My Lords, it is a great pleasure to open the debate on the Great British Energy Bill and to welcome the interest shown by so many noble Lords. I particularly welcome the maiden speech of my noble friend Lady Beckett. It is almost impossible to do justice to her remarkable career and her service to the country and my own party. It is a long time ago, but I particularly valued the discussions I had with her when she was shadow Health Secretary. I wish her a long and happy membership of your Lordships’ House.
I welcome too the maiden speech of the noble Lord, Lord Mackinlay; he comes to this House with considerable experience in the other place. He earned the admiration of so many people in the country and in Parliament for his brave battle following sepsis. He is very welcome to your Lordships’ House and we look forward to what he has to say.
Our country faces huge challenges, more than two years on from Putin’s invasion of Ukraine, as families continue to pay the price for Britain’s energy insecurity. At the same time, we are confronted by the impacts of the climate crisis all around us, not as a future threat but as a present reality.
On climate change, human activity has already resulted in warming of 1.3 degrees Celsius above pre-industrial levels, leading to widespread impacts on people and nature. Professor Penny Endersby, chief executive of the Met Office, has made it clear that if we do not limit temperature rises to 1.5 degrees Celsius, we will see many more weather and climate extremes, including loss of food, water and energy security, leading to increased global conflict, so we have to act fast to reduce emissions to get to net zero. The pace of that reduction is as important as the eventual date when net zero is achieved, because it is cumulative emissions which determine global temperature rises. As the Climate Change Committee has said:
“The faster we get off fossil fuels, the more secure we become”.
That is why the Government’s mission is to make Britain a clean energy superpower, delivering a decarbonised power sector by 2030 as part of an acceleration to net zero. In the first four and a half months of the new Government, we have: lifted the ban on onshore wind; consented some major solar farm developments; agreed major developments in carbon capture, usage and storage; signalled our support for the role of nuclear power as an essential baseload for our electricity generation; conducted a hugely successful allocation round, which delivered a record number of new clean energy projects; announced funding of carbon capture, utilisation and storage; signalled reforms to the planning system and the grid to speed up consent connections; and launched Great British Energy.
We see Great British Energy as a new way of doing things at the heart of our clean power mission. It is a new, publicly owned and operationally independent clean energy company, designed to drive clean energy deployment to create jobs, boost energy independence and ensure that UK taxpayers, bill payers and communities reap the benefit of clean, secure homegrown energy. Headquartered in Aberdeen, with branches in Glasgow and Edinburgh, it will own, manage and operate clean energy projects across the country, generating abundant homegrown electricity and accelerating the energy transition. Backed by a capitalisation of £8.3 billion of new money over this Parliament, Great British Energy will work in partnership with the private sector, local authorities and communities to spread skilled jobs and investment across the country.
My Lords, I thank the Minister, the noble Lord, Lord Hunt of Kings Heath, for so ably introducing this debate on a Bill which relates to one of the most critical issues this country must address: energy security. I very much look forward to the maiden speech of my noble friend Lord Mackinlay of Richborough and that of the noble Baroness, Lady Beckett—a very warm welcome to them both.
This Bill gives the Secretary of State total power to establish the publicly owned Great British Energy, which will receive £8.3 billion of British taxpayers’ money. The purpose of Great British Energy will be to assist the Government in ramping up renewables, which will always be naturally unreliable, to achieve their unachievable target of 100% clean energy by 2030. I am fully in favour of ambitious targets, but this is a target driven by political ideology which industry experts have described as aggressive, unrealistic and expensive—requiring far more than the allocated £8.3 billion of funding. Yet the Bill contains little detail on how this will be achieved. We have not seen a business plan or a framework agreement, nor do we understand how the Secretary of State and Great British Energy will be held accountable.
Over the past month, as was the case both this time last year and in March, we have seen another dunkelflaute, indeed in March the capacity factor—the measure of how often turbines generate their maximum power— failed to reach 20%, and for the past two weeks it has been virtually zero. The UN’s Intergovernmental Panel on Climate Change predicts that average wind speeds in the UK will decline and that wind droughts will become more frequent. Relying on new interconnectors to Belgium and Holland will not offer energy security if either their wind farms suffer the same weather conditions as ours or their countries’ needs are greater than ours. Indeed, it is possibly only Xlinks’ proposed HVDC cable bringing solar and wind-generated energy from Morocco to the UK that comes close to offering baseload power as well as exclusive supply.
My Lords, I declare my interest as chair of Peers for the Planet. I thank the Minister for his interaction before this Second Reading debate and for the very clear and positive way in which he explained the Bill.
