate the kind of challenges facing the intellectual property system will issues that would be included in it. change from year to year. It is for this reason that the clause does not specify individual issues that will be First, the report will provide information on legislative considered. For example, 10 years ago, the proposed changes and any pre-legislative work such as consultations. European directive on software patents was a matter Economic estimates will be taken from impact assessments. of great topical interest. If the IPO had at that time Looking back to the previous financial year, as an produced a report on the impact of its activities on illustration, this would include the copyright measures innovation and growth, these negotiations would have GC 53 Intellectual Property Bill [HL][18 JUNE 2013] Intellectual Property Bill [HL] GC 54 been discussed. However, the directive was rejected by Property Office by interested parties. The noble Lord the European Parliament in 2005 and debates have has raised an important issue. The Government are moved on. If we had passed legislation at that time committed to transparency, as I said earlier, and I have that stipulated specific items on which to report, the therefore considered how information on the IPO’s Government would have been required to report on its engagement with interested parties can be provided in activities in this area every following year, even when a way that is proportionate. I have therefore asked the no such activities took place. Alternatively, the chief executive of the IPO to publish on a quarterly Government would have needed to return to Parliament basis the names of external organisations with whom to make changes through primary legislation to ensure he has had meetings. I already disclose details of my that the report remained relevant. meetings on the government website, as do all Ministers, special advisers and Permanent Secretaries. The extension Amendment 26C would also require the report to of this practice to the chief executive of the IPO is at set out the plans for legislative change for the next the forefront of efforts to increase transparency in 12 months. The purpose of the clause is to create a policy development. duty to report, not to set the forward programme of activities for this or any future Government’s IP policies. Noble Lords will of course be aware that the Government Lord Howarth of Newport: I very much appreciate cannot pre-empt the gracious Speech in any year, but what the noble Viscount has just told the Committee. following the publication of the legislative programme It is very good news indeed. I wonder whether the each year, plans for primary legislation, as well as any information provided will include records of conversations, secondary legislation, are set out in the Intellectual discussions or meetings that may have taken place. A Property Office’s corporate plan. It is therefore neither link in the online version of the annual report would appropriate nor necessary to include these details in be sufficient to achieve that transparency, which would the annual report on innovation and growth. be very helpful. Amendment 27 would require the Secretary of State to make a statement detailing the findings of the Viscount Younger of Leckie: I thank the noble Lord report and the actions he intends to take as a result. for that question. We feel that we have gone as far as The clause already commits the Secretary of State to we can. Many of the meetings are highlighted on lay the report before Parliament. So it will be a Written different websites, as the noble Lord will know. We Statement to Parliament by the Secretary of State and, have gone as far as we can to make the viewing of each year, the report will be placed in the Libraries of meetings transparent. both Houses. I have already referred to the IPO’s I will now address some of the questions raised in corporate plan, which sets out its future programme of the debate. The noble Lord, Lord Stevenson, asked work and priorities. The annual report on innovation whether the annual report was not just a view about and growth will be one of a number of pieces of the Intellectual Property Office. He argued that it evidence that feed into the business planning process should be wider and suggested that it should be a leading to publication of the corporate plan. report on how we are doing as a nation. The report Amendment 28 concerns the information that should will be the view of the Secretary of State, taking into be considered in producing the report. It would require account the extensive wider relationship that the IPO that the Intellectual Property Office carry out consultations has with the creative and innovative industries. I hope and investigations to inform the production of the that the earlier answers that I gave clarified and provided report. It would also require the Government to consider an answer to that general point. any responses collected by the IPO in response to any The noble Lord, Lord Stevenson, made a number consultations or investigations carried out for the purpose of references to the importance of the creative industries. of producing the report. In particular, the amendment He was right to do that. As I said during the passage refers to any assessment the Government might make of the ERR Act, the Government fully recognise the of the effective operation and protection of IP rights importance of the creative industries. They have also licensing in promoting economic growth. The report done much for UK creators, and are doing more, will focus on the activities of the Intellectual Property including supporting the design sector through the Office during the financial year under review and is Bill. We are pressing ahead with the anti-piracy measures not intended to be a Hargreaves-like review of the of the Digital Economy Act. We are also supporting effectiveness of the intellectual property system. If the creative industries abroad through our growing research has been commissioned to measure the impact IPO attaché network, which provides practical support of the IPO’s activities on IP rights licensing, then I can to UK businesses by building relations with intellectual assure noble Lords that the results of that research property agencies in host countries and improving the would be taken into account as part of that year’s influence of the UK overseas. The UK now has attachés report. At present, the Government have no plans to in China, India and Brazil, and is recruiting a fourth run consultations for the sole purpose of producing attaché for south-east Asia. However, the intellectual the report, but if consultations of this nature are property system is not there to support just one sector. conducted, I assure noble Lords that any responses It is right that we look across the economy to its will be considered. impact on a range of sectors. To that extent the noble Finally, I turn to Amendment 28ZA, spoken to by Lord makes a fair point. the noble Lord, Lord Howarth of Newport, which My noble friend Lord Jenkin suggested that it was would require the report to include information detailing not enough to report facts to Parliament, but that the approaches made to the Government and the Intellectual report should set out proposed actions in a statement. GC 55 Intellectual Property Bill [HL][LORDS] Intellectual Property Bill [HL] GC 56

[VISCOUNT YOUNGER OF LECKIE] Court, to which the noble Lord referred. He will also As I said earlier, the report will be laid before Parliament, understand that this particular area of patent law is and publication announced by Written Ministerial governed in the UK by the biotechnology patents Statement. I always welcome the opportunity to debate directive, a carefully negotiated consensus across Europe intellectual property issues with Members of the House, on this particular issue of which the noble Lord may and it is of course open to any noble Lord to call a be aware. Our law continues to develop on this matter debate. Therefore I do not consider it necessary that with references to the European Court of Justice. we put this requirement in the Bill. The noble Lord asked how we should protect health My noble friend Lord Jenkin also questioned whether developments from businesses patenting medicines. exceptions would weaken the incentive to invest in The annual report will cover the activities of the intellectual property. However, exceptions can create Intellectual Property Office and their impact on innovation opportunities for others, with little or no harm to the and growth, which I mentioned earlier, where owners of rights. How does it harm an author if these activities impact on other policy objectives. The someone copies extracts of her work in the course of report will make it clear how different objectives were non-commercial research into it, or if blind people can balanced. read it in accessible form? The Government are introducing The noble Lord, Lord Howarth, also asked how the exceptions to create growth and value; not to transfer IPO considers global interests and stops the restriction it between one interest group and another. The of knowledge in the developing world. Our vision is Government are looking for the right balance between that it must cover both incentives to invest in, for many interests, as I am sure my noble friend is aware. example, new medicines and, as part of wider government The noble Lord, Lord Howarth, asked how we policy, access to medicines. The noble Lord also would define what is new and what is original. In commented on the impact of international treaties, many cases, it is easier to know originality when one such as TRIPS. Where the Government are negotiating sees it rather than to attempt to define it. The noble in these areas, I assure the noble Lord that the report Lord makes a fair point but the courts have a fairly will cover their impact. settled approach to this so I hope that he will accept The noble Lord asked whether the report will cover that they have the ultimate sanction on making decisions the Government as a whole. As a round-up, this is a on that particular issue. report of the Secretary of State in respect of the IPO, and the IPO does not operate in a vacuum. The report The noble Lord commented that strong intellectual will cover issues where the IPO works with other property rights are not always beneficial. The Government government departments. agree with the noble Lord that a balance needs to be struck between IP rights holders and users. I know The noble Lord raised a further issue concerning that the noble Lord has made this point in a previous patents and asked whether patents were granted too debate. The report will make it clear when interests easily and whether they stifle innovation. I am satisfied such as development are weighed against economic that the IPO only grants patents with a high presumption considerations. of validity. Its patent-granting process, the first in the world to achieve ISO quality accreditation, ensures The noble Lord raised an interesting point about that only those inventions that are new, take a significant graphene and whether the annual report would mention enough step forward and are capable of industrial it. I am interested in this particular invention because application are deemed to be worthy of patent protections. when I last visited the Intellectual Property Office I I hope that that is of some reassurance to the noble was given an interesting briefing on this matter. It is Lord. one of the issues that the IPO is taking extremely seriously. However, we cannot say in advance what the 4.30 pm report might say on individual issues, including graphene, or on particular technologies. The report will focus on My noble friend Lord Clement-Jones has been the activities of the Intellectual Property Office so patient in his wait for answers to his questions. He that, if the IPO carries out activities in an area, such as asked how the report will ensure that we set out a graphene, they will be included. robust system for intellectual property. That allows me to return to the purpose of the report, which is to The noble Lord, Lord Howarth, asked how the measure the impact of the previous year’s activities of Government would ensure that development would the IPO and their impact on growth and innovation. take place through patent thickets and he cited the This is also done separately, through its policy statements, example of the pharmaceutical sector. The IPO has legislative programmes and documents, such as its published a report investigating the phenomenon of five-year strategy and the annual corporate plan. patent thickets and commissioned further research The noble Lord, Lord Borrie, asked why we have from academics to understand if there is a particular not set out each intellectual property protection and impact on small and medium-sized businesses. The how long it will last. I spoke about this issue when the annual report will provide an assessment of the research Committee last met. The length of time for which each that is undertaken in this area. It is essential that intellectual property right lasts reflects internationally policy is based on the best available evidence. agreed norms that are often agreed by treaty. I wrote The noble Lord raised another interesting point about the issue at greater length in a letter that I concerning gene patenting and the gist of his question circulated to noble Lords last week, and I hope that he was whether it was right. The Government have noted has received it. If not, I will make sure that he receives with interest the judgment of the United States Supreme a second copy as soon as possible. GC 57 Intellectual Property Bill [HL][18 JUNE 2013] Intellectual Property Bill [HL] GC 58

My noble friend Lord Clement-Jones asked how we Given that the Minister spoke for some 10 minutes will ensure that the report is evidence-based. That is a about what the report also contained, I wonder whether fair point. The IPO has established an ambitious there is a bit of a gap between the written word and programme of research to improve the evidence base what we have heard. It may be possible to come up on which to develop policy. This will be a significant with a better formulation in the Bill, and we may want contribution to the report. All research carried out by to come back and work further on that on Report. the IPO is conducted in an open and transparent way. However, we are not far apart on this and, clearly, if It works closely with industry stakeholders and academics the report does cover all the issues that the Minister to ensure that the research programme is relevant and listed, we would be well satisfied with that, in so far as robust. it goes. The noble Lord, Lord Howarth, asked whether the However, underlying the response was the nagging Government can go further when providing information doubt about authorship. Who holds the pen in this on meetings with stakeholders and commit to providing report? That is the question we have to look at. The details of the discussions that take place. He asked Minister, several times, said that it was okay because about that on a previous occasion and I gave an the Secretary of State would respond, not the noble answer. I reiterate that the current practice is to record Lord himself—as the Minister responsible for IP—or the main topic for discussion—for example, when the even the chief executive of the IPO. Later on, he chief executive meets whoever to discuss copyright. changed that and said that it was “a” Secretary of The IPO, like any government agency, is subject to the State. However, there is not only one Secretary of FOI Act. If a request were received for more information, State in the Cabinet and the Government. There is it would be considered in light of the requirements another Secretary of State, who currently has responsibility under the FOI Act. for the DCMS—although, if the rumours are to be I hope that I have addressed nearly all the questions believed, not for much longer—and who of course raised. It has certainly been a wide-ranging debate. I speaks for creators, appears at meetings speaking on have explained the Government’s intentions behind intellectual property and sometimes appears with the the report and provided noble Lords with details of Minister when the Minister is in his guise as intellectual what it will contain. Including such details in the property tsar. It is fairly obvious from those who legislation would reduce the ability of the report to attend these meetings, and I have heard a number of adapt to reflect new challenges. Instead, we could be reports of them, that a differential approach comes faced with a report that provided information on across. It is impossible for the Government to have a issues that were less topical unless we returned to single voice on this when the responsibilities are split. Parliament to amend the law through primary legislation. One point that has come through, in all the presentations I hope that this will provide sufficient reassurances for that we have had this afternoon, is that the Government noble Lords. I ask them to withdraw or not move their are not currently speaking for the balance of the two amendments. aspects. There is a sense here of an uncompleted need to address this issue. We might well come back to it. Lord Stevenson of Balmacara: My Lords, I thank The second point is that, within our debate, we all speakers in this shortish debate. It was of high picked up on a theme that has emerged in all our quality and we covered a lot of ground. It was particularly Committee sessions and which may run through to the good that the noble Lord, Lord Jenkin, was able to end of this Bill. There is a growing unease about the stay for it. My noble friend Lord Young quipped that way the balance is struck between the needs and rights in these modern times perhaps the noble Lord, Lord of creators against those of wider society and between Jenkin, given his skills, might clone himself and appear the rights of creators and of those who wish to exploit in two places at once. I quipped back immediately that that creativity. I do not think we have settled it. I do that would almost certainly be, if it is not already, a not think it is possible to settle it in this Bill or without crime under the intellectual property Act. It probably a lot more thought. I simply log that as being something will be shortly and he could go to prison for trying it. about which we all hoped more would maybe come We decided that that was not worth pursuing. I am out in the report. This is an issue that we will have to sorry about that. address—if not now, then very quickly—in order to make the best of the way in which any future Government The debate raised a lot of issues. I thank the Minister deal with intellectual property as an important sector very much indeed for his response—it was one of the of our economy. best that I have heard in this Committee or in many others. He covered the ground extremely well, picked As my noble friend Lord Howarth said, the most up every point and answered most of our questions in difficult question is about what our approach will be a very satisfactory way. In terms of what we are in terms of the economic return that can be earned by doing—trying to probe and get a sense of where the inventors, such that it does not squeeze out the benefits report will be coming from—I think that we are well that will flow to those who wish to use and exploit satisfied. those inventions. Are we thinking about intellectual However, the point is that the legislation does not enclosures or about commons? That is a very good quite say what the Minister said in his response. In the formulation for a very complex problem, which I Explanatory Notes are simply two lines on the report know that my noble friend has been dealing with for in paragraph 91, which states: some time. “The report will cover new legislation and policy developments, A third point comes out of this short debate. I including those related to copyright licensing, as well as the apologise for going on at length but it is important to services delivered by the IPO”. get it on the record. We are now satisfied that the sort GC 59 Intellectual Property Bill [HL][LORDS] Intellectual Property Bill [HL] GC 60

