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Energy Bill

My Lords, I should like to make the most of the time available to me by simply supporting everything—everything—the noble Lord, Lord Oxburgh, has just said in a very compelling speech. I intend energetically to follow the arguments he has set out to what I hope and anticipate will be a successful conclusion. It is hard to take issue with the contents of the Bill as set out by the Minister. However, in common with other noble Lords on all sides of the House, I will argue strongly for the inclusion of a number of new clauses which might go some way towards offering hope of an energy strategy that could honestly be described as ““fit for purpose”” for the complexities of the 21st century. As I see it, failure to make those arguments would be a serious dereliction of responsibility to both present and future generations. This is the third occasion in the past five years on which I have had the opportunity to question and, I hope, help to redefine statutory duties and responsibilities in the regulatory world. It is worth recalling that our present concept of regulation was developed as a means of heading off those who argued against the principle of privatisation on the grounds of consumer protection. Needless to say, regulation has been in a fairly constant process of evolution, as the individual sectors have evolved or, in some cases, even changed out of all recognition. However, regulation is still failing to keep up with the pace of change. Some regulatory lag is perhaps inevitable. None the less, I am of the view that at the design stage—where we are at the moment—we must do everything in our power to ensure that there is the right combination of rigour and suppleness within our regulatory framework to anticipate the consequences of change and, most particularly, to protect and even enhance our control over the means of supply. As the Bill proceeds through your Lordships’ House, I will argue that, in the rapidly evolving energy sector, neither the remit nor the resources available to Ofgem have adapted with anything resembling the urgency and importance of the issues they are required to address. It is also vital that we continually balance our actions in the energy sector with the overwhelming importance of our commitment to environmental sustainability. To pretend that there is some kind of either/or option in consideration of these twin challenges is entirely fatuous. Many in this House will remember the so-called ““family silver”” speech made by the Earl of Stockton in November 1985, in which he roundly criticised the economic policy of the then Government. Last weekend, on my computer, I listened to the whole of that remarkable 30-minute speech; it is available at the click of a mouse on the Tory Reform Group website. What seems to have been forgotten is that the true burden of Harold Macmillan’s speech was a call to what he described as a ““third industrial age””, the first having been driven by coal and steam, the second by oil and the third—I paraphrase because there is no hard copy of the speech available and I am afraid my shorthand proved entirely inadequate—was going to have to be a ““post-oil economy””: an economy based on what we would today term renewable forms of energy. Here was a 91 year-old statesman setting out a vision for our country and our world remarkably similar to that in which we find ourselves living today. He talks about laying aside our divisions, as we did in wartime, because the urgency and gravity of what we are likely to face make them a luxury we can ill afford; the issues surrounding feed-in tariffs might well be a case in point. He correctly chides us for having squandered the God-given reprieve of North Sea oil instead of using it to build a national infrastructure robust enough to deal with the many uncertainties that undoubtedly lay ahead. And remember, my Lords, the greatest threat of all—that associated with climate change—had barely raised its head as being among the uncertainties that he was referring to. Shortly thereafter, a rising politician, possibly encouraged or even inspired by Harold Macmillan's prescience, was making a name for himself writing books and pamphlets addressing many of the same issues, and in much the same way. To quote briefly from Where there is greed, a book published in 1989, addressing the inadequacies of privatisation in general and of the regulatory system in particular: "““There has been no substantial extension of consumer rights, no new right of redress for consumers, no new right to refund or right of representation, no guidelines or legislation for improved service or improved consumer safeguards, and little in the way of improved safety standards … Indeed there has been very little attempt to stand up for ordinary people against the vested interests of business and vast corporations””." Later, in a speech on 12 February 1991 in the House of Commons, the same politician said that the Government, "““would appease the vested interests of their friends in the private sector before advancing the public interest which it is their duty to uphold … We will ensure that the public interest is upheld””.—[Official Report, Commons, 12/2/91; col. 754.]" That young politician was, of course, the present Prime Minister, Gordon Brown. In advancing my argument for the overriding importance of a public interest test in respect of mergers and acquisitions in the energy sector I am confident of having in my corner at least two Prime Ministers. I could easily add a third—Winston Churchill—but that is probably another speech for another day. Your Lordships will remember that, some five years ago, this House successfully added a clause to the Communications Act 2003, requiring almost exactly that which I and others now seek from this Bill. Few would argue against the proposition that, important as a balanced communications ecology is to an informed and stable democracy, energy security trumps it on just about any national list of priorities. That being the case, why would we even countenance passing this Bill without the most rigorous safeguards in place regarding the long-term ownership of our means of supply? The family silver, along with the furniture in the salon and the Canalettos, may well have long since gone—at a heavily discounted price, I might add—but it is still within our political gift to ensure that we retain discretion over whose hands all of this is allowed to pass into. The Minister is an old and valued friend of mine and I made him aware some time ago that I intended to raise what is, for me, an absolutely fundamental issue. I have also apologised to him for the fact that I may not be here when he winds up; unfortunately, I have to give prizes at a function. But I am pretty sure that in his notes his excellent officials will have supplied him with any number of assurances that there is no cause for worry and that any attempted amendment could easily be seen off by reference to the powers already vested in the Secretary of State. In his earlier life, however, the Minister had a reputation as a shrewd solicitor and, like any good solicitor when dealing with a matter of this gravity, he would, I am sure, always advise a belt-and-braces approach. I hope that the House will insist upon exactly that: something far more robust than any set of vaguely framed assurances or limp over-reliance on existing competition law—let alone a suggestion, in desperation, that we trust the goodwill of the marketplace. In this vital area of our national interest, as with the financial crisis currently assailing the banking industry, I see the situation as precisely analogous to that set out in an article on lessons learnt from the credit crunch in the current issue of the Economist. Our long-term energy security cannot become vulnerable to what it describes as, "““the collective misjudgment of risk; a zealous search for yield; and the failure of oversight””." That section of the article finishes by observing: "““Regulators lack the knowledge, the clout (and often the talent) to keep up with the … next brilliant scheme””." As I see it, our job as the Bill passes through this House is to ensure that Ofgem and its sponsoring department have the knowledge, clout and talent—as well as all of the resources and powers that they need—to head off what may well prove to be the most brilliant, or even the most devious, of schemes devised by the most powerful of those global energy interests which may already be casting a covetous eye at our marketplace and, indeed, our all too obvious vulnerabilities. If I seem overly anxious, that is only because increasingly, in the past few years, I find myself agreeing with an observation repeated last month in the Guardian by Professor Ulrich Beck of the London School of Economics that, in his words, the, "““market has shrugged off any responsibility for democracy and society in the exclusive pursuit of short-term profit maximisation””." That, in synthesis, is precisely what I believe Harold Macmillan was warning us of 25 years ago, and what Gordon Brown was telling us 20 years ago. If it were true then, I would argue that it is even more profoundly true today. That is certainly not a political or economic reality that we can afford to bow before, as if it were some kind of force of nature, at the very moment that we are being asked to give urgent consideration to this nation’s energy needs for the early part of the 21st century, and well beyond that.