I look forward to both maiden speeches, and it is a particular pleasure for me to speak before the noble Baroness, Lady Beckett. We celebrated last month the fact that it is 50 years since we both entered the House of Commons, in 1974. She, of course, had a much longer career in the House of Commons—and a very prestigious one—than I did; I spent much more time in your Lordships’ House. It is an enormous pleasure to be reunited in the discussion of this important Bill.
I welcome the Bill and the opportunities that it presents in accelerating progress towards the Government’s clean power ambitions and delivering emissions reductions. The objectives the Government have set out for GBE are laudable, but it will be a large, complicated agenda, with a short runway to achieve it.
I do not share the gloom of the noble Baroness, Lady Bloomfield; I think that there are opportunities here. I certainly do not take the view that this is cost, cost, cost that we should not indulge in. We have all known, from the day that the noble Lord, Lord Stern, reported and from the reports that have gone through ever since, that the costs to this country and the costs to this world of not taking action on climate change are, in 10, 20 and 30 years, far higher than the costs of action.
I agree with the noble Baroness, Lady Bloomfield, that, as currently drafted, the Bill is very broad-brush—a skeleton without much flesh. It is clear that much will depend on the statement of strategic priorities and plans, which will be given by the Secretary of State under Clause 5. I hope that, as the Bill progresses through your Lordships’ House, we will be able to see the draft statement of strategic priorities. We need to have clarity here, as there will undoubtedly be some difficult decisions and difficult trade-offs to make as we progress.
My Lords, I hope noble Lords will understand, perhaps even sympathise, when I say that it is with considerable trepidation that I rise to address your Lordships’ House for the first time. For one thing, as the noble Baroness, Lady Hayman, pointed out in her kind remarks, I am not used to being new here. I am also very mindful that this noble House will have courtesies and conventions of its own with which I am as yet unfamiliar. Perhaps I should say at once that if I am found to be in breach of any such courtesies or conventions, it will be only by inadvertence or misadventure and never through deliberate disregard.
The trepidation to which I made reference is tempered somewhat by the extraordinary courtesy and kindness I have been shown here ever since my introduction. That commenced, of course, with Black Rod, her officers and staff, and the assistance and support I have received from them, but it has been faithfully followed by officers and staff at literally every level in the House, and not least by Members themselves.
I was conscious from the outset of having Members I regard as friends in every section of this House, not least because among the great good fortune I have experienced over the years has been the considerable privilege of chairing a Joint Select Committee of both Houses, namely the Select Committee that scrutinises the national security strategy. In that context, I have been lucky enough to work with some of the most distinguished and senior Members of this House. Of course, among the most long-standing and close of my many friends here are my two distinguished sponsors, the noble Lord, Lord Kennedy, and the noble Baroness, Lady Merron. This is only the most recent of the many debts of gratitude I owe them for the friendship they have shown over the years both to my husband and to myself.
I am particularly pleased to have the opportunity to participate very briefly in today’s debate for two principal reasons. First, I recall some years ago hearing our Prime Minister speak—I think at a Labour Party conference, but I would not swear to it—when he suggested that, in the years ahead, some country was going to become the world leader in a number of key policy areas, including climate change. He said: “Why should it not be Britain? Why should it not be us?” It was a challenge I strongly welcomed then, as now. I hope the Bill we debate today—and I recognise the concerns raised by some, including the party opposite—will help to shape our approach in the future, facilitating the spread of clean energy.
My Lords, I look forward to the maiden speech of the noble Lord, Lord Mackinlay of Richborough, who is very welcome to this House.
It is a great personal pleasure to follow the truly excellent maiden speech of my noble friend Lady Beckett. I told her that I would say it was excellent even if it was not, but it turned out to be exactly as expected—brilliant. My noble friend has made a contribution to public life that is second to none. She served in the Governments of Harold Wilson, James Callaghan, Tony Blair and Gordon Brown. There are others who have served as many Prime Ministers, but many of those other Prime Ministers lasted only 49 days. While my noble friend Lady Harman has the longest continuous record as a female Member of the other place, my noble friend Lady Beckett has the longest service of all as a female Member of Parliament at 45 years.
She was first elected in October 1974. There was a break between 1979 and 1983 when there was a misunderstanding with the electorate of Lincoln, who elected a Conservative and indeed continued to elect Conservatives until 1997, when my noble friend Lady Merron was elected on behalf of Labour. In 1983 my noble friend Lady Beckett became the Member of Parliament for Derby South, and she served the people of Derby South until 2024. She never forgot Lincoln, if for no other reason than because she married Leo Beckett, the chair of the Lincoln constituency Labour Party. Leo and Margaret—if I may call her that, just for this remark—were always together, the most famous couple in the Labour Party, more Jennie and Nye than Victoria and David but very much loved. Sadly, Leo died in 2021 and is much missed by everybody.