[LORD STEVENSON OF BALMACARA] Lord Jenkin of Roding: My Lords, it has long been of report that the Minister talked about would document my ambition to appear on the screen in two different very well what has happened in the Intellectual Property places, but I think that is impossible. I have been Office work over the year. But will it be sufficient for looking to see whether other members of my family us to be able to address the issues of what it should be might appear on the screen at the same time. We have doing in future years? In other words, we have a simple not achieved that. We do not set out to do that but it written report and Written Statement—as the noble would be nice if it happened. Lord, Lord Jenkin, said—simply landing in Parliament. Amendment 28A deals with the long-standing problem Without the opportunity to interrogate, question and of lookalikes: products that are designed to look like come up with ideas about what further work it might well known branded products, with the intention— stimulate, the job will not be complete. Might the Minister certainly the effect—of confusing the customer. For think again about the point raised in the amendment me, this is a very familiar problem. Many years ago I of the noble Lord, Lord Jenkin, and the need not just worked for what was then the Distillers Company, for a report but for a Statement that could be debated? which had a number of very famous brands of spirits. I know it is true that we can, as ordinary Members of It had a museum of lookalikes containing literally your Lordships’ House, ask for a debate, but that is hundreds of bottles from all over the world that had not the same as having a proper timetabled slot to been specifically designed to make them look like look forward to, where we can consult with those some of the Distillers Company’s well known brands, outside, bring forward thoughts and events, and discuss on which of course it had spent a great deal of money the issue properly. on advertising and had built up a very strong brand Finally, the question about how intellectual property loyalty. One that I always remember looked exactly is dealt with is so firmly in our minds that we need to like a bottle of White Horse whisky until you looked think hard as we go through the rest of the Bill how we very closely and saw that it was not a horse but an can better secure the debates that will be necessary elephant. But from the other side of the bar you could around the wider context for this. It is true, as the not have possibly told the difference. There was another Minister said, that BIS has the lead on this matter. bottle of whisky that had “Scotland” in very large However, without the wider community of Ministers words on it and if you looked at it very closely, it said, also being engaged in it, that will not be sufficient. “Label printed in Scotland”. There were hundreds of These are very important points to consider. others. This is not the first occasion that this subject has Viscount Younger of Leckie: The noble Lord’s question been raised in this House. On 24 February 1994, my about who holds the pen on this report shows that late friend Lord Reay tabled an amendment during the everything is in the definite or indefinite article. I passage of the Trade Marks Act about what he called clarify that the Secretary of State for Business, Innovation unfair competition. I spoke in that debate, as did a and Skills will have the duty to report. However, the number of other noble Lords. My noble friend Lord report will cover any relevant cross-cutting issues or Strathclyde, who was then the Minister, recognised the activities, including work with DCMS or regulators problem but proposed no action. On 17 March 2000, such as Ofcom. I hope that that clarifies that point. we had the Second Reading of a Private Member’s Bill presented by my noble friend Lord McNally, the Copyright, etc. and Trade Marks (Offences and Lord Stevenson of Balmacara: I thank the Minister Enforcement) Bill, which was specifically directed at for picking up that point. Does it clarify it? No, but this problem of lookalikes. In the end he was persuaded with that I withdraw the amendment. to withdraw the Bill so nothing was done. I have here—and I have no doubt other noble Amendment 25F withdrawn. Lords will have seen similar things—a whole collection of what is sometimes called parasitic copying. Brands Amendments 26 to 28ZA not moved. of margarine have a different word on the top but they look exactly like the very well known brands that are Clause 20 agreed. advertised by companies. There are shampoos, shower creams and lotions—all these things are well known. There is plenty of evidence that they do mislead Amendment 28A consumers. My wife is a very careful shopper but on Moved by Lord Jenkin of Roding one or two occasions in the past few years she has been misled and come back home and said, “Oh, that is not 28A: After Clause 20, insert the following new Clause— what I meant to buy”, but it looked exactly like the “Lookalikes one that she did mean to. (1) A person (“A”) shall not, in relation to any goods or services, use any features of packaging, marking, labelling or decoration in such a way that the public is likely to attribute to A’s 4.45 pm goods or services the reputation of another person (“B”) or the qualities or reputation of B’s goods or services. The question of misleading consumers is at the (2) For the purposes of subsection (1) it is immaterial whether heart of this. These products are simply cashing in on there is any similarity between the goods or services of A and the branded product’s reputation and selling the copycat those of B. product at a lower price. The professional word that is (3) Subsection (1) shall not apply to features of packaging, used for that is “parasitic” copying. Why does it persist? marking, labelling or decoration that are commonplace.” It is, in fact, a form of cheating, yet it is widespread GC 61 Intellectual Property Bill [HL][18 JUNE 2013] Intellectual Property Bill [HL] GC 62 and this country does not seem to be as good at consumer protection regulations—are ineffective because dealing with it as some of our neighbours. Why is it they are not enforced by the OFT and trading standards that successive Governments in this country have signally and there has been no review which would allow failed to deal with it? Why does it appear that the others to enforce those same regulations. branded product owners have no remedy and can take I have practised in the past as an intellectual property no action? I will explain that in a moment. lawyer. Passing off is very difficult to establish in these Sometimes it is pointed out that there are registered cases but that is the basis on which you would normally IP rights, yet the law of passing off, which is a long- expect to enforce ordinary civil actions against this standing common law remedy, has proved ineffective kind of parasitic copying. All the evidence given to me in dealing with the problem. In 2006, the Gowers by the British Brands Group suggests that it is extremely Review of Intellectual Property concluded that brands difficult to obtain the evidence required by the courts were not well protected against what it described as to show confusion, partly because consumers tend “misappropriation”. A shorter word for that is stealing. not to complain about low-priced items. It is very It recommended that the unfair commercial practices difficult to gather the evidence in store and courts directive of the European Union be monitored and if often dismiss survey evidence as unreliable. it were, Another interesting feature, which the Minister might “found to be ineffective, Government should consult on appropriate care to address, is whether or not the UK is upholding changes”. its obligations under the Paris Convention and TRIPS. Therefore, the consumer protection regulations, which Article 10bis of the Paris convention and Article 2 of implemented the directive, were introduced in 2008. TRIPS require signatories, which include the UK, to However, despite strong lobbying from the interests assure nationals of “effective protection” against unfair representing brand owners, enforcement of the directive competition. Counsel has given opinion in the past was restricted entirely to the Office of Fair Trading that the UK is not compliant and I believe that the and trading standards. There was no remedy for those Gowers review gave some indication that that was the who had been wronged. Companies were not granted case as well. The Government have a case to answer on civil rights of action. What about the OFT and trading this question. It is a long-running sore among the standards? They had a pretty regular answer: they owners of these brands and, as the noble Lord, Lord argued that they did not have the resources to enforce Jenkin, said, there is photograph after photograph of the consumer protection regulations and that the matter this type of parasitic copying. There is plenty of did not have sufficient priority. One can understand evidence that it takes place. that given their duties in relation to childcare, adultcare, education and all the rest of it, and the priorities they Lord Borrie: My Lords, the noble Lords, Lord must establish in those areas. This situation arose Jenkin and Lord Clement-Jones, made a clear and despite the Government telling brand owners that the convincing case for doing something about so-called Government had a duty of enforcement. When I lookalikes. I like the word “cheat”, which the noble studied law at Cambridge a long time ago, I discovered Lord, Lord Jenkin, used, because it is a simple, human a very good Latin slogan, which I shall repeat although word, which does not rest on any statute. It is perfectly it may be out of order to do so. The slogan was “ubi clear to people generally what cheating is. This is a remedium ibi jus”: where there is a remedy, that is form of cheating and I hope that something can be where the law is. If there is no remedy, there is absolutely done about it. no use having a law. The regulations constitute the law, I have seen the Which? report, which shows basic but nobody enforces them. examples of lookalikes and the originals and shows The previous Government promised a review after how easy it is, when rushing around the supermarket, two years. However, there has been, as yet, no review. to pick up the wrong item when it looks exactly like The regulations have so far proven singularly ineffective the one you want to buy. That is very serious. The only in tackling the copying of package designs and all the question I have may be one for the Minister rather rest, which is why I and my noble friend Lord Clement- than the noble Lord, Lord Jenkin. Jones have tabled this amendment. This is an opportunity In the last session we passed a Bill establishing a for the coalition Government to put right a very grocery adjudicator. A lot of these problems arise with long-standing and manifest abuse in our trading system. groceries, which are fairly widely defined in the Groceries Amendment 28A forbids parasitic copying and would Code Adjudicator Act. That Act provides a remedy give branded product manufacturers a civil right to for anti-competitive activity by supermarkets and other sue for an injunction and, if appropriate, claim damages grocers in relation to the practices of suppliers of from those who have set out deliberately to imitate goods, groceries in particular. I was not very keen on their products with a view to misleading consumers. the idea of a special adjudicator being set up and This reform is long overdue. I beg to move. wondered why we could not use one of the existing bodies, such as the Office of Fair Trading, and give it a clear remit to deal with the problem. However, a Lord Clement-Jones: My Lords, I rise to speak special post was set up and the lady is now in office. briefly in support of Amendment 28A. My noble She has a back office of some sort and deals with friend Lord Jenkin eloquently set out the case for his complaints from farmers and other suppliers against amendment and there are very few points that I would supermarkets which have done something anti- wish to add. The case that consumers are being misled competitively. Why can one not use that particular was strongly made out by a recent Which? report. As office to deal with the problem that the noble Lord, my noble friend said, it is clear that the CPRs—the Lord Jenkin, talked about? GC 63 Intellectual Property Bill [HL][LORDS] Intellectual Property Bill [HL] GC 64

Lord Howarth of Newport: My Lords, it is not only advantage of its reputation—the riding on the coat-tails a form of cheating but a form of free-riding that is that I mentioned earlier. Given sufficient reputation in clearly unfair. I look forward to the Minister’s positive the marketplace, this protection can apply to even response to the amendment of the noble Lord, Lord simple examples of packaging, such as the colour Jenkin. purple, which Cadbury currently has protected as a trade mark for chocolate products. Viscount Younger of Leckie: My Lords, the amendment Secondly, noble Lords will, I am sure, be familiar proposed by my noble friends Lord Jenkin and Lord with the remedies under the common-law tort of “passing Clement-Jones seeks to protect the distinctiveness of off”. The case of Penguin v Puffin is an example of product packaging. The amendment relates to an ongoing the redress that is available under this tort when a concern by brand owners relating to what has been competitor sails too close to the wind in mimicking called “lookalike” or “parasitic” packaging. This is rival packaging. There is a more recent example, where where businesses are said to mimic the packaging of the threat of legal action from Diageo, the makers of brands with a reputation, whereby consumers believe Pimm’s, over the use of the term “Pitchers”by Sainsbury’s that the lookalike product, normally cheaper than the resulted in an agreement over new packaging for the branded product, shares its characteristics, such as its Pitchers product. quality. My noble friend Lord Jenkin described the A number of questions have been raised. My noble issue in similar fashion. This is considered to be riding friend Lord Jenkin of Roding stated that there was on the coat-tails of a brand’s reputation. plenty of evidence that parasitical lookalike packaging The Government recognise that brands are a significant misleads consumers. I refer him to the report recently contributor to the UK economy. I can assure my noble commissioned by the IPO, to which I alluded earlier in friends that we are very much alive to the concerns of my speech. The study, called The Impact of Lookalikes: brand owners about so-called lookalike products. Indeed, Similar Packaging and Fast-moving Consumer Goods, the IPO has just published research that that it is very long—more than 400 pages—but the results commissioned into the phenomenon of lookalike cover a wide range of issues. The Committee might packaging, which we would urge all interested parties find it useful if I highlight some of the findings, as the to consider. The report is publicly available and can be issues were raised today. found on the IPO’s website. In relation to the harm that lookalike packaging does to both consumers and business, the findings were, perhaps surprisingly, fairly 5pm equivocal. In particular, although a high number of First, the study revealed that, consumers felt disadvantaged by the accidental purchase “a substantial majority of consumers had deliberately purchased of a lookalike, a substantial number saw it as an a lookalike and, of those consumers, most of them found the advantage. Furthermore, there is a fine line between experience to be advantageous. The research did not analyse why confusing packaging and the use of “generic cues” to some consumers perceived the purchase to be advantageous”. signal to customers. For example, the colour green can Secondly, it found: indicate “mint” on toothpaste. There is no particular “Manufacturer brand owners reported that lookalikes enabled business associated with this colour. competitors and retailers to take unfair advantage of the manufacturer The Government are considering the findings of brand owner’s research into consumer insights and packaging design”. the report and look forward to discussing them with the industry but, as previously stated, the evidence was Thirdly, some consumers do believe that similar-looking not convincing enough to initiate immediate action. products have similar characteristics and originate Although the Government agree that brand owners from a similar source. Fourthly, a high number of should be entitled to preserve the distinctiveness of consumers felt disadvantaged by the accidental purchase their products, a delicate balance exists between the of a lookalike, but a substantial number saw it as an proper protection of rights and the openness of the advantage. Fifthly, only in a limited number of categories market to innovation and competition. Any proposal was there an association between, that changes the status quo should be considered with “a reduction in the sales of the brand leader and an increase in the caution. sales of the lookalike”. In particular, the Government do not agree that the Sixthly, the report found, amendment is an appropriate addition to the suite of “a fine line between confusing packaging and using generic cues protections already available to brand owners. The to provide useful signals to consumers”. amendment would unduly broaden the scope of the For example, the colour green can indicate “mint”, as rights currently enjoyed by owners of intellectual property I mentioned earlier. relating to product packaging and upset the balance to My noble friend Lord Jenkin also said that it was which I have referred. In particular, the amendment time for a review of the measures currently in place. would prohibit the use of packaging that tells consumers The Consumer Protection from Unfair Trading that a product has similar qualities to those of a Regulations protect the public from misleading commercial competitor’s product, even where that is true and practices where the average consumer is likely to be consumers are not misled in any way. The law already economically disadvantaged as a result. The regulations provides for the protection of distinctive packaging. carry criminal penalties and are enforced by enforcement Let me explain why. authorities such as local authority trading standards First, where packaging is distinctive, it may be departments. Enforcement will depend on local priorities registered as a trade mark. It is an infringement of a and will be focused where there is an urgent need for registered trade mark where use of a sign takes unfair protection. 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Civil powers to enforce the regulations were considered lookalike product because it was cheaper. However, when they were drafted. They were rejected at that why did it have to look like the branded product? Why time because of the danger that such powers in relation could not the own-label product be designed not to to regulations with a very broad, principles-based give the impression that it is riding on the coat-tails of application could lead to a great deal of costly and a well known branded product? Of course some burdensome litigation before the courts. Such actions consumers will buy it deliberately because it is cheaper. would also need to be based on consumer detriment I find that evidence very misleading. Consumers have resulting from the presence of lookalike products on bought a lookalike because it looks like the thing that the market. The evidence at the time was not conclusive. they have always bought but is cheaper, so they like it. The previous Government undertook to review this Why buy a lookalike? Why do supermarkets not design decision and the Government are now reassessing the their own product? The answer is that it would not sell. position in the light of the recently published IPO There would not be a market. Lookalike products are research. crucial to their marketing. That is cheating. However, My noble friend Lord Jenkin also asked why we I will look very carefully at what my noble friend said, cannot follow the model of any of our international and perhaps take advice from some of the people who counterparts, which is a fair question. The report have more time than I do and have read the 400-page looked specifically at Germany and the United States IPO report. In the mean time, I beg leave to withdraw but the findings indicated that there is no overwhelming the amendment. advantage to the systems operating elsewhere, such as in those countries, that meant that they would be Amendment 28A withdrawn. models for the UK to follow. My noble friend Lord Clement-Jones referred to Amendment 28AA the recent Which? report, as did the noble Lord, Lord Moved by Lord Young of Norwood Green Borrie. The reference in the study was to the 20% of 28AA: After Clause 20, insert the following new Clause— participants who had, at least once, purchased a lookalike “Director General of Intellectual Property Rights product believing it to be the brand owner’s product. (1) The Copyright, Designs and Patents Act 1988 is amended This figure refers to the totality of the purchasing as follows. history of the participants in the study. The Which? (2) In Part VII (miscellaneous and general) at the beginning survey of 2,244 of its members, conducted in February insert the following new section— of this year, also found that of those who had mistakenly “ Director General of Intellectual Property Rights purchased the lookalike product, 38% were annoyed (1) The Secretary of State shall appoint an officer to be known by the fact and 30% felt misled. However, the survey as the Director General of Intellectual Property Rights (“the also reported that 18% of participants had deliberately Director General”). purchased an own-brand product because it resembled (2) The Director General has a duty to— a branded product, some of them because it was (a) promote the creation of new intellectual property, cheaper than the branded product. Taken together, the (b) protect and promote the interests of UK intellectual Government consider that these measures grant a property rights holders, proportionate level of protection to the packaging of (c) co-ordinate effective enforcement of UK intellectual brand owners and that therefore the amendment is not property rights, and necessary. (d) educate consumers on the nature and value of My noble friend Lord Clement-Jones also asked if intellectual property. the UK was upholding its duties under the TRIPS (3) In performing those duties, the Director General must also have regard to the desirability of— agreement. I can assure him that the UK is fully compliant in its obligations under TRIPS and other (a) promoting the importance of intellectual property in the UK, international agreements. The noble Lord mentioned a particular legal case that may have questioned this. If (b) encouraging investment and innovation in new UK intellectual property, and he could provide me with details of that case, I would be happy to pass this on to my legal advisers. (c) protecting intellectual property against infringement of rights.”” The noble Lord, Lord Borrie, raised the Groceries Code Adjudicator Act, and asked why this matter Lord Young of Norwood Green: My Lords, I am could not be brought into the new adjudicator set-up. sure that noble Lords will recall that on 29 October The new adjudicator’s role is very specific and is last, the All-Party Parliamentary Intellectual Property confined to looking at the supply chain and the Group produced a report, The Role of Government in relationship between suppliers and the biggest Promoting and Protecting Intellectual Property, which supermarkets. I hope that that answers his question. urged the Government to get a grip on how IP policy With that in mind, I ask my noble friend to withdraw is made. The chair, John Whittingdale MP, said in a his amendment. press release: “The current system of creating intellectual property policy Lord Jenkin of Roding: My Lords, I listened with just isn’t working. IP needs a champion within Government, who great interest to my noble friend giving his answer, and will recognise its significance and who will have the influence to I hope I shall be forgiven when I say that I have not co-ordinate policy across different departments. From trademarks read all 400 pages of the IPO report. From his description, to patents, design rights and copyright, UK companies depend on their IP rights to succeed and thrive. In this difficult economic it seems to provide “not conclusive evidence”. I am climate it’s especially important that Government backs British moved to say to my noble friend that, yes, of course businesses on IP. We hope that Government will take note of our some customers will be happy that they bought a proposals”. 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[LORD YOUNG OF NORWOOD GREEN] within and across government would increase the influence In Committee on the ERR Bill, a number of noble of the Intellectual Property Office across government Lords called for the creation of a new post of director- and also strengthen the hand of the Minister responsible general of intellectual property rights, who would for IP. As the Alliance for Intellectual Property says: have a duty to promote the creation of IP and to “We believe such a post is needed to ensure that this success is protect it where it exists. We have retabled—with properly recognised, celebrated and built upon to ensure its permission—the original amendment, which states: contribution to growth, employment, culture and society is properly “The Director General has a duty to … promote the creation maximised; for IP to be championed in a way it is in other of new intellectual property … protect and promote the interests nations”. of UK intellectual property rights holders … co-ordinate effective I beg to move. enforcement of UK intellectual property rights, and … educate consumers on the nature and value of intellectual property”. The problem with the present situation, in which we Lord Clement-Jones: My Lords, as someone involved have a Minister—the noble Viscount—and an executive in the All-Party Parliamentary IP Group report of last agency, the IPO, is that the IPO may be an efficient year, which the noble Lord, Lord Young, mentioned, registration body for the registration of IP rights but is it would be churlish of me not to take part briefly in not, and has never purported to be, a champion of IP. this debate. The white horse which I see the noble On the contrary, it sees its role as the passive one of Lord now sitting on had a pretty good trot during the holding the balance between creators and users. As the passage of the Enterprise and Regulatory Reform Act noble Lord, Lord Jenkin, said when he proposed the 2013. I do not really wish to reopen the issue with a original amendment, the creators and owners of IP semi-Second Reading debate on the role of the Minister must have someone in government to speak up for and the idea of an IP tsar. them. That was what the amendment was intended to It has been quite interesting over the past six months, establish. and is really important, that the Government and the IPO have demonstrated that they have intellectual When he spoke in the original debate, the noble property holders’ concerns at heart. We are of course Lord, Lord Jenkin, commented that he had had a lot in Committee but, in the previous debate, the noble of support for the proposal from around the industry. Lord, Lord Stevenson, talked about achieving a balance. He quoted the BPI, which argued that the director-general Here the noble Lord, Lord Young, is talking about should be accountable for ensuring a framework for unequivocally championing IP. I am very much at the IP that would promote investment in new content, end of the spectrum: although, as the Minister picked protect the investment from theft and counterfeit, and up, I am very keen on having an evidence base, I am educate consumers on the importance of UK intellectual still an unequivocal champion of IP so I found what property to jobs, growth and the export strength of he had to say very attractive. the United Kingdom. The issue for me is not so much structures as Intellectual property across copyright, trade marks, attitude, increasingly. “By their fruits shall ye know design rights and patents is at the heart of the success them” is the key to all this. Are the Government going of a modern knowledge-based economy. It is not to implement the Digital Economy Act? Are they sufficient to have one department, one Minister and going to limit the exceptions to those that are really one executive agency to try to do it all. There should needed in the fields in which they are being introduced? be Ministers and expertise embedded right across Will they produce the right kind of report about Whitehall. If you add in the need to educate people innovation, growth and intellectual property? What is about IP and how it works, the case for a DG in this their approach to protecting intellectual property rights area seems very strong indeed. in broad terms? A lot of it is about attitudes rather The UK is a world leader in intellectual property. than structures. We all agree that how the Government develop IP Many of us would love to see an IP Minister with policy is vital for our economy. The Government the same hat as the Creative Industries Minister. Given should match this ambition and champion IP as much that that is a cross-departmental matter, I suspect that as possible. The IPO cannot remain a passive registrar it is never going to happen but I believe that the of IP. It clearly needs to be more overtly a champion connection between intellectual property and the creative for IP. The United States has obviously benefited from industries is extremely important and should be having an IP tsar, otherwise known as the Intellectual represented in a single-focus Minister. That would be Property Enforcement Coordinator, who is responsible a great step forward. for national strategy and reports directly to the White I have met the very impressive United States intellectual House. We offered a similar title to the Minister in an property tsar, Victoria Espinel, who has a valuable earlier debate, but he seemed unwilling to put on the role in the American Administration. However, I am robes or adopt the persona. I did not think that he not sure that an intellectual property tsar would play looked like Ivan the Terrible; Peter the Great had a quite such a valuable role in the UK system. I say that more constructive role, both literally and metaphorically, despite the fact that I signed up to the relevant amendment given Saint Petersburg, if I recall. I am sure that the but, hell, we can always change our positions. The Minister knows that such wonderful casting opportunities more the Minister keeps doing what he is doing, the do not come too often. This is the second time I have less we will see the need for not an inspector-general asked him. but a director-general of intellectual property. However, Having said that, creating a director-general of he probably still has some way to go to convince us intellectual property rights to sit within the Intellectual that the Government and the IPO really have the Property Office and serve as a champion of IP rights interests of the creators of intellectual property at heart. GC 69 Intellectual Property Bill [HL][18 JUNE 2013] Intellectual Property Bill [HL] GC 70

