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Great British Energy Bill

My Lords, I am very grateful to the noble Earl, Lord Russell, because it seems to me that we have “enjoyed” what essentially has been a rerun of previous debates, with Second Reading-type speeches, when the key concern, as the noble Baroness, Lady Noakes, suggests, is Clause 6 and the power of direction.

So I do want to come back to the intent of Clause 6. First, we want GBE to be operationally independent. A founding principle of GBE is that it should be independent as far as possible in executing its functions. The Bill is focused on making the minimum necessary provisions to establish the company. At Second Reading, some noble Lords opposite accused the Government of drafting the Bill in a way that meant we would use Clause 6 to micromanage GBE. We have always maintained, as the noble Baroness, Lady Noakes, rightly pointed out, that this is a backstop provision, yet now noble Lords opposite seek to micromanage both the Government and GBE by these various amendments, most of the issues in which we have already debated.

Secondly, we have set up GBE as a company for long-term success and as an enduring institution. Some of the amendments, which include short-term targets, would be wholly inappropriate in legislation. Indeed, it would be more appropriate for the Secretary of State to set priorities via the statement of strategic priorities in Clause 5, of course within the framework of Clause 3.

My third point is the intended use of the power in Clause 6. Let me make it absolutely clear, as I have done in the past, that the power to give directions to GBE is intended only for urgent or unforeseen circumstances. These amendments would widen the intention unnecessarily. The noble Baroness, Lady Noakes, is right about the relationship between government and such organisations. She and I have both had experience in relation to the NHS; it is a slightly different set-up, but we are talking about the relationship between a government department, the Secretary of State and public bodies. She will know that there the Secretary of State has always had a power of direction, but I think it has had to be used only a handful of times. The reason of course is that chief execs of NHS bodies understand that the Secretary of State is able to set the overall direction of the National Health Service without having to call on what is essentially a backstop power.

My fourth point on a number of the amendments is that the existing reporting requirements are set out in the Bill, which makes provision for GBE to produce and publish an annual report and accounts. They will undergo external audit; they will contain information on the activity of the company over the year; and they will also include reporting in line with the recommendations of the Task Force on Climate-Related Financial Disclosures. GBE may also make information available through reporting, such as when projects or investments are announced. We think that that is sufficient accountability.

On some points raised by noble Lords on Amendment 59, we believe that in an unstable world, the only way to guarantee our energy security and protect bill payers permanently is to speed up the transition from fossil fuels to home-grown clean energy. This is consistent with advice from the Climate Change Committee and it is why we have set an ambitious target to reach clean power by 2030, which the independent NESO considers achievable. We believe that the key role of BGE is focused on driving forward deployment.

I say to the noble Viscount, Lord Trenchard, and the noble Lord, Lord Howell, that I agree with them on the importance of nuclear power. But I say to the noble Lord, Lord Howell, that this is the second time he has tried to divert the Government from supporting Sizewell C. I say to him that this is a massive development and we are moving to final investment decisions over the next few months. It will produce 3.2 gigawatts, it is a replica of Hinkley Point C, 80% above ground, and we have the regulated asset-based approach which will bring in private sector expertise and disciplines. So, in agreeing with him on the importance of small modular reactors and advanced nuclear reactors, we should not underestimate the potential of Sizewell C—and indeed Hinkley Point C when it comes on line, I hope at the end of this decade.

Of course I take the points that data centres will need a lot of electricity, that grid capacity issues are vital and that we need more investment in the grid. I also take the point made by the noble Lord, Lord Berkeley of Knighton, about the beauty, or not, of pylons. I of course accept the point he makes, but we are going to have to have more pylons. None the less, they will have to go through vigorous planning and meet environmental protection requirements.

On jobs and Amendment 60, GBE aims to revitalise the UK’s industrial areas and we think that, by situating its headquarters in Aberdeenshire—which I am sure the noble Lord, Lord Bruce, will welcome—it will be able to leverage the skilled workforce available there and throughout Scotland. More broadly, we have set up the Office for Clean Energy Jobs to promote clean energy employment and focus on skills development and training in the core energy and net-zero sectors.

Amendments 61 and 76 concern supply chains, which are of course very important indeed. GBE’s founding statement has already made it clear that my department expects the company to prioritise the development of supply chains and to report to government on progress. To come to the noble Lord, Lord Alton, of course we have debated these matters over the years and I absolutely understand where he is coming from.

But it will be for GBE as an operationally independent company to determine the projects and technologies it chooses to invest in, in accordance with its objectives. It will be expected to respect human rights under the Human Rights Act 1998 and it will be subject to the provisions on forced labour and supply chains, both under the Modern Slavery Act 2015 and the Procurement Act 2023.

We recently set out our Clean Power 2030 Action Plan, which requires significant deployment of solar electricity—noble Lords are right on that. Developing sustainable, diverse and resilient solar supply chains, free from forced labour, is important for the Government. As the noble Lord, Lord Alton, knows, we also have the Solar Taskforce, which will be looking at these matters.

On Amendment 63 on the cost of fulfilling the company’s strategic objectives, I can assure the noble Lord, Lord Petitgas, that the Secretary of State will set ambitious but achievable objectives for Great British Energy that can be achieved through the funding envelope. GBE will be backed, as noble Lords will know, by a capitalisation of £8.3 billion over this Parliament, and its objective is to crowd in additional private sector investment. However, it will be subject to HM Treasury’s value-for-money guidelines and, like existing publicly financed institutions, its investments will be subject to safeguards and risk assessments.

On Amendments 69, 70 and 85A, on the impact on carbon emissions of GBE’s investments, the company is committed to advancing the deployment of clean energy to aid the Government’s goal of decarbonising our electricity system by 2030. The amendments would require a report to be produced for every investment made by Great British Energy, which seems neither proportionate nor effective. On importing energy into the UK, we acknowledge that reliance on imported fossil fuels presents economic and security risks, as evidenced by the situation following the Russian invasion of Ukraine. The best response is to increase domestic power generation through renewable energy sources and nuclear power, while simultaneously transitioning to more sustainable methods for heating homes, fuelling vehicles and powering industry. These can substantially mitigate our exposure to volatile international markets and energy price fluctuations. We see GBE as being at the heart of those efforts.