Within months of entering the House of Commons in 1974, my noble friend was made a Whip. Over the next 35 years she held a series of offices, including Secretary of State for Trade and Industry, Secretary of State for Environment, Food and Rural Affairs, Leader of the House of Commons and Foreign Secretary. But a description of her distinguished career does not adequately describe the characteristics that will make her so important and valuable a contributor to this House.
My Lords, I declare my interests in energy-related companies, institutions and organisations, as in the register. I join most heartily in the comments made on the maiden speech we have already heard in this debate, by the noble Baroness, Lady Beckett. She seems to have held an enormous portfolio of high offices over the years, and the way she has swept through the offices of state makes many of us look like part-time politicians. She was Secretary of State for Trade, as the noble Lord just mentioned, Foreign Secretary and—if my memory serves me right, and it serves me wrong more and more nowadays—I think she was leader of her party as well. Anyway, she is a considerable and major figure who we are honoured to have among us as we grapple with the huge new issues sweeping into politics and policy today.
Obviously, I am also looking forward to my amazing noble friend Lord Mackinlay’s maiden speech, which I am sure we will all listen to with enormous interest.
An entirely new politics of energy is taking shape at the moment, at a very rapid rate. I am referring not just to the prospects of President Trump, who, of course, has announced that he will break totally with all the major assumptions on which this Bill and many other energy policies are based, so we will have to think anew on all that. I am talking about the fact that we are heading into yet another era of oil and gas surplus. It all goes up and down in very volatile ways; it always has and will continue to do so.
The new Secretary of State, Mr Miliband, has said that he has, I think, three priorities—he has many, but three in particular. The first is to save the planet; that is the climate change challenge, of course. The second is to create jobs. That is certainly right, because we are heading into a considerably bigger change in world energy than the Industrial Revolution. There will obviously be a huge shift in the patterns of jobs, training and the education behind them.
My Lords, it is a pleasure to follow the noble Lord, Lord Howell of Guildford, who demonstrated his long-standing interest and expertise in this area.
It was also a huge privilege and pleasure to have been here for the maiden speech of my noble friend Lady Beckett. Her speech demonstrated once again why she is such a towering figure in the Labour movement. My noble and learned friend Lord Falconer of Thoroton expressed perfectly why we are so lucky in your Lordships’ House to be able to benefit from my noble friend’s experience and wisdom. I add my own thanks to her for all the kindness she has shown to me and the advice she has given me over the many years that I have known her. I am sure I speak for many Members of this House, not least those who came from the House of Commons, when I say that.
Noble Lords
Hear, hear.
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We have published Great British Energy’s founding statement and announced its first major partnership, with the Crown Estate, to exploit our offshore wind asset. Progressing the Great British Energy Bill to Royal Assent is the next stage of GBE’s journey, giving it the statutory footing needed to deliver on our ambitions.
The Bill itself draws on best practice from previous legislation, including the Great British Nuclear provisions in the Energy Act 2023, and the UK Infrastructure Bank Act, which have set up successful government companies. The Bill is drafted deliberately to give GBE the flexibility and independence that it needs to carry out its functions and achieve its objectives over time, giving it space to develop and grow. It is focused solely on making the necessary provisions to support the company, provide the finance and set the appropriate guardrails to ensure that it delivers on the Government’s ambitions.
The Bill underpins the wider programme needed to deliver both Great British Energy and our wider mission to establish the UK as a clean energy superpower. The founding statement for GBE confirms that the company will have five key functions to support this: first, project investment and ownership, by investing in energy projects alongside the private sector, helping to get them off the ground; secondly, project development, by leading projects through development stages to speed up their delivery while capturing more value for the British public; thirdly, local power plans that support local renewable energy generation projects through working with local authorities, combined authorities and communities across the UK; fourthly, building supply chains across the UK, boosting energy independence and creating jobs; and, fifthly, exploring how GBE and Great British Nuclear will work together.
Great British Energy will be accountable to Parliament. It will be overseen by an independent board and benefit from industry-leading expertise and experience. The appointment of Jürgen Maier, the former CEO of Siemens UK, as start-up chair exemplifies this; he brings a wealth of experience to the GBE board. His background, in a variety of roles across sectors, positions him to drive GBE’s mission to innovate and to expand the UK’s clean energy capabilities.
The case for GBE is simple: it will speed up the delivery of the clean energy we urgently need. The only way to protect families from the risk of future price shocks is to accelerate the transition away from volatile fossil fuels and towards clean energy. GBE will mobilise and crowd in investment from the private sector, and it will invest in technologies such as wind, solar, tidal, hydrogen, nuclear, and carbon capture. In the October spending review, the Chancellor announced £25 million to establish the company, with a further £100 million of capital funding to spend in 2025-26 so that GBE can get to work. By backing clean energy projects up and down the country, GBE will help to build a new era of energy independence, firmly establishing us as a clean energy superpower.