5.15 pm of” something or other. Now there is the Financial Services Authority—or, rather, the Financial Conduct Lord Howarth of Newport: My Lords, it grieves me Authority—and the new competition body is not called to part company with my noble friend Lord Young of the Office of Fair Trading or “Office of Competition” Norwood Green but I cannot agree with him on this but the Competition and Markets Authority. It has a matter. Of course, I agree with him that the Government board, a chairman and chief executive. I am simply and their appointees should back British business, but saying to my noble friends that I am not sure that I not to the exclusion of other interests and responsibilities. care for this amendment anyway, for the reasons given Of course, I agree that intellectual property should be by my noble friend Lord Howarth, but it is technically championed, but I do not agree with him that it not an up-to-date way of doing it. should be championed as much as possible. In an earlier debate, we reviewed some of the unhappy consequences that followed the decision to allow patenting Viscount Younger of Leckie: My Lords, Amendment of the human genome. If a new public functionary 28AA would create a new statutory role of “Director called the director-general of intellectual property rights General of Intellectual Property Rights”, with a duty is to be created, it seems to me that that official, acting to promote intellectual property rights. A very similar and speaking in a public capacity created by the amendment to the Enterprise and Regulatory Reform Government, ought to maintain a balance in his approach Bill was proposed by my noble friends Lord Jenkin, to the whole question of intellectual property rights. Lord Clement-Jones and Lady Buscombe, who is not He should champion the creation of new intellectual in her place today. property rights where it is appropriate but he should The functions of this new role are already being also recognise where the limitations ought to be and carried out. As Minister for Intellectual Property, I where the public interest needs to be balanced. have a role to champion the IP system as a whole. That includes the vital role of not only protecting the interests I shall certainly not weary the Committee by repeating of IP rights owners but considering the different interests the arguments that I deployed in our earlier discussion of future businesses, consumers and other users and about what should be covered in the annual report, creators of IP. A balanced IP system promotes strong but many of the arguments that I suggested should and competitive markets, and encourages innovation apply there also apply to this proposal. In any case, I and creativity. think it is unnecessary to create such an appointment. It seems to me that the chief executive of the Intellectual My role as IP Minister is to create and sustain the Property Office himself ought to take this wide and best possible balance. I am supported in this role by balanced view. If his remit from the business department the IPO, whose objectives I set through its annual is narrower than that, none the less, the noble Viscount, corporate plan. The IPO is responsible for promoting in his capacity as Intellectual Property Minister, speaking innovation by providing a clear, accessible and widely and acting collectively on behalf of the Government understood IP system that enables the economy and as a whole, ought always to have regard to that wider society to benefit from knowledge and ideas. range of interests and a balanced approach to policy. In particular, I am supported by the chief executive of the Intellectual Property Office, who is a director- general within the Civil Service. The chief executive is Lord Borrie: My Lords, I want to intervene in a appointed by the Secretary of State. He or she is small way. I had a certain nostalgic feeling when directly accountable to the Secretary of State, to me as reference was made to setting up a director-general of the responsible Minister and to the Permanent Secretary intellectual property because I was once the director- as the principal accounting officer. The chief executive general of fair trading for some 16 years and I enjoyed is responsible for the administration of the relevant that. I enjoyed the fact that the legislation that applied statutes, in this case the Patents Act 1977, the Copyright, to me directed everything in a sort of pyramid set-up, Designs and Patents Act 1988, the Trade Marks Act whereby I was at the top of the pyramid and everybody 1994 and associated legislation. He or she also advises else was down below. That was rather enjoyable, but the Secretary of State on all aspects of national intellectual surely my noble friends who have put forward this property, related EU and international legislation and amendment must realise that it is terribly dated now. on relevant policy issues. It seems to me that these are In the 1970s and 1980s, as each old-fashioned nationalised precisely the tasks that one would expect a director-general industry became privatised, a director-general was set of IP to perform, and we have a director-general doing up—for example, of Ofgas, Offer or Ofcom. They them. were all set up as sort of clones of the director-general We have heard the suggestion that a director-general of fair trading with specialised functions. However, for IP owners is needed to convince holders of IP roughly from the 1990s, into this century, all these rights that the Government are supportive of their offices have been remodelled on what I might call interests. The Government have already introduced or more private enterprise bases, whereby there is a board, supported a wide range of beneficial measures, from a chairman and a chief executive. The same person enhanced R&D tax credits and incentives for animation can no longer be both chairman and chief executive in to longer copyright for music performances, and from either private enterprise or the public sector. easier access to justice through the courts to encouraging Bodies that have been set up in recent years to do a a new IP crime unit in the City of London Police to job of this sort, to act as offices to receive public tackle online IP crime. It is clear that we have done concerns and complaints and to bring forward policy, much for IP-intensive industries, as my noble friend have been set up in the more modern way. If I may put Lord Clement-Jones acknowledged in the Grand it in simple terms, previously there has been an “Office Committee on the ERR Bill. I appreciate his general GC 71 Intellectual Property Bill [HL][LORDS] Intellectual Property Bill [HL] GC 72

[VISCOUNT YOUNGER OF LECKIE] My noble friend Lord Clement-Jones said that the support today—when compared, perhaps, with his Government and the IPO must show that they have views during the passage of the ERR Bill—and I am the interests of intellectual property holders at heart. grateful. He is right. The Government have done much, including The need for balance in IP policy has been recognised extending the copyright term in music performances for many years. For example, when the current Copyright, and the tax incentives for research and development in Designs and Patents Bill was debated in the other animation, which I mentioned earlier. place in 1988, the former honourable Member for The noble Lord, Lord Howarth, said that the Sedgefield, Tony Blair, said the following: Government should not be championing intellectual “The difficult balance that we have to strike … is between property rights to the detriment of others; in other ensuring that industry has a proper incentive to invest and recognising words, he was focusing on the public interest balance. that the consumer must be protected against the lack of competition Again, this is absolutely right. The IPO acts in the that will inevitably come from copyright protection. If we protect public interest, running the IP system in order to industry too much the consumer will suffer through the abuse of maximise innovation and creativity in the widest possible monopoly, and if we give too little protection to industry it will lose the incentive to invest. Our task is not to choose between the sense. interests of industry and the consumer but adequately to balance I hope that on the basis of the information I have those interests”.—[Official Report, Commons, 25/7/88; col. 38.] provided, specifying in some depth the role of the I am most grateful to the noble Lord, Lord Howarth, chief executive of the IPO, as well as my own passion for clarifying that point earlier in this debate. for the role as IP Minister, the noble Lord will withdraw his amendment. The duties of the proposed director-general are significant in what they do not include. There is no duty to consider the impact on consumers, other businesses Lord Young of Norwood Green: My Lords, I have or the advance of research. He or she need not have not quite struck a consensus in Committee on this regard to the benefits of competition, and the development occasion. Even those who were supportive before seem of high-quality evidence does not appear to have been to have decided that the ship was going down. given priority.These are not optional extras but important Nevertheless, it has been a useful debate. considerations in their own right. Although the Of course, I concur with the critics, such as my Government understand the intention behind the noble friend Lord Howarth, who talked about the amendment, we do not believe that this additional role importance of getting the balance right between IP is necessary. In addition, I am not fully convinced that rights and public interest. I would not demur from a role that does not acknowledge the balance of interests that and I would not say that this is a perfect amendment. necessary to good intellectual property policy would However, if nothing else, it has again required the benefit creators, rights owners or the UK. Minister to define the way that, as the IP Minister, he The noble Lord, Lord Young,raised some important acts within his department and with other departments. points, some of which I may have addressed earlier. In that respect, it has been useful. It was unfortunate He suggested that the IPO is efficient at registering but that he referred to Chamberlain, as his career was does not champion IP rights. As I mentioned earlier, terminated rather abruptly, so perhaps he should choose the Intellectual Property Office is under my control as another analogy in future when he is waving a piece of Minister for IP. I do not know about my transition paper. Nevertheless, I take the point that he made. from Ivan the Terrible to Peter the Great but reiterate The noble Lord, Lord Clement-Jones, was right to that I am a proud Intellectual Property Minister. say that we will judge the Government by their actions. However, importantly, I do not agree that it is my role The reference to the Digital Economy Act brought a to champion current IP rights holders over future ones feeling of nostalgia and I hope that we will see it fully or to have one set over another. enacted. Nevertheless, I thank noble Lords for The noble Lord, Lord Young, questioned what the participating in the debate and, taking into account IPO has done to support rights holders and IP businesses. those responses, I beg leave to withdraw the amendment. As I mentioned earlier, the IPO is taking a wide range of actions to help business. I refer noble Lords to my Amendment 28AA withdrawn. lengthy letter last week, which set out some of these activities on business support and enforcement. I have 5.30 pm here—which I can wave, Chamberlain-style—a copy of the IPO achievements for 2012-13. Noble Lords are most welcome to read it. Amendment 28AB The noble Lord, Lord Young, asked if intellectual Moved by Lord Stevenson of Balmacara property should be embedded in considerations across departments in Whitehall. Having the IPO as the 28AB: After Clause 20, insert the following new Clause— centre of IP expertise and policy in government, to “Future of intellectual property which departments can turn, helps to facilitate this. Subordinate legislation to implement the government’s Furthermore, IPO policy officials actively reach out to policy statement entitled “Modernising Copyright” published in December 2012 will not be brought forward other departments—DCMS and the Ministry of Justice, until the Secretary of State has published, and laid to name but two—on cross-cutting intellectual property before both Houses of Parliament, a report setting out issues. This system works for a wide range of policy the government’s long term plans for the future of areas and is the norm. intellectual property in the United Kingdom.” GC 73 Intellectual Property Bill [HL][18 JUNE 2013] Intellectual Property Bill [HL] GC 74

Lord Stevenson of Balmacara: My Lords, this amendment permanent copies, particularly when a sound recording is designed to probe the Government’s intentions as or a film may include underlying works which have regards the substantial baggage of copyright exceptions been licensed only on a limited basis for inclusion in a which stem from the Hargreaves report. We understand so-called permanent copy? the deadline for written comments on the first batch of Draft Section 28B(4) of the CDPA appears to draft legislation is 17 July 2013, and that the IPO will ignore how terms and conditions permitting access to be holding a series of open meetings in the week copyright works increasingly relate to the application commencing 8 July 2013 to give opportunity for discussion. of technical protection measures. For example, Although we welcome this, we have not had notification programmes which can be viewed on BBC iPlayer may so far about the other batches or, indeed, any certainty also be downloaded for viewing during an agreed on how many of these there will be. period, not normally beyond 30 days. If customers Therefore, can the Minister say, first, that it is can override the TPM contractual provisions, any intended that the Government will make the draft terms which are intended to distinguish access to a legislation widely available so that the finer points of catch-up TV service from a full video on-demand wording may be examined by parties with a broad download service will be potentially ineffective. TPM range of expertise? If so, can he spell out the various measures have never been “strictly non-contractual”. stages remaining in this process for the information of Can the Minister explain how the government drafting the Committee? takes this into account? Secondly, may I ask how the Government will The current wording on “cloud” storage does not manage the need to take a view of the impact of these appear to prevent sharing from the storage. Can the regulations in the round? Will there be a debate or Minister confirm that the draft regulations will be some other opportunity for both Houses of Parliament tightened to ensure that no one is permitted to permit to get involved before the regulations are introduced? anyone else to make copies of their “private” copies? On the regulations so far published, we are already It is hard to see how the new quotation exception aware of some significant issues which are being raised can apply to all copyright works, including photographs. across the industry. Can the Minister share with the Section 30 of the CDPA allows fair dealing of copyright Committee how the proposal to introduce an exception works for criticism, review and news reporting but for private copying can be squared with the requirements excludes photographs from the fair dealing provision. of the EC copyright directive and its requirements for Can the Minister confirm that a similar carve-out will fair compensation for rights owners? In this context, is be introduced for photographs? The phrase “fair dealing the Minister aware of concerns about the evidence for the purposes of quotation” does not clearly base used for the Hargreaves review? For example, the communicate in plain English the fact that uses which Government justify the proposal not to provide a are normally licensed or otherwise exploited are not compensation system on the basis that the exception included. Can the Minister confirm that this can be will cause minimal, if any, harm due to the minimal looked at again? impact on sales expected to arise from the introduction of this permitted act and the opportunity that it The Minister will recall that when we discussed provides for the value of private copying to be priced parody at length in Committee on the ERR Bill, the in at the point of sale. suggestion was made that parodists could rely on the concept of fair dealing, so that no further definition The impact assessment accompanying the modernising was required. This approach was strongly challenged copyright documents stated on page 15 that the research in Committee, not least because parody is a very into private copying appears to confirm that pricing in popular mode of entertainment in the UK and needs is possible and is taking place. However, the research certainty. I accept that this is a tricky area but do not by Roberto Camerani et al, which informed the impact believe that the proposed new exception for parody assessment, does not come to this conclusion and will be sufficient if no definition or boundaries are set instead finds, in the case of music, that out in the regulations. It is also quite surprising, given “an assumption or view that online stores embed an additional the debate referred to, that no definition is being cost into their product price for copying remains ambiguous”. proposed to specify what would constitute “parody”, Moreover, the research concludes that, in the field of “caricature” or “pastiche”. Would the Minister not music, the researchers could not find any evidence in agree that it will be necessary at least to distinguish support of a widely held view that stores are including each of those from the others? To avoid further confusion in their price a permission to copy. The assumption in the application of any clearly defined exception that the value of private copying is priced in at the linked to each of these expressions, rights owners are point of sale is refuted by the research commissioned likely to argue that it should be made clear that when by the IPO itself, so how does the Minister justify the users rely upon the proposed exception, any parody, approach now being taken? caricature or pastiche must not infringe the moral Draft Clause 28 in the CDPA refers to permitted rights of the authors or performers. Can the Minister private copies being made from a copy that is held by confirm that this matter might be looked at? an individual on a permanent basis. This expression is I apologise to the Minister for all the detailed not clear and is not currently recognised elsewhere as a questions, but I hope that they exemplify why more means of distinguishing one copy in the lawful possession time needs to be allowed for these important changes. of an individual from another copy which might not Unfortunately, I doubt very much whether single debates, meet the test of being a permanent copy. Can the even on a group of SIs, will be sufficient. I beg to Minister elucidate this? Will he clarify the concept of move. GC 75 Intellectual Property Bill [HL][LORDS] Intellectual Property Bill [HL] GC 76