GBE will ensure investment in clean energy and create good jobs across the country. We have made progress on the rollout of renewables over the last two decades, but the reality is that we have underdelivered on the jobs that should have come with it. GBE will help to support our plan to create the next generation of good jobs, with strong trade unions and decent wages, by joining forces with our national wealth fund and the British jobs bonus, and working hand in hand with industry to build supply chains up and down the country and driving the reindustrialisation of Britain.
Great British Energy will generate a return for the taxpayer and will own, manage and operate clean energy projects around the country.
I will briefly go through the details of the Bill. Clause 1 allows the Secretary of State to designate a company as Great British Energy, provided that it is “limited by shares” and “wholly owned” by the Crown. A company has already been incorporated for that purpose, so it can be designated as soon as the Bill receives Royal Assent.
Clause 2 ensures that Great British Energy is not regarded as a “servant or agent” of the Crown and will be subject to the law in the same way as any other company.
Clause 3 restricts the objects of Great British Energy, providing the framework for it to carry out the functions I mentioned, which are
“facilitating, encouraging and participating in … the production, distribution, storage and supply of clean energy … the reduction of greenhouse gas emissions from energy produced from fossil fuels … improvements in energy efficiency, and … measures for ensuring the security of the supply of energy”.
Clause 4 enables the Secretary of State to provide financial assistance to GBE, which is key to unlocking the £8.3 billion committed. Financial assistance to GBE will occur in line with its agreed financial framework and His Majesty’s Treasury’s delegations. Financial assistance may be provided in any form, including grants, loans, guarantees and indemnities, as well as through acquisitions and contracts.
Clause 5 requires the Secretary of State to provide Great British Energy with more detail on where it should prioritise and focus its activities, via a “statement of strategic priorities”. The clause also requires GBE to secure that its articles of association provide for the company to
“publish and act in accordance with strategic plans”—
which must reflect the Secretary of State’s strategic statement—and for it to update those plans whenever the Secretary of State’s strategic statement is revised or replaced.
Clause 6 allows the Secretary of State to direct GBE; for example, in the interests of national security. The Secretary of State is not able to do so until they have consulted GBE and such other persons as they consider appropriate. Any directions given must be published and laid before Parliament by the Secretary of State.
Clause 7 ensures that GBE is subject to parliamentary and public transparency by requiring its annual reports and accounts to be laid before Parliament.
Clause 8 sets the territorial extent of the Act and the date on which it will come into force, which is immediately once passed to enable GBE to start delivering benefit for the people of this country.
The Bill will help ensure that every part of the UK has a role to play in delivering energy independence for our country. With GBE, we will harness the UK’s clean energy potential and ensure we are never again at the mercy of volatile global fossil fuel markets. It will speed up delivery and drive investment. It will create good jobs and build supply chains. It will protect family finances and ensure energy security, reaping the benefits for all. I commend the Bill to the House. I beg to move.
Throughout the election campaign, the Government repeatedly promised that Great British Energy would cut household energy bills by an average of £300. A similar claim was made by at least 50 MPs as well as by both the Science and Work and Pensions Secretaries of State. The Chancellor said:
“Great British Energy, a publicly owned energy company, will cut energy bills by up to £300”.
In an interview in June, the Secretary of State claimed that Great British Energy would lead to a “mind-blowing” reduction in bills by 2030. However, the quotes in the weekend press from the wind farm industry are damning. They say that the rush to deliver by 2030
“would create very short-term resource constraints, spikes in prices and the consumer risks losing out”—
a fear also expressed in the recent NESO report that supply chain pressures might add a whopping £15 per megawatt hour to the price of our electricity.
I therefore express my deepest concern that in the other place the Government voted against a Conservative amendment to make cutting energy bills by £300 a strategic priority for Great British Energy. By doing this, they voted against an amendment that would hold them to their word and to their election promise. the Minister confirm by how much they anticipate energy bills to fall by 2030? The pledge to cut household energy bills by up to £300 was not the only promise the Government made. They also promised that Great British Energy would create 650,000 jobs. Yet this too was defeated from becoming a strategic objective of Great British Energy and is absent from the Government’s Explanatory Notes to the Bill and the Great British Energy founding statement. Why?
These are not trivial matters; they are promises that are important to people, and the Government have already put 200,000 jobs at risk through their plans to shut down North Sea oil and gas. The Secretary of State has made huge promises which greatly impact people’s energy bills, their businesses and their jobs. It is therefore crucial that the Government are held accountable. Will the Minister tell the House how the creation of Great British Energy will impact employment in the UK?
The Government have said that Great British Energy is part of their plans to ramp up renewables, which they say will result in cheaper energy and greater energy security. This is simply not true. Instead, the Government’s renewables plans will cost the British people. First, analysis by Cornwall Insight found that the contracts for difference round that the Secretary of State bumped up will increase people’s energy bills. Secondly, if we build renewables faster than we can develop and connect them to the grid, the constraint payments needed by 2030 could increase bills by hundreds of pounds. Why was the need for long-term energy storage not realised before the approval of all these huge solar farms being built on prime agricultural land?
Thirdly, the cost of the transition to renewable energy will be paid for by consumers, through environmental levies on bills. The Office for Budget Responsibility has forecast that this tax will increase by 23% by 2030, highlighting the upfront cost of the Government’s ambition to decarbonise the grid by the end of the decade. In fact, households in the UK are expected to pay the equivalent of £120 per year, via green levies, to fund the Government’s race for clean energy. This is far from the Government’s promise that Great British Energy and the race to renewables would cut bills.
It is clear that the cost of investment in renewable energy projects will be incorporated into prices. Not only will consumers be burdened by environmental levies but experts have warned that the funding required to build new electricity pylons and overhead wires, enabling the connection between wind and solar farms to the grid, is and will be added to bills in the form of network charges. The Government have not modelled the cost of constraint payments, network costs or green levies. What is more worrying is that they have deprioritised new technologies such as small and advanced modular reactors.
The inescapable truth is that intermittent, non-dispatchable renewable energy sources can never compete on level terms with nuclear power, which can harness the extremely high-energy density of nuclear with very little fuel and very little waste. For its entire lifecycle, it is the lowest-carbon electricity source and that is even before the potential uses of its excess heat, such as the creation of green hydrogen, are taken into account. Shockingly, solar requires 17 times more material and 46 times as much land for the same installed capacity as nuclear. Moreover, these new technologies will not only bring supply chain opportunities, jobs and inward investment but will attract data centres such as Microsoft to the UK if we can deliver the kind of co-located energy sources as offered by such companies as TerraPower, X-energy and others.
In the meantime, by increasing the windfall tax by 3% in the Budget, the headline rate of tax imposed on UK oil and gas firms is 78%. Energy firms have described this as “a devastating blow”. This hike will cut investment in UK natural resources and oil and gas production and will make the UK increasingly dependent on imported supply. Not only will this compromise the UK’s energy security but consumers will be exposed to price fluctuations. If investment in UK oil and gas decreases, the revenue generated from the energy profit levy, which the Government are relying on to help fund Great British Energy, will decrease. Twelve billion pounds in tax receipts have been lost from the North Sea by pressing ahead with ending oil and gas licences, a move no other major economy has taken. This, combined with £8 billion which will be spent on Great British Energy, is a staggering £20 billion.
I come back to the details of the Bill, or the lack thereof. I repeat that we have not seen a business plan or a framework agreement. This is deeply concerning. We have learnt that Great British Energy will be headquartered in Aberdeen—incidentally, in a country totally opposed to nuclear power—but that the chair will be based in Manchester. Another promise was that Great British Energy would turn a profit for the taxpayer, yet there is nothing in the Bill that elucidates an investment profile or even a targeted rate of return. Why not? The British taxpayer must be able to see what the Secretary of State is doing with £8.3 billion of their money.
We have also not seen an explanation of how this Bill is different from the UK Infrastructure Bank, which was set up to do the exact same thing. Great British Energy is almost a duplicate of the UK Infrastructure Bank. This was established to provide loans, equity and guarantees for infrastructure to tackle climate change, funded by £22 billion. Great British Energy seeks to do something extremely similar but gives far greater powers to the Secretary of State. The UK Infrastructure Bank Bill had important accountability and report measures which are removed from this Bill. Why is this and why should taxpayers be burdened twice?
Furthermore, how is Great British Energy going to link in with the underresourced Great British Nuclear, which has yet to receive this Government’s encouragement to craft a vision that industry, government and the private sector can work collectively towards? Indeed, the word “nuclear” does not even appear in the Government’s new industrial White Paper, and the Minister reported at the all-Peers briefing last week that Great British Energy will not be investing in nuclear at all. What is going to happen to Wylfa?
In conclusion, this legislation is premature, lacking in detail and fuelled by an unrealistic target which will be unnecessarily costly to the people, jobs and economy of this country. This is particularly concerning given the wide-ranging powers the Bill gives to the Secretary of State and the absence of accountability measures and a business plan. We need clarity from the Government on the priorities and intention of Great British Energy. I hope that the Minister—indeed, the Minister for Nuclear—for whom I have the greatest respect, will engage constructively with these concerns.