Lord Clement-Jones: My Lords, the noble Lord, I will set out for your Lordships a number of Lord Stevenson, has found a novel way of responding documents that establish the Government’s strategy to the consultation on exceptions. It is not a wholly for intellectual property. These include the report by welcome process nor, I am sure, will the Minister find Professor Hargreaves himself, published in May 2011; it wholly welcome, since I suspect that questions fired the Government’s response accepting the professor’s with the rapidity of bullets can only really be answered recommendations, published in August 2011; an in correspondence. international intellectual property strategy published I am content to see the full suite of exceptions that in the same year, as well as an IP crime strategy will be put forward by the Government, which will of covering a five-year cycle; and, most recently, course need scrutinising. I hope that that will be both the Modernising Copyright document, to which a formal and informal process, so that parliamentarians the amendment refers, which flowed directly from the will have the opportunity to engage with the Minister Government’s response to the Hargreaves review and and with the IPO on these exceptions—not simply their subsequent copyright consultation that ran from through the debate that we will formally have when December 2011 to March 2012. Taken together, the they come to the House as statutory instruments. I can documents very clearly lay out the Government’s vision see that the motives of the noble Lord, Lord Stevenson, for intellectual property as an essential element of are pure but I am not quite so sure whether the growth, and back up that vision with real plans for the instrument he has used is appropriate. next five years. Those plans are reflected in the IPO’s corporate plan, which I, as the Minister for Intellectual Lord Howarth of Newport: My Lords, I support my Property, have signed off. noble friend Lord Stevenson of Balmacara in his I also remind noble Lords that the previous proposal that the Government should publish a document Government conducted many of their own reviews, of some sort setting out their thinking in relation to such as the Gowers review, Digital Britain, Creative the suite of exceptions that they propose to legislate Britain and the 2009 copyright review. Following this for. It will not be satisfactory if the first opportunity number of reviews, now is the time for action and that Parliament has to consider these exceptions is implementation, and I am pleased to say that this in the highly constrained circumstances in which we Government are now moving to implementation. consider unamendable orders, in fairly brief time, in I am very grateful to the noble Lord, Lord Stevenson, Committee. for his engagement and interest in the Government’s It would be very helpful if the Government would plans to implement their proposed changes to copyright lay out their thinking in a report and better still—essential, exceptions. This work, as the noble Lord is aware, is I would suggest—if Parliament had the opportunity being taken forward not in the Bill but through secondary to debate that report, so that when we come to consider legislation, which we will all have ample time to debate. the specific orders and enact legislation on them, we However, I understand why the noble Lord has raised do so in the context of a proper understanding of the the issue and recognise that while many are in favour thinking and strategic purpose of the Government. of the proposed changes, some stakeholders still have The Government have some very delicate and difficult concerns. Therefore, I will now try to respond. judgments to make, exception by exception, and Parliament needs to take responsible decisions. Parliament First, the noble Lord asked for more information will be better educated, and better placed to make about the timetable for the technical review of copyright appropriate judgments on this, if we have the opportunity exceptions that the Government are conducting. As to go through the preliminary stage that my noble the noble Lord indicated, the IPO is seeking comments friend suggested. The report need not be quite as on the first set of draft exceptions by 17 July and has ambitious as the one that he proposed in his amendment, offered open meetings in the week of 8 July. This first which would set out, set of technical drafts covers proposed new exceptions on private copying, parody, quotations, and changes “the government’s long term plans for the future of intellectual property in the United Kingdom”. to the existing exception for public administration. The next set of technical drafts will cover education, That could be quite a bulky document. However, if the preservation and archiving, research and private study, report is focused on the issues raised in the exceptions and text and data mining. It is my intention that these for which the Government are minded to legislate, it will be published before the end of the week. would be very helpful to Parliament and to others as well. This will leave one remaining exception: that for disabilities. However, noble Lords may be aware that Viscount Younger of Leckie: My Lords, I understand the UK is currently involved in discussions in Marrakech that the noble Lords, Lord Stevenson and Lord Young, to agree a treaty on improving access for the visually are keen to discuss the Government’s plans on copyright impaired to published works. Therefore, it may be exceptions arising from the Hargreaves review and necessary to await the outcome of that important their copyright consultation. The Government have work before issuing proposals to update the disability already made their vision for the future of intellectual exemption. I am sure that all noble Lords support this property very clear. They have endorsed the important work, which has the aim of facilitating recommendations of Professor Hargreaves after his access to books for visually impaired people across the thorough report. We want to see a framework that world. maximises growth across the economy, not just for On the time available for public comment, the industries that are users of the intellectual property Government are keen to ensure that sufficient time is framework but for everyone. provided for all the technical drafts to be considered GC 77 Intellectual Property Bill [HL][18 JUNE 2013] Intellectual Property Bill [HL] GC 78 properly. Therefore, the same time to comment—six For example, if I buy my content online I will have weeks—will be allowed for each technical draft. If any paid for the right to make copies. Should I pay again noble Lords here today wish to respond to the technical for that right when I purchase something on which to review exercise, the Government will be very happy to store that content? If consumers wish to purchase a hear from them. In addition, I will be happy to meet USB stick and to store their own photographs on it, any noble Lords who have a keen interest in this area. should they pay a tax to do so? Should a business have I now turn to how, subject to satisfactory completion to pay a tax on the photocopier paper it uses, or discs, of the technical review exercise, the Government plan or on any other medium that it uses to store the to bring the draft legislation before this House and the company’s content? I am sure that noble Lords would other place. These are statutory instruments, but the agree that the answer to all these questions has to Government have committed to lay them before each be no. House for affirmative resolution. This will provide an It does not seem sensible to maintain the current opportunity for Parliament to comment and to express position, where many consumers are infringing copyright its views. The noble Lord expressed concern about the on a daily basis. UK consumers and rights holders time to debate the issues. I do not share the noble should enjoy the same rights as those in other countries Lord’s fear that there will not be enough time for including Australia and Canada. Indeed, the Gowers discussion on these issues. This House and the other review commissioned by the previous Government place do not seem to shy away from debates on copyright. reached exactly the same conclusions. Those conclusions, Copyright exceptions have already been the subject of including a private copying exception, were accepted debate on the Floor of both Houses in the context of by Gordon Brown in the pre-Budget report in November the ERR Act and have been scrutinised by not one but 2007. Given the support of the previous Government two Select Committee inquires. However, I recognise for these provisions, I would like to work with the the great interest in this area and, as I indicated, noble Lord, Lord Stevenson, and all Members of this during the passage of the Enterprise and Regulatory House so that we can bring our copyright framework Reform Act, the Government remain open to the idea up to date. In light of these assurances and my offer to of additional debates on the draft regulations if there write and to meet, I hope that the noble Lord will is a desire from members of this House and of the withdraw his amendment. other place. I am happy to repeat that offer here today.

5.45 pm Lord Stevenson of Balmacara: My Lords, I thank I am, however, grateful to the noble Lord, Lord all speakers for contributing to this, and to the Minister Stevenson, for offering me his comments at this stage. for his very full response. I was not expecting detailed As the noble Lord himself noted, some of these points rebuttal on any of the points I made on individual are detailed and technical, such as the definition of copyright exceptions. I look forward to the letter, permanent copy. The Government will certainly be which I am sure will be very interesting. looking at this, and all other comments on the draft. The Minister has actually covered all the ground Indeed, the aim of the technical review process is to very satisfactorily. We were not aware of the timetable devise the best language possible, so I am grateful for for the second group of copyright exceptions. Six all noble Lords’ initial insights and suggestions on this weeks takes us to the end of July, so I assume that matter. I suggest that, rather than discussing each that will be finished at roughly the time that the point in detail, I write to the noble Lord separately to House rises. That would be good and gives us time to try to answer the more detailed points he raises. come back to that. I understand the point about Having said that, there are some points I would like the disabilities exception, which I do not think is to cover briefly here. The draft exception will not contested at all but should benefit from the further allow anyone to override copy protection measures discussions in the Morocco environment that the that are applied to works. The Government understand Minister talked about. the importance of these measures in the fight against We recognise that this is a process for which there copyright piracy, and will continue to protect them. are precedents. The affirmative resolution process is With regard to the particular example mentioned by what it is, but I recognise that the Minister has indicated the noble Lord, that of storing BBC iPlayer downloads in the past, and has repeated today, that he would be beyond the 30-day limit, this activity would not fall happy to respond to requests for additional debates. I within the scope of the exception. This is because this think that would be the way forward and I am sure type of copy is not acquired on a permanent basis. If that we could have a discussion on that and then it did fall within the scope of the exception, which it discuss it through the usual channels. does not, then it would still be illegal to break the copy protection measures applied to it. I am also particularly grateful for the news that On the issues raised on pricing and compensation there will be some new impact statements. We did not for private copying, the Government intend to publish feel that the previous impact statements, which attracted an updated impact assessment on this and the other criticism all round the House, including from the exceptions, and I hope that this will set out all the noble Lord, Lord Clement-Jones, were up to the mark evidence which has been gathered on this issue. The on what they were trying to justify. Seeing some reworked noble Lord raised a number of points about figures with proper calculations being done will be a compensation. However, I am sure that the noble huge success. Lord is not suggesting that consumers should pay I think that the amendment has achieved what we twice for content that they have legitimately purchased. wanted: to probe a little further on this area and to GC 79 Intellectual Property Bill [HL][LORDS] Intellectual Property Bill [HL] GC 80

[LORD STEVENSON OF BALMACARA] “permit effective action” against infringement of draw out the need for more time and effort to be spent intellectual property rights covered by the agreement, on these important and good proposals. I beg leave to including, withdraw the amendment. “remedies which constitute a deterrent to further infringements”. Amendment 28AB withdrawn. The EU directive on the enforcement of intellectual property rights echoes the TRIPS obligation. To satisfy Amendment 28AC the obligations imposed by TRIPS and EU law, many EU member states have adopted strong rules on civil Moved by Lord Young of Norwood Green damages for intellectual property infringements; for 28AC: After Clause 20, insert the following new Clause— example, in Ireland aggravated and exemplary damages “Compensation for financial loss are available. In other markets, including Austria, the (1) Section 97 of the Copyright, Designs and Patents Act 1988 Czech Republic, Greece, Poland and Romania, rights is amended as follows. holders can recover multiple damages. Lithuania provides (2) At the end of subsection (2), insert “including in addition for a form of statutory damages. These remedies are to or as an alternative to compensating the plaintiff for financial not available in the UK. In addition, Canada, the US loss a lump sum equivalent to the amount of royalties or fees and other countries have introduced statutory or pre- which would have been due had authorisation to use the relevant rights been requested”. established damages. Can the Minister say whether the UK Government Lord Young of Norwood Green: My Lords, we have believe that their implementation of the enforcement argued in Committee about whether or not criminal directive meets the requirement for member states to sanctions should be introduced to the design rights have “effective, proportionate and dissuasive” civil field. However, even if the Government’s current proposal remedies? It is true that the courts are free to continue is adopted, unregistered design rights will remain outside to apply their existing approach. A subsequent licence the criminal courts. purchase, for example, may be deemed adequate to It has been argued that the present civil damages compensate for lost profits. Technically, this leaves the regime is ineffective and provides no deterrent to those rights holder with the ability to recover unfair profits seeking to infringe IP rights—infringements which, it by suing the infringer. However, proving such profits can be argued, impact on economic growth. The current can be exceedingly difficult in many cases, especially regime offers little opportunity for organisations to where the profit is a saved cost. claim back the true costs of the losses they suffer, Much, if not all, of the substantive and common apart from the often nominal unpaid licence fee, as it law that concerns the awarding of damages predates takes no account of the profits a person may have the development of the modern, digital-based creative made on the back of their infringement. Therefore, economy.As a result, anomalies, deficiencies and inequities given that the only penalty available is an ability to have become increasingly apparent, particularly for reclaim the fee that should have been paid in the first copyright interests. The amendment provides the ideal place, a situation is created that provides an incentive opportunity for these problems to be fixed. I beg to to infringe. move. The Gowers report of 2006 stated that: “Damage awards should act as a disincentive to infringement”. Lord Clement-Jones: My Lords, I was not planning The 2007 Culture, Media and Sport Select Committee to speak on the amendment but the noble Lord, Lord report into new media and the creative industries Young, made such a good fist of the arguments that I stated: wanted to say that this matter needs serious examination. “The deterrent effect of the present law in this respect is near In fact, when one looks closely, one sees that this is a zero: it should be substantial, as are some of the illicit profits being made”. relatively mild amendment because it does not really constitute exemplary damages. It simply rolls up royalties The 1997 Law Commission report, Aggravated, Exemplary into a lump sum that otherwise could have been awarded and Restitutionary Damages, stated: by a court. Exemplary damages are rather tougher. “Substantial numbers of consultees considered that exemplary Indeed, many rights holders complain that the provisions damages do or could have a useful role to play in filling these gaps. They fulfil a practical need. We agree”. of the amendment would be inadequate when all they When pressed, the Ministry of Justice points to the are going to get is just the equivalent of a royalty fact that the civil regime is there only to compensate, when, in fact, an infringement has taken place over a while the criminal regime is there to punish. However, long period. One could go a lot further, but as a first blurring of these boundaries already takes place. In step and as a way of stimulating discussion this is an January 2010, a judge awarded exemplary damages in interesting amendment. a civil case involving a car insurance scam. In addition to ordering the individuals in the fraud ring to compensate Viscount Younger of Leckie: My Lords, Amendment the companies for £300,000 of losses, the judge ordered 28AC would allow for the awarding of damages in the ring to pay a further £92,000 as a punishment. The copyright infringement cases that compensate a plaintiff reason, he stated, was to send a clear message that this for the infringement, as well as the additional damages sort of action would not be tolerated. allowed in some circumstances for copyright infringement. The WTO Agreement on Trade-Related Aspects This is already catered for by Regulation 3(2) of the of Intellectual Property Rights—TRIPS—requires Intellectual Property Regulations 2006—SI 2006/1028— that members provide enforcement procedures that and damages may be awarded at the court’s discretion. GC 81 Intellectual Property Bill [HL][18 JUNE 2013] Intellectual Property Bill [HL] GC 82

Copyright gives the creator of a protected work the answer totally satisfactory. We will reflect on the statistics right to control certain acts, such as how and when the that he gave us. I assume, as he only went as far as work is copied or when it is issued to the public. Most 2009, that we have not got any further statistics for cases of copyright infringement fall under the remit of 2009 to 2012. If he has, no doubt he will let us know in civil law and are dealt with by the civil courts. Infringement writing. We will reflect on his points and, in those can be a criminal matter, particularly where it is carried circumstances, I beg leave to withdraw the amendment. out deliberately and/or it occurs on a commercial scale. The UK legal system does not generally have Amendment 28AC withdrawn. principles of punitive damages in the civil courts. In some circumstances this is possible for blatant copyright infringement, but these provisions are rarely used. Clause 21 : Recognition of foreign copyright works Civil remedies in UK law are aimed at settling disputes and performances and provide restitution and compensation, while punishment is the purpose of the criminal courts. Amendment 28B Intellectual property law is complicated and in many Moved by Viscount Younger of Leckie circumstances it is possible for an individual or business to infringe accidently. As a result, although it is possible 28B: Clause 21, page 19, line 30, leave out from “Part” to end to obtain additional or exemplary damages for copyright of line 32 and insert “, or any of its provisions, to a specified infringement in some circumstances, this isn’t something country; that the Government intends to introduce more widely. (c) make provision for applying this Part, or any of its In particular, the introduction of further exemplary provisions, to any country of a specified description; damages for design rights and patents would almost (d) make provision for the application of legislation to a certainly have a negative impact on innovation, as country under paragraph (b) or (c) to be subject to specified restrictions.” industry would become more nervous about infringement when developing new products. Further damages would also create a perverse incentive for some individuals Viscount Younger of Leckie: My Lords, I will set and organisations to take legal action that might out why the Government have tabled minor and technical otherwise be inappropriate. amendments to this clause. The Committee will be relieved to know that my speech will be brief on this An important principle of UK law is ensuring that occasion. the level of penalty is proportionate to the level of wrongdoing. The Government believe that furthering Clause 21 is intended to simplify the way in which exemplary damages could allow for disproportionate the UK currently meets its international obligations to sanctions to be imposed on those who unintentionally extend copyright protection to works from other countries infringe IP and would not support rights holders, or and their citizens, delivering clearer information for protect or enforce their rights. Above all, we have seen users. This need arises from the fact that the UK is a no evidence that exemplary damages work where they signatory to a number of international copyright are available in other countries. conventions and treaties. This obliges the UK to extend copyright protection to works and performances created The noble Lord, Lord Young, questioned whether by citizens of other member countries, or to works the UK Government are doing enough on enforcement. that originate in other member countries. These obligations I am delighted that this gives me an opportunity to are reciprocal: UK copyright holders benefit from the provide some highlights of what I regard as a serious same protection in those countries. and important matter. The UK’s legal system convicts pirates and counterfeiters, and 80% of criminal cases However, it became clear after the Bill was introduced under IP legislation in 2009 led to a guilty verdict. In that the clause as drafted would not provide the 2009, the UK convicted nearly eight times as many Government with the flexibility to extend as much, or copyright offenders as in 2002. The assets seized from as little, of the Act as is appropriate. The policy IP criminals were £21 million in 2010-11, which was behind Section 159 is for protection to apply only more than twice the previous year’s figure. Figures where it is offered in return. This very much depends vary from year to year, understandably, but there is an on which international agreements those other countries increasing trend in the value of assets recovered since have signed up to, and whether they have opted out of 2004-05. some elements. The purpose of the Government’s technical amendments to this clause, therefore, is to The noble Lord, Lord Young,spoke generally about better define the powers to extend only parts of the whether the current system is working. To address his provisions of the Act to citizens and works from other first question, we simply have not seen the evidence countries, and where the United Kingdom is obliged that the UK’s penalties are ineffective deterrents. UK to do so. piracy is relatively low, and Ofcom research suggests that it is not rising. That is not to say that we are Amendment 28K is consequential and removes text complacent. However, I ask the noble Lord to withdraw that has become redundant, because the Bill will his amendment. automatically ensure protection in future for works from the Channel Islands and the Isle of Man. I beg to move. 6pm Lord Young of Norwood Green: I thank the noble Lord Stevenson of Balmacara: My Lords, I am sure Lord, Lord Clement-Jones, for participating in the that there will be little response to the Minister’s brief debate. I cannot say that we found the Minister’s but adequate explanation of these amendments. He GC 83 Intellectual Property Bill [HL][LORDS] Intellectual Property Bill [HL] GC 84