In its 2024 progress report, the Climate Change Committee said that in order to make greater progress in decarbonising energy,
“British-based renewable energy is the cheapest and fastest way … The faster we get off fossil fuels, the more secure we become”.
It is really important that the projects that GB Energy participates in, facilitates or encourages—in the words of the Bill—are those which will be most effective in helping to deliver emissions reductions and the decarbonisation of energy.
At present, it is not clear how projects will be assessed and prioritised. Despite what the Minister said at the beginning, the accountability to Parliament that he suggested was there is, in fact, very thin indeed. It consists of the Secretary of State having a responsibility to publish the reports and accounts submitted to Companies House by GBE; frankly, I do not think that is good enough for such an important issue.
Apart from consulting with the devolved powers, which is welcome, there is no requirement for the Secretary of State to consult with any of our expert bodies, such as the CCC, the NESO or the wider energy sector in producing the statement of strategic priorities.
I have no doubt at all about the intentions of the Minister or the Secretary of State, but I gently ask them to reflect on how they would have approached a Bill as skeletal as this one when they were in Opposition. We need to set up GB Energy to be an organisation that is future-proof, robust and sustainable for the next 50 years, not just the next five.
On its funding, it is welcome that GB Energy is receiving £8.3 billion of government funding in this Parliament. However, the crucial question is how this will be split between the different objectives. There will need to be an assessment of what proportion should go to, for example, the reduction of greenhouse gas emissions or improvements in energy efficiency, and some clarity on how competing funding options will be prioritised as necessary. While £8.3 billion sounds like a lot of money—and it is—it can be very quickly spent, and there needs to be hard-headed discussions on how it should be spent. It would be helpful if, in his response, the Minister could say a little about how the Government plan to assess and prioritise projects to ensure that they benefit communities and offer best value for money for the taxpayer.
Energy UK has highlighted that it is important that GB Energy avoids conflicts of interest and market distortions by crowding in to areas where the private sector is already active. There is a real issue as to whether, if there are projects which can easily attract private sector funding, it would be appropriate for a government-owned company to compete. To ensure that it delivers additional emissions reductions, it will need to prioritise areas which are more nascent, need greater investment to scale up and will be less likely to happen without government partnership and support. Equally, it would be a real missed opportunity if a large proportion of the £8.3 billion were to find its way to fund projects already receiving significant public subsidy.
There are a few issues that are not mentioned in the Bill. We know that it is crucial we take the public along with us on the journey to net zero. One of the ways to do that is to give the public a real stake in progress. This is precisely what community energy projects do—or, I should say, could do, if there was a proportionate and fair playing field for them to operate in. I am sure that other noble Lords will raise these issues, which were debated at length during the passage of the Energy Bill 2023. I hope the Minister will be able to give some detail tonight about how GB Energy will be able to help remove the blockages that currently exist.
In his opening remarks, the Minister made it clear that the Government hope that GB Energy will bring in its wake new highly skilled jobs across the UK. Again, there is nothing in the Bill to explain how this will be implemented and how we can ensure that the skills of workers in our oil and gas industries are not lost, and that those workers are supported to transition to new green jobs, should they wish to do so. We also need to ensure that younger workers are being skilled-up to join the new green economy.
NESO’s advice to DESNZ highlighted the huge challenge ahead to achieve a clean power system by 2030 and concluded that this is possible with the right interventions, in a way that does not overheat supply chains and can offer
“Opportunities for local growth and good jobs”
and for
“positive impacts on nature, the environment and public health”.
Before I end, I will focus briefly on those positive impacts on nature. As the Minister knows, we are in a double-headed crisis. Climate change and biodiversity loss are two sides of the same coin: one exacerbates the other. In establishing a new company that will control substantial assets, there will be in many cases an opportunity for it not only to reduce emissions but to work to restore our native biodiversity and towards our mandated Environment Act targets—for example, by incorporating nature-based solutions and habitat restoration in the building of renewable infrastructure. Again, I am sure that is an issue which other noble Lords will wish to debate during the passage of the Bill.
The Bill and the creation of GB Energy offer real opportunity to move forward on the aspiration of achieving a zero-carbon grid, freeing us from the volatility and unpredictability of fossil fuel prices. I look forward to working with other noble Lords to ensure that, when we return the Bill to the Commons, it will establish an organisation that is effective, transparent and accountable, and equipped to take on the challenges it will undoubtedly face.
My second reason for welcoming this debate is that the issue and the impact of climate change has formed the background to and context of a substantial part of the work I have been able to undertake hitherto. When the then Prime Minister invited me to preside over bringing together the departments of agriculture and of environment to form the basis of Defra, one of my reactions was to think, “That’s reform of the common agricultural policy and the follow-on to the Kyoto Protocol—this is going to be a lot of work”, as indeed it proved to be.
That was my second reaction. As I recall, the then Prime Minister had first told me that the scientific modelling of the then raging foot and mouth outbreak indicated that it would continue and perhaps even strengthen, and told me that my first duty was to work to bring it to an end. The words “hospital pass” sprang for the first but not the last time at once into my mind.
I take this opportunity to pay tribute to the world-class civil servants and experts with whom I had the great good fortune to work, respected as they were and are across the world. It is my hope that we still have in this country practitioners of that quality, so that Britain may find itself once again among the major contributors to addressing threats of such importance and relevance to us all. Indeed, the two main issues on which I hope to engage in future in your Lordships’ House are the two great threats of nuclear weapons and of climate change. It was a former Chief of Defence Staff and a Member of this House who I heard years ago refer to nuclear weapons as: “The greatest threat to the continued existence of the human race, second only”—these are his words—“to climate change”.
I confess to a slight feeling of irritation when I hear no doubt well-meaning people talk, as they sometimes do, of the threat we collectively pose now to the planet. The planet will be fine. It is the human race, along with the rest of life on the planet, whose continued existence is at risk. However, I of course welcome the serious degree of concern which such comments reflect, and wish I could be sure and confident that that degree of concern is universally shared, especially at the most senior levels of power and responsibility across the world.
I have been advised that the underlying purpose of a maiden speech to your Lordships’ House is in effect to introduce oneself to this noble House, so perhaps I should say at once that I am extremely conscious of having enjoyed considerable good fortune over my years in public life. I did not set out to pursue a life in politics, although, as I say, in doing so I have enjoyed considerable good luck along the way.
Even my first job in an engineering apprenticeship taught me a number of useful life lessons. I went from a quiet convent school to an engineering factory in Manchester’s Trafford Park, which then housed a workforce of some 20,000 strong, including about 2,000 apprentices, of which some 20 were women. Apart from the discipline of physically clocking in and out, especially at lunchtime, I learned the necessary ability to at least appear impervious to anything said to or around you, often at considerable volume—something which remains occasionally relevant and useful to this day.
Those days, however, reinforced what has since been a lifelong love for British manufacturing, and I always felt myself blessed to have over 40 years in my then constituency the last manufacturer of rail rolling stock in this country to have capacity to design, manufacture, test and service new trains, and, separately but equally importantly, the civil aviation headquarters of Rolls-Royce, a source of great pride to all who live in and associate with the city of Derby.
I am honoured to be a Member of this noble House and will endeavour to make a useful contribution here—in which endeavour I know I will enjoy much assistance and support, for which I should be extremely grateful.
She is wise. In those years in government from 1997 to 2010, she was the wise owl whose advice we wanted. In 1997 there would have been those who thought she might be an early casualty, but the Prime Minister—like all the Prime Ministers who followed—very quickly realised that there was no more reliable and insightful person on his Front Bench than my noble friend. She ended up as his Foreign Secretary, leaving government on the same day as the Prime Minister, although the next Prime Minister had her back on the Front Bench within 18 months.
She is loyal. She has been a member of our party for even longer than those 50 years. She is universally loved. She held our party together during the dark days that followed the tragic death of John Smith. When she announced her retirement, the East Midlands Labour Party gave her a dinner that was massively oversubscribed, a love fest that few politicians in either party could have inspired.
Above all, she is trusted. Her commitment to our party will not prevent her saying when we are on the wrong track. She is a great public servant with profound loyalty and commitment to our country. Her words are always worth listening to. She is seldom wrong in her judgments.
It is particularly good that my noble friend Lady Merron, now on the Front Bench, was a successor to my noble friend Lady Beckett in Lincoln in 1997, when finally it was won back after 18 years. The current Member of Parliament for Lincoln is my son, Hamish. He could not be prouder to be one of my noble friend’s political children. She is so very welcome and will hugely enhance the deliberations of your Lordships’ House.
I thank the Minister for his clear and helpful exposition of the Bill, which I greatly welcome. I was unable to determine from her contribution whether the noble Baroness, Lady Bloomfield, was in favour of the Bill; I took the view that she was probably not, but it was not clear. The merit of the Bill is that it will bring British public ownership back into the United Kingdom energy system, albeit through a state-owned private company.