[LORD STEVENSON OF BALMACARA] An Independent Review of E-Lending in Public Libraries also tried to write to us to explain what he was doing, in England, was published in March 2013. A number but unfortunately the letter did not reach us until this of recommendations were made to ensure that authors morning. However, I have had the benefit of a brief receive fair remuneration from the lending of digital, read of that. It seems to us a sensible amendment, and audio and e-audiobooks by libraries. The review we wish it well. recommended that the anomaly whereby rights holders are still not recompensed for the loan of their audio Viscount Younger of Leckie: I am grateful for the and e-books should be urgently addressed by extending brief contribution from the noble Lord, Lord Stevenson. PLR to cover e-books, audiobooks and e-audiobooks; I have nothing further to add. that there should be an increase in the Government’s PLR funding to take this into account, so that writers Amendment 28B agreed. and other rights holders are equitably compensated; that the provisions in the Digital Economy Act 2010 that extend PLR to on-site loans of audiobooks, Amendments 28C to 28K e-books and e-audiobooks should be enacted; and Moved by Viscount Younger of Leckie that the Government should find space in their legislative programme, at the earliest opportunity, to enact primary 28C: Clause 21, page 19, line 33, leave out “(4)(b)” and insert legislation to extend PLR to remote e-loans. “(4)” 28D: Clause 21, page 19, line 37, after “(4)(b)” insert “or (c)” I will say a word on the legalities around PLR. Authors who have granted publishers the right to 28E: Clause 21, page 19, line 38, after “country” insert “or publish their works as audiobooks or e-books will countries” typically retain copyright in the work and will often 28F: Clause 21, page 19, line 39, leave out “Order” and insert retain the exclusive right to lend the work granted by “provision under subsection (4)(b) or (c)” Section 16(1) of the Copyright, Designs and Patents 28G: Clause 21, page 19, line 40, at end insert— Act 1988. Under Section 18A of the CDPA it is an “(6A) Application under subsection (4)(b) or (c) is in addition infringement of copyright in a literary work to lend to application by subsections (1) to (3). that work to the public without the copyright owner’s (6B) Provision made under subsection (4)(c) may cover countries permission. However, Section 40A of the CDPA permits that become (or again become) of the specified description after public libraries to lend books that fall within the the provision comes into force.” public lending right scheme. If the Digital Economy 28H: Clause 21, page 20, line 18, after “(bb)” insert “or (c)” Act is implemented, the PLR scheme will be varied to 28J: Clause 21, page 20, line 22, at end insert— include audiobooks and e-books. Until that happens, “(c) make provision for the application of this Part to a loans of audiobooks and e-books issued without a country added under paragraph (b) to be subject to copyright owner’s authorisation perpetuate a situation specified restrictions.” in which lending rights are being infringed. 28K: Clause 21, page 20, line 29, at end insert— Loans of audiobooks are significant, considering “( ) In section 208(5) of that Act (which, so far as it gives power to designate any of the Channel Islands or the Isle of Man, that no payment is made to authors for their loan from is superseded by the new section 206(1)(ba)) omit “any of the libraries and that in many instances the libraries charge Channel Islands, the Isle of Man or”.” for the loans. The latest CIPFA statistics put the number of audiobook loans at 9.9 million for 2010-11 Amendments 28C to 28K agreed. and 8.9 million for 2011-12. However, CIPFA treats e-audio separately in the 2011-12 figures and there is Clause 21, as amended, agreed. an additional figure to be taken into account of 287,000 loans for e-audiobooks. Amendment 29 In their response to the Sieghart report, the Government committed to pursuing legislation to extend Moved by Lord Clement-Jones PLR to remote lending in future parliamentary Sessions. 29: After Clause 21, insert the following new Clause— They also agreed to consider commencing the relevant “Remote e-lending provisions of the Digital Economy Act. Their commitment (1) Section 5(2) of the Public lending right Act 1979 (interpretation) to pursuing the legislation to extend PLR to remote is amended as follows. lending was said to be subject to compliance with the (2) At the end of the definition of “lent out” omit “but EU copyright directive, with further funding dependent paragraph (b) does not include being communicated by means of on evidence of remote loans. electronic transmission to a place other than library premises”.” What are the potential consequences if the Government do not implement the recommendations? The continuing Lord Clement-Jones: My Lords, as your Lordships failure to provide for lending remuneration in respect know, the public lending right is the legal right of of non-print formats raises an important legal issue. authors to receive payment for the loan of their books While on-site e-book lending is a developing service, by public libraries. Currently it applies to the loan of the ability to access audiobooks in public libraries is books only in printed format. It does not apply to clearly highly valued by the public. The advisory panel e-books, audiobooks and e-audiobooks. heard that around 10 million audiobook loans take William Sieghart and a distinguished advisory panel place each year, the vast majority of which are in carried out a review of a number of issues and concerns hard-copy formats. Quite apart from the inequitable on the subject of e-lending in libraries. Their report, treatment of rights holders, the current situation also GC 85 Intellectual Property Bill [HL][18 JUNE 2013] Intellectual Property Bill [HL] GC 86 places the library service in a position where rights are The Government recognise the opportunities presented being infringed on a daily basis. For libraries and by the lending of e-books by public libraries and authors, the longer-term consequences of a failure to recently commissioned an independent review of e-lending implement the Sieghart recommendations expeditiously in libraries in England, led by William Sieghart, which are clear: readers are increasingly choosing digital my noble friend Lord Clement-Jones referred to. Noble formats, anticipating on-demand access at the time Lords will be aware of the public lending right—PLR— and place of their choosing. scheme which enables authors and other rights holders The Government should act upon William Sieghart’s to receive payments in exchange for their works being recommendations without delay to effect the extensions loaned out free of charge by public libraries. to PLR envisaged by the Digital Economy Act, to More than 23,000 authors, illustrators, photographers, provide adequate additional funding for these extensions translators and editors who have contributed to books and to fund and encourage appropriate models for lent out by public libraries in the UK receive PLR remote e-book lending so that libraries can act within payments each year, up to a maximum of £6,600 per the law and authors can receive fair remuneration. rights holder. This is, in effect, compensation for the Since the Government are now committed to pursuing mandatory nature of the PLR scheme. Rights holders the legislation to extend PLR to remote lending, subject are automatically included in the scheme, although to compliance with the EU copyright directive, with some authors waive their right to receive PLR payments. further funding dependent on evidence of remote At present, e-books, audiobooks and e-audiobooks— loans, why not use this Bill for the enabling legislation? which I shall collectively call e-books for convenience—are I beg to move. outside the scope of the PLR scheme. This is regardless of whether those books are downloaded on library Lord Howarth of Newport: My Lords, I support the premises or downloaded remotely, such as at home. It noble Lord, Lord Clement-Jones, very strongly indeed. is very important to note that public libraries are able I am very glad that he tabled this amendment. There is to lend e-books, both on library premises and remotely, a palpable injustice that needs to be remedied and I without the PLR scheme being extended. Library can see no good reason why it has not already been authorities offering e-lending reach appropriate agreements done. It should be done very expeditiously indeed. to license the lending of e-books by contracting the The historic authors’ public lending right scheme services of third party aggregators who liaise with has always been run on a highly cost-effective basis. publishers on rights holders’ behalf. The cost of it has been minimal to public funds. But it has been valued very much by authors, not because it makes them rich—there is a low ceiling on the total 6.15 pm remuneration they can receive through the scheme—but Before I address my noble friend’s amendment, it is because it gives recognition to their copyright and worth noting that loans of e-books currently represent their rights as authors. Rightly, they feel strongly a tiny fraction of book loans in this country. The last about it. It is clear that the principles of the system set of statistics on public library usage showed that need to be extended to e-books and should have been there were 850,000 e-book loans in the UK in 2011-12 extended long ago to audiobooks. All the thinking has compared with almost 288 million loans of print been done by Mr Sieghart and his colleagues. books in the same period. Nevertheless, e-lending is a To carry on with the present state of affairs is growing trend and we should expect library users’ disreputable. I suspect that the constraint is seen as expectations and demands to change. In the future, for one of cost but even a token royalty or token remuneration some people, perhaps popping to the library will become would satisfy the principle, which I think is important synonymous with going upstairs to log on to their to authors. I hope very much that the Minister, speaking computer. on behalf of not only his department but the DCMS, The Digital Economy Act 2010 contained provisions will be able to encourage us today. enabling the PLR scheme to be extended to on-site e-lending; that is, loans of e-books carried out on Lord Young of Norwood Green: My Lords, I thank library premises. By contrast, under remote e-lending, the noble Lord, Lord Clement-Jones, for his a library user may, for example, log on to a library comprehensive contribution, as well as my noble friend website from his or her home and download an e-book Lord Howarth. I think that they have covered the in that way. I apologise for labouring the distinction waterfront on this one. The only thing I would add is: but it is an important one for the Committee to bear in can the IP Minister tell us what has happened to the mind. Digital Economy Act? I look forward to his response. Last autumn, the Minister for Culture in the other Basically, we support the premise that is contained in place, Ed Vaizey, asked William Sieghart to carry out this amendment. an independent review of e-lending in public libraries in England. The report recommended that the PLR Viscount Younger of Leckie: My Lords, I thank my scheme should be extended to on-site loans of audiobooks noble friend Lord Clement-Jones for his amendment. and e-books by commencing the provisions in the This amendment and the following one fall within the Digital Economy Act 2010, and that PLR should be remit of the Secretary of State for Culture, Media and extended to remote e-loans. The government response, Sport. However, as I work ever more closely with my published in March this year, welcomes the review’s colleagues in DCMS where there is some crossover in findings, but explains that it has not yet been possible policy, I am more than happy to discuss these amendments to bring the provisions of the Digital Economy Act today. into force. However, it also says that the Government GC 87 Intellectual Property Bill [HL][LORDS] Intellectual Property Bill [HL] GC 88

[VISCOUNT YOUNGER OF LECKIE] Designs and Patents Act 1988, allowing these rights have now committed to considering the commencement holders to authorise or prohibit the lending of their of the provisions to extend PLR to on-site loans of work. The law requires library authorities to reach audiobooks and e-books. appropriate agreements with non-print rights holders However, this amendment deals specifically with or with other parties on behalf of those rights holders remote e-loans, which are not covered by the provisions in order to license the lending of their non-print in the Digital Economy Act. This was to ensure works. compatibility with a European directive: namely, the Library authorities offering e-lending do this by copyright directive. Under that directive, authors are contracting the services of third party aggregators provided with the exclusive right to authorise or prohibit who liaise with publishers on their behalf, which is a any communication to the public of their works. This point that I made earlier. My noble friend Lord Clement- includes making a work available to the public by Jones spoke about the need to increase funding for the electronic transmission in such a way that members of PLR. The funding available for PLR for 2015-16, the public may access it from a place and time of their which is the earliest at which the scheme can be own choosing—in other words, via remote e-loans. extended, will be confirmed in the spending round on This right is provided for in the Copyright, Designs 26 June. Given that loans of print books and audio and Patents Act 1988. books are seeing a downward trend as loans of e-books On-site loans of e-books are subject only to the are increasing, it is not necessarily the case that an separate right of reproduction. There is a specific increase in PLR funding would be necessary to maintain exemption in the copyright directive for loans by the rate per loan paid to authors. libraries. By contrast, in respect of the exclusive right My noble friend Lord Clement-Jones made a of communication, the specific exemption is limited to recommendation that the PLR should be extended communications to members of the public, and funding provided urgently, and he asked why this “by dedicated terminals on the premises”. has not happened to date. In the response to the This is the basis upon which the Government review, the Government have committed to considering legislated in the Digital Economy Act to extend PLR the commencement of the DEA provisions. I can to on-site loans. Therefore, I trust that, considering assure your Lordships that careful consideration has the wider constraints within which UK legislation been given to this and I will inform the Culture Minister must operate, and that we must have proper regard to of my noble friend’s keen interest. The funding available this matter of EU law before proceeding, my noble for the PLR for 2015-16 will be confirmed on 26 June, friend will appreciate that this area needs particularly as I mentioned. careful consideration. The noble Lord, Lord Young, asked where the Furthermore, the implications for PLR funding Government are on the Digital Economy Act—whether need to be considered against evidence of the number it would be implemented and when. The provisions in of remote loans of e-books. The government response the Digital Economy Act aim to address the online stated that, copyright infringement resulting from unlawful peer- to-peer file sharing. The Government and Ofcom are “any increase to PLR funding would need to be considered currently implementing this system. The Government against evidence of increased loans within the increased remote scope”. are still on track to send the first notification letters during the course of 2014. It may be that a fuller An important step, therefore, is ensuring that there is a answer is required to the noble Lord in respect of his robust evidence base upon which to consider any specific questions on the timing and I will endeavour future extension. This is a really important point as to do that. existing research about e-lending is predominantly American. While that provides useful indicators, the UK market is significantly different in many ways. Lord Young of Norwood Green: I welcome that Therefore, to offer any meaningful evidence on e-lending nugget of information but it is a nugget in that there is in the UK, the review concluded that a central project quite a lot more in the Digital Economy Act. I was is needed to bring together all partners collaboratively. taking the opportunity to ask generally and I quite As a result of the findings of the review, I am understand that that requires a complex answer. If the pleased to say that the evidence base will be improved Minister will write to us with more information, it will through a research project led by the Society of Chief be eagerly received. Librarians in collaboration with publishers and library authorities. The Government expect that the whole Viscount Younger of Leckie: I was attempting to library sector can benefit from these results. The give a fuller answer in that I, too, understood that it Government see improving the evidence base as an was a slightly more complex question and that is why I important step forward as e-lending is evolving extremely would like to give a holistic answer covering the noble quickly. However, the Government believe that it would Lord’s general point about the timing and the rollout be premature to prejudge the outcome of that independent of the Digital Economy Act. research project by legislating now. My noble friend Lord Clement-Jones asked why we A number of noble Lords raised questions in this should not just provide a token amount of remuneration short debate and my noble friend Lord Clement-Jones in respect of PLR. By EU law, remuneration must be stated that authors’ rights were being infringed without more than merely illusory. Although the UK has a this amendment. Non-print book rights holders are degree of discretion as to the amount, the European currently conferred lending rights by the Copyright, Commission’s case law has said that it must be real GC 89 Intellectual Property Bill [HL][18 JUNE 2013] Intellectual Property Bill [HL] GC 90 and reflect the loss of remuneration, so the availability of remote e-lending under the copyright directive. I of funding is relevant to any extension. My noble am not an expert on that directive but I doubt whether friend also asked what the implications were if these it is beyond the wit of man to find a way through that changes were not made. To clarify that point, library and to find some satisfactory way of including remote authorities can continue to lend e-books without the e-lending in PLR if the budget is there. extension of PLR. However, the number of hard copy or print books The noble Lord, Lord Howarth, asked whether the which are subject to PLR is diminishing over time, so issue is one of cost and, if so, whether a token amount the pool of money required to compensate authors—the can be paid. My noble friend Lord Clement-Jones Minister said that £6,600 is the limit under PLR—may made a similar point. The financial implications must not necessarily grow, because there will be a compensating be given consideration but I assure noble Lords that diminution in the number of printed books taken out the Culture Minister is giving this proper consideration as against the quantity of digital lending. I would not even as the challenging economic circumstances continue. be at all surprised if this required no additional funding With this in mind, I hope that my noble friend will and it was simply a matter of political will to recognise withdraw his amendment. that the technology is moving in a particular direction and to make sure that authors are compensated as much for the loan of digital books as for the loan of Lord Clement-Jones: My Lords, I thank the Minister print books. However, we will not get much further for that quite complex reply. I thank the noble Lord, today. I thank the Minister for his considered reply Lord Howarth, for his support, and the noble Lord, and beg leave to withdraw the amendment. Lord Young. I liked his question about what has happened to the Digital Economy Act. It is one of Amendment 29 withdrawn. those mysteries, like “Who killed Cock Robin?”. The Minister seemed to be saying that it is far easier 6.30 pm to implement the Digital Economy Act for onsite e-lending than it is for remote e-lending. If I have elicited that as a response, we can at least start sorting Amendment 30 out the wheat from the chaff. It sounds as if 26 June is Moved by a very significant date for whether or not we are going Lord Clement-Jones to be able to implement that part of the Digital 30: After Clause 21, insert the following new Clause— Economy Act. I shall put on my party clothes if, on “Copyright in broadcast the 26 June, we know that there is going to be something Omit section 73 of the Copyright, Designs and Patents Act in the budget for PLR under Section 43 of the Digital 1988 (reception and re-transmission of wireless Economy Act. I shall put on even more party clothes broadcast by cable).” if, after four years, we start issuing letters next year under the initial obligations code. The fact that it has taken four years to implement an Act will perhaps be Lord Clement-Jones: My Lords, I am afraid I have in the Guinness book of records, although the noble three amendments in a row. I do not know whether Lord, Lord Borrie, who has a great memory for these it will be “three strikes and you’re out”, but things, may remember other Acts that have not been Amendment 30 is the second. I will first explain that implemented. However, it is good news on that front. Section 73 of the Copyright, Designs and Patents Act It sounds as if there is some willingness to implement is a provision in UK copyright law that permits the the Act as far as that is concerned. immediate retransmission of the main PSB free-to-air services by “cable” in the area where the original PSB I am rather baffled that the Government should channel was broadcast. Crucially, Section 73 provides commission a report by somebody extremely distinguished, that the copyright in the broadcast, and in any work with a very distinguished advisory panel, which came included in the broadcast, is not infringed by such to some very clear conclusions about remote e-lending, retransmission. The effect of the section is to permit and then shuffle the whole thing off into a piece of “cable” operators to retransmit PSB services without research. I am sure that that is very frustrating for all agreement or consent. concerned. The Minister talked about the bodies that were involved, including the publishers, but the authors— What was the original purpose of the provision? the ALCS and others—really need to be involved in The policy justification for Section 73 in its current this process. In many respects, all this is happening form was to encourage cable rollout in the 1980s and behind a somewhat closed door as far as the writers 1990s as a competing platform to terrestrial television. are concerned, but they should be involved. Clearly I How have the courts interpreted the provision today? am not going to get very far with that until the results In the recent TVCatchup litigation in the UK and of the survey are put together. CJEU, TVCatchup, an online TV service provider, On the legal issue, not all libraries have reached an argued that its retransmission and commercial exploitation agreement with aggregators. There will be continuing of the PSB services via the internet was lawful under infringement until we have either proper, blanket Section 73 on the basis that “cable” ought to be given licensing—via the aggregators, publishers or whatever—or its natural meaning. The judge in the High Court we have something in the Digital Economy Act, or litigation agreed, and stated: another instrument, to bring remote e-lending within “I see no reason why the cabling system inherent in the PLR. The situation will continue to be very unsatisfactory. internet should not be regarded as ‘cable’ for the purposes of the I heard exactly what the Minister said about the status Section 73 defence”. GC 91 Intellectual Property Bill [HL][LORDS] Intellectual Property Bill [HL] GC 92

[LORD CLEMENT-JONES] Secondly, the original policy rationale for Section 73 This is not an interpretation that can ever have has gone. Significant cable roll-out is now a thing of been intended by Parliament—and nor, based on the past and the TV distribution market is now highly correspondence with the IPO, is it one that the competitive. Cable is a highly effective and well resourced Government believe is correct. In that correspondence competitor to Sky and freeview/digital terrestrial television. in 2008-09 the IPO stated that, There is no reason to continue to grant a primary legislative advantage from the 1980s to one particular “‘cable’ in section 73 as amended must mean the same thing as ‘cable’ in the Information Society Directive, the relevant requirements platform operator in the current competitive market. of which were implemented by the section 73 amendments in Moreover, the Communications Act 2003 introduced question. In the Information Society Directive ‘cable’ is not a “must offer”obligation on the PSBs under Section 272, synonymous with ‘wire’ and is confined (as therefore, is section 73 requiring broadcasters to offer the main PSB services CDPA) to the retransmission of broadcasts by conventional cable for carriage on the cable, as well as satellite, platform. programme providers. The foregoing supports this Office’s view In addition, Virgin Media contracts with the PSBs for that the activities of IPTV providers such as ‘Zattoo’ who purport to rely on section 73, are in fact wholly outside the scope of that the supply of all the other channels offered by the provision and that there are grounds for challenging them on that PSBs that are not covered by Section 73. basis”. Thirdly, the provision is almost certainly in breach of European law and exposes the UK Government to The IPO also stated in the correspondence that the damages actions. In its submissions to the CJEU on interpretation of Section 73 by the IPTV providers, the TVCatchup case, the European Commission made and confirmed by the UK courts in the TVCatchup clear that it had grave doubts about the compatibility case, of Section 73 with the 2001 copyright directive. I will “cannot have been Parliament’s intention”. not go into the detail of that. The Commission went on to observe that it was “very doubtful” that the UK What are the problems with Section 73 now, in the court’s ruling that TVCatchup could make use of light of that case? First, economic loss for PSBs and Section 73 for that part of its service transmitted over the UK creative economy. Section 73 is now being the internet “could stand”. Notwithstanding the relied on by a series of service providers, most notably Commission’s clear position, however, the CJEU could TVCatchup and FilmOn, to make money from PSB not deal with the compatibility of Section73 in its channels by retransmitting them via their own online judgment in the TVCatchup case because the UK services and placing advertising in and around the court had declined the request of the broadcasters to channels, which include BBC channels. Not only are refer the question of the compatibility of Section 73 to the PSB services being exploited without agreement or the CJEU in the first place. What should the Government payment to anyone, including contributors, but, perversely, do in the face of this? Section 73 effectively permits these illegitimate online services to stream a small amount of content on the In broadcasters’ meetings with the Government to PSB channels, such as a number of old series for which date it has been very hard to understand the remaining online rights were not obtained and some sports coverage, policy rationale for Section 73, particularly given the that the PSB services themselves cannot stream online “must offer”obligation that applies to the PSB channels. for rights reasons. This perverse consequence of Section 73 Broadcasters believe that repeal of Section 73 would has attracted significant attention from underlying be a sensible deregulatory measure that would end the rights holders, including UK producers and foreign unjustifiable damage which is being suffered by the providers such as US studios, as well as from other PSBs, and would ensure that the UK continues to industry bodies. meet its Community law obligations. They believe that the forthcoming legislative programme, including this Services such as TVCatchup undermine the legitimate Bill, provides the Government with an opportunity online streaming services and on-demand catch-up urgently to consider repealing Section 73, assuming services provided by PSBs which, in the case of commercial this cannot be achieved by secondary legislation following PSBs, are a core part of ongoing efforts to make a the passage of the Enterprise and Regulatory Reform financial return on the PSB investment in original UK Act. Repeal of Section 73 would not only assist content. broadcasters in their fight against parasitic websites—we It is increasingly clear that TVCatchup in particular have used that term earlier today—but would also is operating at scale in the UK and has many millions ensure that UK legislation complies with the EU of users. Indeed, it claims that it has close to 12 million acquis and therefore reduces the risk of any potential registered users on its site. The key losses from this infringement proceedings against the UK. exploitation for the PSBs are loss of audience from The negative commercial impact of retaining Section 73 legitimate PSB online streaming services, linear broadcast is significant for UK public service broadcasters, and viewing and on-demand services, and, for the commercial ultimately, as a result, the producers of the audio-visual PSBs, loss of advertising and sponsorship revenue content they broadcast. This impact will continue to from their own channels. By contrast with PSB increase if no action is taken by the Government to exploitation of channels and content online, none of repeal these provisions. I beg to move. the TVCatchup revenue flows back into original UK content production or to underlying talent and rights Lord Stevenson of Balmacara: My Lords, I declare holders. The scale and problem of this free riding is no current interest in this matter, although I was likely to increase substantially over the coming years director of the British Film Institute when the Copyright, as more and more households adopt connected TV—that Designs and Patents Act was enacted. I was also is, IPTV. author of a minor monograph that is still in print. GC 93 Intellectual Property Bill [HL][18 JUNE 2013] Intellectual Property Bill [HL] GC 94

The amendment troubles me. Section 73 of that Act the policy outcome required by the Government, and is only one component of a complex web of regulation we understand that this issue will be considered in that provides equilibrium in the UK broadcast market. some detail by the Government when their It ensures that consumers who have already paid for communications White Paper is eventually published PSB content through the licence fee or indirect taxation in the summer, the amendment seems somewhat previous, can get access to publicly funded content through a as well as contrary to consumer interests. cable platform at no additional cost. It is true that While the recent TVCatchup case may indeed require Section 73 is a relatively old provision created when an adjustment to the current law, abolishing the clause the cable industry was in its infancy. It is also true that entirely, as the noble Lord, Lord Clement-Jones proposes, the cable industry is in a different position than when seems entirely contrary to the interests of 4 million Section 73 was conceived. However, the age of something cable customers who access public service content, at should not determine value. Attempts to delete old no cost to those broadcasters, through the cable platforms. things from existence can surely give no Member of I hope that the Government will firmly resist the your Lordships’ House much comfort. amendment. However, the amendment gives the Government a chance to look again at the objective of Section 73 and Viscount Younger of Leckie: My Lords, the amendment to ask themselves whether the outcomes it delivers would repeal Section 73 of the Copyright, Designs today are still relevant to their public policy objectives. and Patents Act 1988—in short, the CPDA—and I acknowledge that the recent TVCatchup case referred thereby remove the copyright exemption for the to by the noble Lord, Lord Clement-Jones, raises retransmission by cable of certain public service legitimate concerns about the use of Section 73 as a broadcasts, known as PSBs. The UK television industry defence for the retransmission of free-to-air PSB channels is a great success story. We are world leaders, producing online. great programmes and formats that are then sold the I understand that the Government are currently world over. We want to see the continued success and looking at how Section 73 might be amended and growth of this vibrant, important sector of the economy. tightened to ensure that the beneficiaries of the clause Section 73 of the CDPA is just one part of the are the intended platforms that are acting within the overall framework that supports the availability of TV law. Perhaps when he responds the Minister will again and investment in television programming in the UK. put on his DCMS hat and let us know what progress is This framework consists of a variety of rules and being made in that review, and indeed what progress is regulations that affect the production and availability being made on the communications White Paper— of public service programming and its relationship another of the vanishing opportunities for the with the services or platforms that carry it. These Government to intervene in these areas, which has include the obligations on PSBs to offer their content been promised since 2010. It seems that we are no to all relevant platforms, the rules governing payments nearer to a publication date. by broadcasters for technical platform services, and However, apart from the TVCatchup issue, I the powers for regulators to compel these services to understand that Section 73 continues to provide PSBs carry PSB content. and consumers with the most efficient route to access the PSB channels that most cable subscribers want 6.45 pm and who equally do not want to have to pay twice for. This is an area where it is important to examine Some noble Lords may be aware of the ongoing row carefully and in some detail the balance between the between the PSB community and the Sky platform competing interests and objectives involved before about the level of fees paid to broadcast on the commercial deciding on the appropriate course of action. It is also satellite platform. Indeed, one of the major gripes that important to ensure that a change to one part of this PSBs have at the moment—and I understand that they framework does not undermine other aspects of the been lobbying for this through the communications framework or give rise to unintended consequences in review process—is that they want to see an end to fees the industry. Given the interrelation between Section 73 that they have to pay to platform providers to carry and many other rules and regulations, it is key that this their content. is looked at in the context of the wider framework. However, when setting out the Government position The Government have been doing just this: considering in his speech to the Oxford Media Convention in the role of Section 73 within the wider framework. In January 2013, the Culture Minister said: answer to the noble Lord, Lord Stevenson, my colleague “I welcome the steps Sky have taken so far to reduce retransmission in the other place, Ed Vaizey, has been leading this fees to a much lower level. But we want them to go further, taking work, and DCMS will set out the next steps on this into account the undoubted value that PSBs offer to satellite issue when it publishes its approach to digital connectivity, platforms and their viewers, so that there’s a level playing field: content and consumers, which is planned for publication zero fees either way”. before the end of July. This would, indeed be a good outcome for consumers. It is right and proper that any proposal will be However, the question remains of how to draft a consulted on with the relevant stakeholders and interested clause to ensure that there is a level playing field parties. This proposed amendment to the CDPA would between all platforms, with zero fees either way. pre-empt the Government’s approach to this area. Unlike publicly funded platforms and unlike BSkyB, Given the complex framework that governs the balance cable has never charged PSB channels to carry their of payments between platforms and broadcasters, taking content. Given that this zero charge/zero pay policy is this action without fully considering or consulting on GC 95 Intellectual Property Bill [HL][LORDS] Intellectual Property Bill [HL] GC 96

[VISCOUNT YOUNGER OF LECKIE] the impact could risk unintended and harmful Amendment 31 consequences for the industry and have a chilling effect on growth in the sector. Moved by Lord Clement-Jones My noble friend Lord Clement-Jones asked if the Government believe that the definition of “cable” as 31: After Clause 21, insert the following new Clause— set out by the courts is correct. There is an ongoing “Criminal liability litigation in relation to the issue so it would be (1) The Copyright, Designs and Patents Act 1988 is amended inappropriate to comment on this specific case. The as follows. Government will set out their approach shortly. My (2) In section 107(4A)(b) (criminal liability for making or noble friend also asked if Section 73 was in breach of dealing with infringing articles, etc) for “two” substitute “ten”. EU law. The Government believe that Section 73, properly interpreted, is consistent with EU law. The (3) In section 198(5A)(b) (criminal liability for making, dealing with or using illicit recordings) for “two” substitute Court of Justice did not comment on the compatibility “ten”. in its recent judgment. On the understanding that Government are actively Lord Clement-Jones: Noble Lords will be pleased to looking at this issue and will be publishing shortly, I hear that this is a rather shorter amendment. would be grateful if my noble friend would withdraw Amendment 31 inserts a new clause which will increase the amendment. criminal penalties for digital copyright offences. Criminal Lord Clement-Jones: My Lords, I am delighted to offences for online copyright theft have maximum hear that the Government are looking at this. I do not penalties of two years’ imprisonment. Criminal offences know whether this is going to be the long awaited for physical copyright theft have maximum penalties White Paper coming out at the end of July—again, I of 10 years’ imprisonment. This discrepancy came will put my party clothes on if this is the case, since we about because the new offences were introduced by have been waiting 18 months for this. If it includes secondary legislation using the European Communities consideration of Section 73, so much the better. Act 1972 as part of the UK’s implementation of the copyright directive in 2003. Penalties for new criminal I am glad that although the noble Lord, Lord offences introduced by secondary legislation via the Stevenson, disagrees with me, he thinks that there are ECA are limited to two years’ imprisonment. This was legitimate concerns. However, this is not a matter of also after my right honourable friend Vince Cable’s depriving 4 million consumers of the ability to see Private Member’s Bill that became the Copyright etc. public service broadcasting over various digital media, Trade Mark (Offences and Enforcement) Act 2002 because that is already covered by Section 272 of the and that increased penalties for criminal copyright Communications Act 2003. I hope that there is not offences to harmonise them with those available for going to be a knee-jerk reaction to Section 73 going trade mark offences at 10 years. and that people very carefully consider what Section 272 I strongly believe that criminal sanctions should actually sets out; basically, it gives the right—and not be dependent on whether the offence is taking Ofcom enforces it—for Virgin, Sky and so on to show place in an online or physical environment. Intellectual these public service broadcast channels over their own property is still being stolen, whichever format is being platforms. used. The problem that this has created for law I have not raised the whole issue of whether or not enforcement was seen recently in FACT’s significant we adopt a US-style system with regard to the landmark private prosecution of Anton Vickerman. balance of trade between satellite and public service Vickerman was making £50,000 each month running broadcasters and so on. That was not my intention at a website which facilitated mass-scale copyright all. My intention was to draw attention to what, infringement. He was prosecuted and subsequently really, is cheating—we were talking earlier about convicted on two counts of conspiracy to defraud and cheating—by services such as TVCatchup, which has sentenced to four years’ imprisonment. This sentence no commercial arrangements with the public service would not have been possible if he had been prosecuted broadcasters. It inserts its own advertising in the under copyright law. breaks of commercial broadcasting. It is taking This amendment does not introduce any new offence. advantage of other people’s content. It is not paying It is simply about addressing an anomaly in the level for it. It does not feed back into the public service of penalties available. The maximum criminal penalties broadcasters in any shape or form. If one puts a for IP offences are: trade mark, 10 years; physical TVCatchup app on an iPad or another tablet, there is copyright, 10 years; registered designs, 10 years proposed no obligation to pay the BBC licence fee, so nobody is in the Bill; and online copyright, two years. The deriving any benefit from the services it provides Government prosecutors are happier using fraud other than TVCatchup itself. This why our public legislation to obtain convictions against online infringers. service broadcasters are so concerned and wish to see Given this, there is no appetite to amend the CDPA. action on this. I very much hope that, come July, our Trade associations such as FACT and the BPI anti-piracy honourable friend Mr Vaizey will take cognisance of unit tell a different story. While they do use the Fraud a serious gap through which TVCatchup is driving a Act in some instances, it would not be applicable to all coach and horses. In the meantime, I beg leave to cases and offences. Fraud legislation is used because, withdraw the amendment. owing to this discrepancy, there is no other option. The Fraud Act is used as a work-around because of Amendment 30 withdrawn. the leniency in the CDPA. GC 97 Intellectual Property Bill [HL][18 JUNE 2013] Intellectual Property Bill [HL] GC 98

In the Vickerman case, had he not conspired with that an increased sanction for online copyright infringement someone, conspiracy would not have been a possible would either increase the number of prosecutions brought charge, which would have left a serious offence subject forward, increase the length of sentences passed down to a disproportionately low maximum penalty. What to those found guilty of infringement or deter more law enforcement and prosecutors need is a full package people from infringing. We have not consulted on this of legislative options available to them so that they and we have no plans to do so. can consider each case individually and use the piece With existing legislation already providing the necessary of legislation that will get them the best result. This penalties and prosecutors having a range of options discrepancy aids defendants. They are able to point to already at their disposal, at the present time. I see no the fact that the maximum penalty for these offences is reason to increase sanctions under the Copyright, only two years, and therefore that they are minor Designs and Patents Act, despite there being a slight offences and should not be viewed as serious. This is discrepancy. In particular, changes should not be made incredibly damaging. Modern copyright law should without carrying out the appropriate consultation to focus on having a content-neutral and platform-neutral gather evidence of the impact. approach to infringement. I beg to move. I hope that this has clarified the Government’s position to my noble friend, and I ask him to withdraw Lord Young of Norwood Green: My Lords, we support his amendment. in principle the amendment of the noble Lord, Lord Clement-Jones, and would be interested to hear the Lord Clement-Jones: My Lords, although the Minister ministerial response. has thanked everyone for their part in Committee, he has, sadly, ended on a somewhat stony note because he Viscount Younger of Leckie: My Lords, I listened is saying that it would not be appropriate to introduce carefully to the speech of my noble friend Lord Clement- something without consultation but has absolutely no Jones. In so doing, I was multitasking and was able to intention of entering into a consultation. That slightly calculate that my noble friend has pledged to dress puts one in a cul-de-sac in all this. himself up in no fewer than three layers of party The Minister’s statement directly contradicts the clothes, which, I imagine, must be quite an impressive experience on which I have been briefed by FACT and sight. Given that this is the last amendment that I will the BPI in terms of their ability to use fraud legislation be speaking to in Committee, I want briefly to thank and common-law conspiracy. Clearly, they either have all Peers who have contributed and engaged in Committee not put their case sufficiently to the IPO or the IPO’s on the Bill. I realise that there will be more to speak evidence is at variance for some reason. Perhaps it is about on Report and I look forward to further discussions. talking to a different set of prosecutors. However, on a The effect of the amendment tabled by my noble couple of occasions, as well as talking about party friend would be to increase the maximum penalty for clothes, I have said that I am very much in favour of online copyright infringement to 10 years’ imprisonment. evidence-based legislation. I am very keen that we While I recognise that there appears to be a discrepancy should have the evidence and that we do not legislate between the penalties obtainable from the two offences without it. of online copyright infringement, with a maximum of If we need further discussion and evidence, I very two years’ imprisonment, and physical copyright much hope that the Minister will be open to that infringement, with a maximum of 10 years under despite the advice that he has received that the fraud the Copyright, Designs and Patents Act, I cannot legislation is relatively straightforward to use. That is support harmonisation of the two offences, given my certainly not what I have been told and I would not understanding of the area. have tabled an amendment if I had believed that. The Prosecutors are already using our current fraud discrepancy is not minor but one of eight years, which legislation to obtain convictions for online infringement, is significant, especially if you were locked up for that with substantial penalties, up to a maximum of 10 years’ period. You would, quite honestly, notice the difference. imprisonment. The existing legislation allows for effective However, the hour is late and we have had a good prosecutions to be made without reliance on any trot at a number of issues raised in Committee today specialist intellectual property knowledge. Last year, and I beg leave to withdraw the amendment. for example, the owner of the website Surfthechannel— which linked to pirated copies of films and TV—was Amendment 31 withdrawn. sentenced to four years in prison on two counts of conspiracy to defraud, more than the two years available Clauses 22 and 23 agreed. under the CDPA. The important economic aspect of this was addressed Schedule agreed. by the Digital Economy Act when it came into force in 2010. This raised financial penalties on digital offences Bill reported with amendments. to £50,000, in line with physical copyright theft. The Government have no evidence to support the suggestion Committee adjourned at 7 pm.

WS 7 Written Statements[18 JUNE 2013] Written Statements WS 8

East (15 September 2011, Official Report, col. 1206) to Written Statements review the unacceptable practices in the London Borough of Harrow. Tuesday 18 June 2013

Bailiffs EU: Agriculture and Fisheries Council Statement Statement

The Parliamentary Under-Secretary of State, Department The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham): for Environment, Food and Rural Affairs (Lord De My Honourable Friend the Parliamentary Under-Secretary Mauley): My right honourable friend the Secretary of of State for Communities and Local Government (Brandon State for Environment, Food and Rural Affairs (Owen Lewis) has made the following Written Ministerial Paterson) has today made the following statement. Statement. The next Agriculture and Fisheries Council is on The coalition agreement committed the coalition Monday 24 and Tuesday 25 June in Luxembourg. I Government to provide more protection against aggressive will be representing the UK, accompanied by Richard bailiffs and unreasonable charges. Further to this, last Lochhead MSP, Alun Davies AM and Michelle O’Neill year, Ministers pledged to review the guidance given MLA. to local authorities on the use of bailiffs to collect Monday and Tuesday will concentrate on the common council tax. agricultural policy (CAP) reform package. There are This was in light of unacceptable practices by some no fishery items scheduled for this council. local authorities; poor advice from the old Office of Council negotiations will centre on the four regulations the Deputy Prime Minister guidance; and the failure that make up the CAP reform package. The Irish of the last Administration to deliver on their 2009 presidency will be looking to obtain a full political pledge to publish new guidance on good collection agreement on the CAP reform package during this practice. council. My department has published new guidance to local authorities: Council Tax: Guidance to Local Councils on Good Practice in the Collection of Council Tax Arrears. A copy has been placed in the Library of the EU: Employment, Social Policy, Health House and is available on my department’s website at and Consumer Affairs Council https://www.gov.uk/government/publications/council- Statement tax. It replaces the previous Office of the Deputy Prime Minister guidance. Councils will rightly want to ensure they collect The Parliamentary Under-Secretary of State, Department council tax as far as possible, as every penny that is of Health (Earl Howe): My honourable friend the unpaid means higher bills for law-abiding citizens. But Parliamentary Under-Secretary of State, Department this does not mean that shady or aggressive practices of Health (Anna Soubry) has made the following are acceptable. Written Ministerial Statement. The new guidance directly tackles such issues as The Employment, Social Policy, Health and Consumer “phantom visits”, excessive charges and kickbacks Affairs Council will meet on 20-21 June in Luxembourg. from bailiffs to local authorities. Contracts should not The health and consumer affairs part of the council involve rewards or penalties which incentivise the use will be taken on 21 June. of bailiffs where it would not otherwise be justified. The main agenda items will be the following legislative It also provides clear guidance on: proposals: bailiffs providing the debtor with a contact number - the tobacco products directive (it is expected that should they wish to speak to the billing authority; the presidency will aim to agree a general approach); local councillors remaining responsible for the - clinical trials regulation (where the presidency action of bailiffs they have contracted; will report progress on negotiations) in-house bailiffs having to explicitly state that they - medical devices regulations (where the presidency are part of the local authority; will report progress on negotiations) councils publishing their standard scale of fees on Under any other business, the presidency is likely to their website, to allow public scrutiny and highlight provide information on the serious cross border threats unreasonable practices; and decision and matters relating to the import of active actively encouraging councils to sign up to the pharmaceutical ingredients in accordance with the Citizens Advice Bureau good practice protocol. falsified medicines directive; the transparency directive; This Statement delivers on the commitment made and the EU drugs action plan. by Ministers (12 January, Official Report, col. 385W) The Lithuanian delegation will also give information to report back to the House. It also delivers on the on the priorities for its forthcoming presidency, which commitment made to the hon. Member for Harrow will run from July until December 2013. WS 9 Written Statements[LORDS] Written Statements WS 10

EU: Telecommunications Council the need for any further telecoms regulation. Many Statement member states also emphasized that one of the outcomes of these proposals should be that broadband is available to all citizens regardless of where they live in the EU. Lord Gardiner of Kimble: My honourable friend, On spectrum, there was consensus among member the Minister for Culture, Communications and Creative states that there should no changes that would reduce Industries (Ed Vaizey MP) has made the following member states’ abilities to make their own decisions to Statement: how spectrum is allocated. The Telecommunications Council took place in Luxemburg on 6th June 2013. I represented the UK at The next item was a progress report from the this council. presidency, followed by an orientation debate on the The first item was a full “tour de table” debate proposal for a directive of the European Parliament guided by questions from the presidency on the digital and of the council concerning measures to ensure a agenda for Europe—the role of the telecommunications high level of network and information security across and ICT sectors. The commissioner for the digital the Union. (First reading – EM6342/13) My intervention agenda, Vice-President Kroes is planning to launch an supported the high level principles of the strategy but initiative with the aim of achieving the goal of a expressed concern that the current proposal was too further integrated European telecoms single market. It prescriptive. I also said that voluntary data sharing forms part of the goal to achieve a pan-European arrangements were very valuable and should not be digital single market by 2015; though the telecoms threatened by mandatory reporting requirements. Finland, single market measures may have a longer timescale France, Sweden and Germany also shared my view before realisation. that the regulation was too prescriptive. However, most member states believed that legislation was necessary This debate focused on two questions: garnering but only in respect of sectors that were considered member states’ views on how to realise the ambition of “critical” national infrastructure. a more integrated telecoms single market and views on further pan-European spectrum harmonisation. The The presidency then provided a progress report on commissioner for the digital agenda opened the debate the proposal for a regulation of the European Parliament by urging member states to see the digital agenda as a and of the council on electronic identification and vehicle for increasing growth and jobs, particularly for trust services for electronic transactions in the internal young people. She went on to say that the telecoms market (First reading EM10977/12) There was not a sector is too fragmented across member states and major debate on this item and I did not intervene. there are too many barriers that prevent cross border trade in digital goods and services. The council then looked at two proposals under the “banner” of digital infrastructure and services. My intervention noted that the UK welcomed the The first item was the proposal for a regulation of the idea of a further integrated single market in telecoms European Parliament and of the council on guidelines in principle, including the proposal for a telecoms for trans-European telecommunications networks and passport which would allow telecoms providers the repealing Decision No. 1336/97/EC (First reading ability to be able to operate in any Member State, EM16006/11). The second item was a progress report along similar lines to the single European banking on the proposal for a regulation of the European licence. However, I also suggested that that this proposal Parliament and of the council on measures to reduce should not allow telecom companies the ability to the costs of deploying high-speed electronic base themselves in a member state with a weak regulator. communications networks (First reading EM7999/13). I also stated that any proposals will need to strike the The council and Commission noted both these items right balance between allowing consolidation in the without any comment. telecoms market but still ensuring that there is vibrant competition. There then followed a progress report on the proposal On spectrum, I said that the UK had just carried for a directive of the European Parliament and the out a successful spectrum auction and we would be council on the accessibility of public sector bodies’ like to work together to develop guidelines that would websites. (First reading EM17344/12) The council and produce a more joined up approach towards spectrum Commission noted this report without any comment. management across the EU, but we would be cautious Any Other Business about uniform rules at European level. The majority of member states broadly supported Finally, the Lithuanian delegation informed the the principle of a single telecoms market. However, council of its priorities for its forthcoming presidency. Germany, Belgium and Spain expressed scepticism on I did not intervene on this item. WA 29 Written Answers[18 JUNE 2013] Written Answers WA 30

The Parliamentary Under-Secretary of State, Ministry Written Answers of Defence (Lord Astor of Hever): I refer the noble Tuesday 18 June 2013 Lord to the Written Statement I made on 18 March 2013 (Official Report, column WS33). This presents Apprenticeships our position with regards to awarding the Military Cross to 2nd Lieutenant Walter Tull, and has been Questions used in responding to a small number of representations Asked by Lord Adonis received since then. To ask Her Majesty’s Government what was the total number of staff employed within the Skills Armed Forces: Unmanned Aerial Vehicles Funding Agency on 1 May 2013; and how many of Questions them were (1) under the age of 21, (2) apprentices under the age of 21, and (3) apprentices over the Asked by Baroness Stern age of 21. [HL761] To ask Her Majesty’s Government whether any non-military personnel are involved in the maintenance The Parliamentary Under-Secretary of State, Department or operation of unmanned aerial vehicles flown for Business, Innovation and Skills (Viscount Younger from Jalalabad, Afghanistan. [HL736] of Leckie): To ask Her Majesty’s Government whether United The Skills Funding Agency – 01 May 2013 Kingdom personnel are involved in the maintenance or operation of unmanned aerial vehicles flown Total Number of Staff 1320 Employed from Jalalabad, Afghanistan. [HL739] Staff aged under 21 46 Apprentices aged under 21 41 The Parliamentary Under-Secretary of State, Ministry Apprentices aged 21 over 10 of Defence (Lord Astor of Hever): No UK civil servants or UK military personnel are involved in the maintenance Asked by Lord Adonis or operation of unmanned aerial vehicles flown from To ask Her Majesty’s Government what was the Jalalabad. total number of staff employed within the UK Space Agency on 1 May 2013; and how many of Arms Export them were (1) under the age of 21, (2) apprentices under the age of 21, and (3) apprentices over the Question age of 21. [HL763] Asked by Lord Dobbs Viscount Younger of Leckie: The total number of To ask Her Majesty’s Government what military permanent staff employed by the UK Space Agency equipment has been sold by United Kingdom on 1st May 2013 was 46. At that point, the Agency companies to the Assad regime in Syria during the had no staff members under the age of 21, no apprentices last ten years. [HL714] under the age of 21 and no apprentices over the age of 21. The Parliamentary Under-Secretary of State, Department Asked by Lord Adonis for Business, Innovation and Skills (Viscount Younger of Leckie): Military equipment may not be exported To ask Her Majesty’s Government what was the from the UK without a licence issued by the Export total number of staff employed within Acas on Control Organisation (ECO) in the Department for 1 May 2013; and how many of them were (1) under Business (BIS). The ECO only holds records of licences the age of 21, (2) apprentices under the age of 21, granted. All licence applications are rigorously assessed and (3) apprentices over the age of 21. [HL764] on a case-by-case basis against the Consolidated EU Viscount Younger of Leckie: At 1 May 2013 the total and National Arms Export Licensing Criteria. A licence number of staff employed by Acas was 844 people would not be granted if to do so would be a breach of (773.9 Full Time Equivalent). the Criteria. Of these, none was under the age of 21, and there Over the last ten years the following licences were were no apprentices under the age of 21, and no granted for the export of military equipment for the apprentices over the age of 21. ultimate end-use of the Syrian government. In 2003 two Standard Individual Export Licences were issued: one covered bomb suits and improvised Armed Forces: Medals explosive device detection equipment; the other was Question for ballistic test equipment and components, small arms ammunition and small calibre artillery ammunition Asked by Lord Ouseley for testing of locally produced small arms. Two Open To ask Her Majesty’s Government, further to Individual Export Licences were also issued in 2003 the answer by Lord Astor of Hever on 22 November for laser and small arms collimators and their accessories. 2012 (WA 403), what responses have been made to In 2004 and 2005, one Standard Individual Export any representations received subsequently about Licence was issued in each year for armoured all wheel awarding the Military Cross to 2nd Lieutenant drive vehicles for the transportation of government Walter Tull. [HL724] officials. WA 31 Written Answers[LORDS] Written Answers WA 32

Aviation: Air Quality The Parliamentary Under-Secretary of State, Home Office (Lord Taylor of Holbeach): The Government is Questions aware of the report. Asked by The Countess of Mar As outlined in the reply to the recent question on this issue, a substantial programme of work, being To ask Her Majesty’s Government what scientific, planned jointly by Her Majesty’s Crown Prosecution technical and medical expertise the Civil Aviation Service Inspectorate and Her Majesty’s Inspectorate Authority has to investigate fume events on board of Constabulary, will look at child sexual abuse and aircraft. [HL791] exploitation. As part of this work, both named inspectorates will liaise across the four criminal justice inspectorates and Earl Attlee: The Civil Aviation Authority (CAA) work closely with the Ofsted inspectorate to develop monitors the frequency and severity of such fume terms of references and finalise methodologies. Both events through the Mandatory Occurrence Reporting inspectorates have also confirmed that this programme Scheme (MORS) and through their general oversight will be developed in conjunction with social services of airline operations and employs experienced pilots and local authorities. and engineers who are able to assess the adequacy of Her Majesty’s Inspectorate of Constabulary will air operators’ procedures for managing events of this take cognisance of all recent reports regarding child nature. The CAA has been actively involved in research sexual exploitation when preparing their inspection into the potential flight safety and health effects of criteria for forthcoming inspections in this area and fumes events for a number of years. The Head of the this will include the Rochdale report and the recent Aviation Health Unit has lead responsibility for the parliamentary report by the Home Affairs Select CAA’s ongoing participation in international activity Committee. seeking to resolve concerns about potential health effects. Asked by The Countess of Mar Criminal Records Bureau To ask Her Majesty’s Government what measures are taken by the Civil Aviation Authority to ensure Question that passengers on board aircraft are made aware of Asked by Lord Vinson fume events when they occur; what advice they give to vulnerable passengers who might have been affected; To ask Her Majesty’s Government, further to whether they measure the level of public concern the answer by Lord Henley on 21 March 2012 about such events; and, if so, how. [HL792] (HL Deb, cols 913–4), how many checks have been carried out each month by the Criminal Records Bureau or its successor since changes to the system Earl Attlee: There is no national or international were introduced by the Protection of Freedoms legislation requiring passengers to be informed of Act 2012; and whether those figures are in line with fume events. Fume events rarely cause symptoms requiring their forecast that numbers would fall by 50 per medical attention and airlines have procedures for cent. [HL823] assisting sick passengers or crew. If no symptoms are experienced, no action is required. A passenger who experiences symptoms that resolve during or immediately The Parliamentary Under-Secretary of State, Home after the flight does not need to seek medical advice. If Office (Lord Taylor of Holbeach): The table provides a passenger feels unwell following a fume event, and information on how many checks have been carried symptoms persist after the flight, medical advice should out each month by the Criminal Records Bureau be sought. (CRB) and its successor, the Disclosure and Barring There are no measures in place to establish the level Service (DBS), since changes to the system were introduced of any public concern about fume events. However, by the Protection of Freedoms Act 2012. members of the public with concerns should contact The forecast that the volume of checks will fall in the Aviation Health Unit at the Civil Aviation Authority. the future is based on the impact of the update service which will eliminate the need for unnecessary repeat checks. The update service was launched on 17 June. Children: Safeguarding Children Total applications received Question 10-30 Sep 2012 335,743 Oct-12 411,866 Asked by Lord Morris of Aberavon Nov-12 360,976 Dec-12 255,713 To ask Her Majesty’s Government whether they Jan-12 306,290 will obtain the Taylor report on the response to the Feb-12 331,550 sexual exploitation of young people in Rochdale; Mar-12 310,214 and whether they will ensure that inquiries of the inspectorates of the Crown Prosecution Service Apr-12 316,322 May-12 346,073 and the constabulary take it into account. [HL829] WA 33 Written Answers[18 JUNE 2013] Written Answers WA 34

Drones The Parliamentary Under-Secretary of State, Department Question for Communities and Local Government (Baroness Hanham): We have set out clearly in the National Planning Policy Asked by Baroness Stern Framework the importance of early and meaningful engagement with local communities and that an application To ask Her Majesty’s Government what plans for renewable energy development should only be approved they have to provide armed surveillance drones to if its impacts are or can be made acceptable. To help the Syrian opposition. [HL740] ensure planning decisions in England reflect the balance in the Framework, we will issue new planning practice The Parliamentary Under-Secretary of State, Ministry guidance shortly to assist local councils, and planning of Defence (Lord Astor of Hever): There are no plans inspectors in their consideration of local plans and to provide armed surveillance drones to the Syrian individual planning applications. This will set out clearly position. that need for renewable energy does not automatically override environmental protections and the planning Elections: Postal and Proxy Votes concerns of local communities. Question We are looking to local councils to include in their Local Plans policies which ensure that adverse impacts Asked by Lord Greaves from renewable energy developments, including cumulative landscape and visual impact, are addressed satisfactorily. To ask Her Majesty’s Government whether they Where councils have identified areas suitable for renewable have, or have had, any plans for discussions with energy, they should not feel they have to give permission the Electoral Commission regarding a change in for speculative applications outside those areas when the rules which would allow candidates or registered they judge the impact to be unacceptable. political parties to inspect submitted application forms for postal and proxy votes. [HL678] Exporters: Foreign Language Skills Lord Wallace of Saltaire: The Government have Question not had any discussions with the Electoral Commission regarding a change to these rules, nor do we currently Asked by Baroness Coussins have plans to do so. To ask Her Majesty’s Government whether they will consider introducing financial incentives for Embryology non-exporting businesses that train existing staff to Question export, in line with the recommendations of the British Chambers of Commerce report Exporting Asked by Lord Alton of Liverpool is good for Britain but knowledge gaps and language skills hold back exporters, published on 10 June To ask Her Majesty’s Government, further to the . [HL806] Written Answers by Earl Howe on 19 October 2011 (WA 72) and 11 March 2013 (WA 12) and by Lord Marland on 19 November 2012 (WA 311–12), what The Minister of State, Department for Business, consideration was given to the biological distinctions Innovation and Skills & Foreign and Commonwealth between somatic cell nuclear transfer (SCNT) Office (Lord Green of Hurstpierpoint): UK Trade & and pronuclear transfer (PNT) in allowing research Investment(UKTI),theGovernmentDepartmentresponsible licence R0152 for work on SCNT to encompass for providing UK-based companies with the support PNT activities under the expired research licence they need to succeed in the global economy, has a R0153. [HL721] number of services aimed at preparing businesses for exporting. These include schemes such as Passport to The Parliamentary Under-Secretary of State, Department Export and Gateway to Global Growth aimed at new of Health (Earl Howe): The Human Fertilisation and exporters and more experienced exporting Small and Embryology Authority has advised that the decision to Medium Sized Enterprises’ (SMEs), providing advice, vary research licence R0152 was taken by its Research guidance and support to help new to export businesses. Licence Committee on 18 November 2009. The minutes These schemes provide an assessment of exporting of that meeting, setting out the Committee’s reasoning, capability, and include face to face training from export are available on the Authority’s website at: http:// professionals. guide.hfea.gov.uk/guide/Inspection Report.aspx?code= With the additional funding made available in last 17&s=1&&nav=2 year’s autumn statement, UKTI will provide export voucher funding for Passport and Gateway companies which companies can choose to spend on a variety of Energy: Solar Parks export services. That could include language training Question or wider training needs, as well as other services offered by UKTI and external suppliers. Asked by Lord Marlesford Separately, The House of Lords Committee on SME To ask Her Majesty’s Government whether their Exports, Roads to Success: SME Exports, recommended new policy on planning applications for wind farms that UKTI should promote the benefits of addressing is to be applied to solar parks. [HL815] the language issue and advise on the consequences if it WA 35 Written Answers[LORDS] Written Answers WA 36 is ignored as part of our communications strategy accessing business finance, such as a lack of formal with SMEs. UKTI agreed with the Committee’s analysis savings and collateral shortages. Many of these factors and will publish next week an updated publication, will be just as relevant to Gypsy, Traveller and Roma “Improving your business communications. Overcoming communities as they are to some other ethnic minority language and cultural barriers in business: A guide for communities. exporters”. Health: Cancer Drugs Fund Food: Beef Question Question Asked by Lord Clement-Jones Asked by Baroness Byford To ask Her Majesty’s Government what assessments To ask Her Majesty’s Government whether they they have undertaken of the success of the Cancer or the Food Standards Agency require samples of Drugs Fund since its introduction. [HL861] beef products to continue to be subject to DNA testing; and, if so, who is paying for it. [HL655] The Parliamentary Under-Secretary of State, Department The Parliamentary Under-Secretary of State, Department of Health (Earl Howe): The Cancer Drugs Fund was of Health (Earl Howe): The Food Standards Agency launched on 1 April 2011 to help National Health (FSA) is funding local authority sampling for meat Service cancer patients access the drugs their clinicians speciation by DNA testing as part of the 2013-14 believe will help them. We also made an additional National Coordinated Feed and Food Sampling grants. £50 million available to strategic health authorities in This will include testing beef products. 2010-11. This funding has so far helped over 30,000 patients in England to access the additional cancer drugs their The FSA is also continuing to work with the food clinicians recommend. industry to ensure effective assurance controls are in place to check the authenticity of meat products. As A clinical audit of the drugs provided through the part of those arrangements DNA testing for horse in Cancer Drugs Fund is being carried out by the beef products is continuing to be carried out. The Chemotherapy Intelligence Unit at the Oxford Registry costs of these tests and the wider assurance arrangements and we expect preliminary data to be made available are for industry. Industry is continuing to share the later this year. results of their horse DNA testing with the FSA. The Asked by Lord Clement-Jones results from this testing programme are now published on the FSA website on a quarterly basis, with the To ask Her Majesty’s Government what latest report published on 13 June. consideration they have given to maintaining the Cancer Drugs Fund after the current arrangements Gaza’s Ark come to an end in 2014. [HL864] Question To ask Her Majesty’s Government what representations they have received from NHS England Asked by Baroness Tonge about the future of the Cancer Drugs Fund. [HL865] To ask Her Majesty’s Government whether they To ask Her Majesty’s Government what plans intend to provide naval protection for the vessel they have to involve NHS England in decisions known as “Gaza’s Ark” when it sails from Gaza in about the future of the Cancer Drugs Fund. [HL866] order to take exports from that territory. [HL618] Earl Howe: We are exploring ways in which patients The Parliamentary Under-Secretary of State, Ministry can continue to benefit from innovative cancer drugs of Defence (Lord Astor of Hever): No. at a cost that represents value to the National Health Service, in the context of developing new pricing Gypsies and Travellers arrangements for branded medicines. Input has been Question sought from NHS England as part of this work. Asked by Baroness Whitaker We are committed to ensuring that arrangements are in place to protect individual patients receiving To ask Her Majesty’s Government, further to treatment through the Cancer Drugs Fund as the the Written Answer by Baroness Hanham on 12 June planned end of the Fund approaches. (WA 252), whether the barriers faced by Gypsy, Roma or Traveller businesses have been assessed in the cross-government review into the barriers faced Health: Education and Training by minority ethnic businesses in accessing finance. Question [HL892] Asked by Lord Hunt of Kings Heath The Parliamentary Under-Secretary of State, Department To ask Her Majesty’s Government what assessment for Communities and Local Government (Baroness Hanham): they have made of the effect reductions in funding The cross-government review into the barriers faced will have on (1) Health Education England, and (2) by ethnic minority businesses in accessing finance assessed all Local Education and Training Boards, for the a range of factors that prevent entrepreneurs from financial year 2013–14. [HL642] WA 37 Written Answers[18 JUNE 2013] Written Answers WA 38

The Parliamentary Under-Secretary of State, Department The Parliamentary Under-Secretary of State, Department of Health (Earl Howe): From 1 April 2013, central of Health (Earl Howe): Eye care liaison officers (ECLOs) funding for education and training is provided by the provide support to individuals who are diagnosed Department to Health Education England (HEE) to with an eye care condition, although their role varies fund their responsibilities for managing the delivery of according to local service needs. Many ECLOs are education and training for the healthcare system. funded by the Royal National Institute of Blind People In 2013-14, HEE has been provided with a budget and its associated charities. In cases where commissioners of £4,883 million. This represents an increase on have wholly or part-funded positions, this is a matter the £4,879 million of funding provided to strategic for the local commissioning body. health authorities (SHA) through the 2012-13 Multi- Professional Education and Training budget. It also Investment: Foreign Investment represents an increase over actual spending in 2012-13 Questions of £116 million. Asked by Viscount Trenchard It is the responsibility of HEE to allocate this funding effectively to their Local Education and Training To ask Her Majesty’s Government (1) how many Boards (LETB) based on need. HEE have informed jobs they estimate have been created in the United the Department that: Kingdom by Japanese companies, and (2) what has Comparisons at an individual LETB level are been the total amount of Japanese investment in complicated by changes in funding to reflect the the United Kingdom, in the last decade; and what introduction of tariffs for undergraduate clinical is the current balance of trade between the United trainees’ placements in National Health Services Kingdom and Japan. [HL907] providers and some changes in the impact of funding To ask Her Majesty’s Government (1) how many student loans and bursaries. This is shown below for jobs they estimate have been created in the United information with adjustments to mirror the previous Kingdom by Chinese companies, and (2) what has SHA boundaries. been the total amount of Chinese investment in the It is the case that a significant portion of HEE United Kingdom, in the last decade; and what is expenditure is committed to programmes for existing the current balance of trade between the United trainees. In finalising their spending plans LETBs Kingdom and China. [HL908] have had to make local priority decisions on the deployment of limited discretionary funds around Lord Wallace of Saltaire: The information requested short development courses, and ad-hoc projects. There falls within the responsibility of the UK Statistics has also been a significant reduction in planned running Authority. I have asked the Authority to reply. costs of the order of 10%. Letter from Glen Watson, Director General for ONS, to Viscount Trenchard, dated June 2013. Health: Ophthalmology As Director General for the Office for National Statistics, I have been asked to reply to your recent Questions Parliamentary Questions asking how many jobs Asked by Lord Harrison are estimated to have been created in the United Kingdom by both Japanese and Chinese companies; To ask Her Majesty’s Government what assessment what has been the total amount of both Japanese they have made of the work of eye clinic liaison and Chinese investment in the United Kingdom in officers. [HL731] the last decade; and what is the current balance of trade between the United Kingdom and Japan and To ask Her Majesty’s Government what financial the United Kingdom and China (HL907 & HL908) support they have provided to develop the eye clinic Below are the data on Japanese and Chinese investment liaison officer service. [HL732] in the United Kingdom in the last decade:

Table 1 FDI International positions in the UK , 2002 to 2011

£ million 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 CHINA 42 102 119 111 99 202 427 618 378 765 JAPAN 11791 11949 12300 10513 14766 25479 30643 246466 27638 31444

The current (annual) balance of trade between Unfortunately the ONS is unable to estimate the United Kingdom and Japan is -£3362 million in how many jobs have been created in the United 2012. Kingdom by Japanese or Chinese companies. However, in Table 2, we are able to estimate the number of The current (annual) balance of trade between the people employed by Chinese and Japanese companies United Kingdom and China is -£19277 million in in the UK 2012. WA 39 Written Answers[LORDS] Written Answers WA 40

Table 2 Lord Gardiner of Kimble: In announcing the cross-party Employment of UK Enterprises owned by Chinese and Japanese agreement on a Royal Charter on 18 March, the Prime companies Minister made clear that this will help deliver a new China People’s system of independent and robust press regulation in Republic Japan our country that will deliver for victims and meet the Employment Employment principles set out in Lord Justice Leveson’s report. This system will ensure up-front apologies, million 2003 820 112,860 pound fines, a self-regulatory body with independence 2004 392 110,227 of appointments and funding, a robust standards code, 2005 372 108,246 an arbitration service that is free for victims, and a 2006 382 109,878 speedy complaint-handling mechanism. However, it 2007 776 115,387 would be inappropriate for the Government to put its 2008 1,289 113,949 Charter forward to the Privy Council at this time, 2009 1,343 120,715 whilst the Privy Council Office is in receipt of a formal 2010 1,664 114,311 petition by The Press Board of Finance with a draft 2011 2,436 110,408 Royal Charter for the independent self-regulation of 2012 2,770 122,464 the press. Note Data extracted from the IDBR at March each year. Ultimate Foreign ownership data are supplied to the ONS by Prisoners: Complaints Dun & Bradstreet. Question A copy of the tables will be stored in the Library of Asked by Lord Beecham the House. To ask Her Majesty’s Government how many prisoner complaints were dealt with by the prison Israel service in 2012. [HL560] Question The Minister of State, Ministry of Justice (Lord Asked by Baroness Tonge McNally): There were 233,904 complaints submitted To ask Her Majesty’s Government what by prisoners in England & Wales which required a developments have occurred since the United Kingdom response during the financial year 2011-12. The total Embassy in Tel Aviv raised the issue of health number of complaints for 2011/12 was 4% lower than dangers in Salfit from sewage from Barkan and in 2009/10. Ariel settlements with the Office of the Coordinator This figure refers to complaints submitted under of Government Activities in the Territories on the established prisoner complaints procedures and 5 February. [HL623] does not include those made under the Confidential Access facility. It has been drawn from administrative The Senior Minister of State, Department for Communities IT systems, which as with any large-scale recording and Local Government & Foreign and Commonwealth system, are subject to possible errors with data entry Office (Baroness Warsi): The agricultural district of and processing. Salfit continues to face health and environmental problems as a result of the effects of sewage from nearby Israeli settlements, most notably Barkan and Railways: Electrification Ariel settlements. Question We continue to raise our concerns about the impact of settlements on Palestinian communities in Asked by Lord Bradshaw the West Bank and East Jerusalem with the Israeli To ask Her Majesty’s Government whether they authorities. The Secretary of State for Foreign and have identified sufficient electric rolling stock which Commonwealth Affairs, my right hon. Friend the will be available by December 2014 when the Member for Richmond (Yorks.) (Mr Hague) raised electrification of a substantial part of the railway our concerns about settlement activity with the Israeli network will be complete. [HL797] authorities, including Prime Minister Netanyahu, during his visit to Israel and the Occupied Palestinian Territories in May. Earl Attlee: By December 2014, assuming satisfactory conclusion of the electrification works, it will be possible for Northern Rail to operate electric services Media: Press Regulation between Liverpool and Manchester via Newton-le- Question Willows and between Liverpool and Wigan via St Helens Central. The Department continues to work Asked by Lord Dykes with industry partners on the plan for the delivery of To ask Her Majesty’s Government whether the rolling stock to utilise the electric infrastructure from all-party draft Royal Charter on press regulation this date. will put in place adequate protection for potential No other electrification projects are due for completion future victims of press intrusion. [HL503] by December 2014. WA 41 Written Answers[18 JUNE 2013] Written Answers WA 42

Railways: High Speed 2 Railways: Rolling Stock Questions Question Asked by Lord Willoughby de Broke Asked by Lord Bradshaw To ask Her Majesty’s Government how they To ask Her Majesty’s Government whether calculated the proposed capacity of HS2 trains. the criteria for assessing the economic cases for the [HL667] East Coast Main Line franchise will include a bidder’s proposal to use rolling stock other than the anticipated Intercity Express train. [HL835] Earl Attlee: Existing high speed trains around the world seat around 500 passengers per 200 metre train Earl Attlee: The InterCity Express Programme contract – HS2 Ltd used this as a reference when calculating includes an option to extend the order to replace the the proposed capacity of HS2 trains. electric Intercity 225 stock. A decision on this is Asked by Lord Willoughby de Broke expected to be made in the summer which will inform the rolling stock specification and will be reflected in To ask Her Majesty’s Government what is their the Invitation to Tender. estimate of the subsidy required for HS2, assuming an operating capacity of (1) 90 per cent, (2) 70 per cent, and (3) 50 per cent. [HL668] Roads: Funding Question Earl Attlee: The profitability of HS2 will depend Asked by Lord Storey upon the ownership, operating and regulatory structures To ask Her Majesty’s Government how much of in place, as well as ridership. the funding allocated to the Highways Agency and Early modelling published in 2012 for the Economic local authorities for maintenance of the motorway Case suggests that, even when the impacts on the and trunk road network and highways has been existing network are accounted for, HS2 services would subsequently awarded to the City of Liverpool in be operationally profitable over the appraisal period. each of the last five years; and to what purpose. Asked by Lord Willoughby de Broke [HL688] To ask Her Majesty’s Government what is their Earl Attlee: Funding allocated to the Highways estimate of the average cost per metre of tunnelling Agency for maintenance of the motorway and trunk required for HS2; and what is the range of that cost road network is not allocated to the City of Liverpool according to terrain and depth. [HL669] or any other local highway authority. A breakdown of the capital funding grant allocated Earl Attlee: The initial stage estimate for tunnels to the City of Liverpool for highways maintenance, has been based on the best available data for benchmarking including top-up funding, over the last five years is as costs which continues to be the data provided by the follows: British Tunnelling Society through the Infrastructure Amount UK cost study work. Rates for each tunnel proposed Financial Year £million are being considered on an individual basis using the available data. 2009-10 Highways Maintenance Capital Block 3.378 Grant Funding (see note 1). The rates have a fixed set of costs which are needed 2010-11 Highways Maintenance Capital Block 3.885 for each tunnel and a variable set that reflects the Grant Funding (see note 1) length of the tunnel therefore, at this stage, it is not May 2010 – Additional Funding provided for 0.381 possible to give an average cost per metre for HS2. pothole damage March 2011 – Additional Funding provided for 1.058 pothole damage Railways: Land and Property Value 2011-12 Highways Maintenance Capital Block 3.825 Question Grant Funding (see note 1) 2012-13 Highways Maintenance Capital Block 3.571 Asked by Lord Bradshaw Grant Funding (see note 1) 2013-14 Highways Maintenance Capital Block 3.271 To ask Her Majesty’s Government, further to Grant Funding the Written Answer by Earl Attlee on 11 June 2013-14 Additional Highways Maintenance 0.596 (WA 230), whether they propose to undertake a Funding announced in December 2012 fresh evaluation of the change in land and property Note: values following the opening of the Jubilee Line 1) These are indicative funding allocations and final allocations extension, to complement the assessment of the to the City of Liverpool were subject to distribution arrangements potential benefits of Crossrail. [HL834] undertaken by the Merseyside Joint Authority/Integrated Transport Authority.

Earl Attlee: We have no such plans. The “Crossrail Local authorities are also able to use revenue funding Property Impact Study”, carried out by GVA and allocated by the Department for Communities and published in October 2012, was commissioned by Local Government through the Revenue Support Grant Crossrail Ltd. for maintaining their local highways. WA 43 Written Answers[LORDS] Written Answers WA 44

Neither capital nor revenue highways maintenance Sport: Boxing funding is ring-fenced and it is for local highway Question authorities to decide upon their spending priorities across the whole range of services they provide. Asked by Lord Pendry To ask Her Majesty’s Government how much Sexual Offences: Investigation and funding was allocated through Sport England to school and grassroots boxing in the last year for Prosecution which records are available. [HL680] Question Asked by Lord Morris of Aberavon Lord Gardiner of Kimble: Between March 2012 and March 2013, funding was allocated as follows: To ask Her Majesty’s Government, further to 17 boxing projects received a total of £813,969 the answer by Lord Taylor of Holbeach on 21 May National Lottery funding through Sport England’s (HL Deb, cols 740–2), what co-ordination there will Inspired Facilities fund, to upgrade and modernise be between the Crown Prosecution Service Inspectorate, facilities. the constabulary, the social services agencies and local authorities. [HL689] 28 boxing projects received a total of £235,027 National Lottery funding through Sport England’s Small Grants fund, for sports equipment and The Parliamentary Under-Secretary of State, Home coaching. Office (Lord Taylor of Holbeach): A substantial The Amateur Boxing Association of England programme of work, being planned jointly by Her received £16,859 Exchequer funding through Sport Majesty’s Crown Prosecution Service Inspectorate and England’s SportsMatch programme for a mobile Her Majesty’s Inspectorate of Constabulary, will look boxing arena. at child sexual abuse and exploitation. The intention is to specifically address how agencies interact to protect The Amateur Boxing Association of England children and ensure that offenders are brought to received £623,810 National Lottery funding and justice. As part of this work, both named inspectorates £614,265 Exchequer funding through Whole Sport will liaise across the four criminal justice inspectorates Plan investment, over 2012-13. and work closely with the OfSted inspectorate to Furthermore, £4.8 million Whole Sport Plan investment develop terms of references and finalise methodologies. from Sport England has been ring-fenced for the Both inspectorates have also confirmed that this grassroots sport of boxing, between 2013-17. An award programme will be developed in conjunction with agreement will be signed with the Amateur Boxing social services and local authorities. In addition, work Association of England, once they have provided continues on the development of multi-agency child confidence that they are able to reach the required protection inspections, as part of the Government’s governance standards by October 2014. If they are not commitment to deliver the actions from the Munro able to do so, Sport England will be seeking alternative review of child protection. investment routes in to the sport. Tuesday 18 June 2013

ALPHABETICAL INDEX TO WRITTEN STATEMENTS

Col. No. Col. No. Bailiffs ...... 7 EU: Employment, Social Policy, Health and Consumer Affairs Council...... 8

EU: Agriculture and Fisheries Council...... 8 EU: Telecommunications Council ...... 9

Tuesday 18 June 2013

ALPHABETICAL INDEX TO WRITTEN ANSWERS

Col. No. Col. No. Apprenticeships...... 29 Gypsies and Travellers ...... 35

Armed Forces: Medals...... 29 Health: Cancer Drugs Fund ...... 36

Armed Forces: Unmanned Aerial Vehicles ...... 30 Health: Education and Training ...... 36

Arms Export...... 30 Health: Ophthalmology...... 37

Aviation: Air Quality ...... 31 Investment: Foreign Investment...... 38 Israel...... 39 Children: Safeguarding Children ...... 31 Media: Press Regulation ...... 39 Criminal Records Bureau ...... 32 Prisoners: Complaints...... 40 Drones...... 33 Railways: Electrification ...... 40 Elections: Postal and Proxy Votes...... 33 Railways: High Speed 2 ...... 41 Embryology ...... 33 Railways: Land and Property Value...... 41 Energy: Solar Parks ...... 33 Railways: Rolling Stock ...... 42 Exporters: Foreign Language Skills ...... 34 Roads: Funding ...... 42 Food: Beef ...... 35 Sexual Offences: Investigation and Prosecution ...... 43 Gaza’s Ark...... 35 Sport: Boxing...... 44 NUMERICAL INDEX TO WRITTEN ANSWERS

Col. No. Col. No. [HL503] ...... 39 [HL678] ...... 33

[HL560] ...... 40 [HL680] ...... 44

[HL618] ...... 35 [HL688] ...... 42

[HL623] ...... 39 [HL689] ...... 43

[HL642] ...... 36 [HL714] ...... 30

[HL655] ...... 35 [HL721] ...... 33

[HL667] ...... 41 [HL724] ...... 29

[HL668] ...... 41 [HL731] ...... 37

[HL669] ...... 41 [HL732] ...... 37 Col. No. Col. No. [HL736] ...... 30 [HL823] ...... 32

[HL739] ...... 30 [HL829] ...... 31

[HL740] ...... 33 [HL834] ...... 41

[HL761] ...... 29 [HL835] ...... 42

[HL763] ...... 29 [HL861] ...... 36

[HL764] ...... 29 [HL864] ...... 36

[HL791] ...... 31 [HL865] ...... 36

[HL792] ...... 31 [HL866] ...... 36

[HL797] ...... 40 [HL892] ...... 35

[HL806] ...... 34 [HL907] ...... 38

[HL815] ...... 33 [HL908] ...... 38 Volume 746 Tuesday No. 19 18 June 2013

CONTENTS

Tuesday 18 June 2013 Questions Badgers ...... 131 Gaza ...... 133 Education: Sex and Relationship Education...... 135 Kenya: Kenyan Emergency ...... 138 Child Support and Claims and Payments (Miscellaneous Amendments and Change to the Minimum Amount of Liability) Regulations 2013 Motion to Approve ...... 140 Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Referral Fees) Regulations 2013 Motion to Approve ...... 140 Offender Rehabilitation Bill [HL] Order of Consideration Motion ...... 140 Procedure of the House Motion to Agree ...... 141 Energy Bill Second Reading ...... 141 Grand Committee Intellectual Property Bill [HL] Committee (3rd Day) ...... GC 41 Written Statements ...... WS 7 Written Answers...... WA 2 9