All agree that the clean energy revolution that is required will not come from either public or private sector investment alone. There has to be a combination, and the effect of the creation of Great British Energy is likely to promote the crowding in, not the crowding out, of private sector projects in this field. They have to operate together. The Government’s description of the working of the company seems right:
“Led by its own CEO, Great British Energy will be overseen by an independent fiduciary Board, rather than ministers, benefitting from industry-leading expertise and experience across its remit. Trade unions will have a voice and representation within Great British Energy”.
The creation of Great British Energy right at the start of this Government, coupled with the commitment of £8.3 billion for Great British Energy to invest, shows both the urgency with which the Government are addressing the issue and that they have hit the ground running on it. I strongly welcome the early partnership with the Crown Estate in offshore wind power—this is exactly the sort of drive and leadership that Great British Energy can give. I also welcome the early appointment of Jürgen Maier. To have secured the services of a serious, successful figure in the private sector of his stature shows the depth of the commitment and the likely ability of GB Energy to deliver results.
I completely understand the wisdom of setting up an entity in private company form, albeit wholly owned by the state. It imposes the private sector disciplines on the company, including the need for a sensible return on investment, but in a way that allows this company to pursue the overarching aims of the Government to deliver on the aims of clean energy. I also underline the point made time and again by the Secretary of State that the promotion of our clean energy agenda will be a major contributor to the creation of a whole new infrastructure, the creation of community energy projects and the widespread retrofitting of the built environment to growth, upon which the future of our economy depends.
I thoroughly welcome the Bill and what it demonstrates about the Government’s readiness and commitment to addressing the climate emergency. I have two questions on which I would welcome assistance from my noble friend the Minister. The first is how this Bill fits in with the state subsidy and competition regime in law. There are limits on what state subsidies may be given by the state, particularly in the context of competition law, which prevents a state subsidy warping a Minister. Can the Minister say a little about what limits there are on the subsidies that the Government can give to Great British Energy and on the subsidies that Great British Energy can give to third parties?
My second query is that the Bill does not address the strategic objectives of Great British Energy, which will come from a statement by the Secretary of State. We are well acquainted with the aims of this Secretary of State, but would it be better, from a constitutional point of view, to incorporate the strategic aims in the Bill so that they cannot be subverted subsequently without parliamentary approval? We know that this House has always been keen to repel skeleton Bills.
The Secretary of State’s third concern is lower energy prices. I am very glad to hear that, too, because it makes me uneasy all the time, as I am sure it makes all of your Lordships, that probably 3 million or 4 million families wake up every morning in this United Kingdom of ours in desperation and apprehension about the coming winter and how on earth they are going to pay—or even try to pay—for the necessary energy for putting hot food on the table, heating, cooking, hot water and a comfortable home, which they know they cannot do. The sums still do not add up. Energy cap or no energy cap, they are impossible prices for millions and millions of households in what is supposed to be a mature and rich country in which we look after our citizens. So I am very glad that he puts that as one of his trio. Maybe there are others.
So how will this new body, the Great British Energy company, help tackle all this? The first thing I would add, which has not come up very much in any of our recent energy debates, is that we must be clear about what the real situation is. To get to an all-electric society by 2030, which I think is the Government’s aim—or is it by 2035? I am not quite sure—will require five times more electricity than we are generating now. People say “No, no, that can’t be true”. I was just looking at the briefing from the voice of the energy industry, which says, “Oh, it’s all right. Today, the UK’s electricity grid is powered more by renewable and low-carbon sources of energy than fossil fuel”. Wait a minute; that cannot be right. It sounds right and it may be true at this moment, but, if we are talking not about the electricity grid but about the UK’s economy, that is powered vastly more by fossil fuels than by renewable energies of any kind. This is a complete misapprehension of the reality, which is that renewable energy provides slightly under 10% of the nation’s total energy usage. It is the other 90% that has to be decarbonised if we are to get anywhere near net zero by 2030 or 2035. It is important to start with a realisation of the colossal hill we have to climb to get to a situation where net zero of any kind, even by 2050, is faintly achievable.
Some 27 million households now use about 6 kilowatts of electricity a day. If all gas and oil are illegal and unavailable—just not there—by 2030, each household will need 29 kilowatts, on average. Obviously, some will need much more; some less. This is about 4.5 to 5 times what is currently produced. This nation produces about 65 megawatts of electricity a day, half of which comes from renewables. On good days, all of it comes from renewables but, averaged out over a year, 30 to 40 megawatts come from renewables.
The most sober estimates are that, between now and 2030 or 2035, we will need 200 gigawatts of clean, green energy, plus a back-up system of intermittency, because the wind does not blow all the time and we have not finished redeveloping and rescuing our nuclear industry. The decisions have not yet been made and we have all the problems of storage and hydrogen yet to solve—although they will play their part in in the future and their place will come.
In short, fossil fuels may be fading over the next 20 to 30 years, but in modern economies electricity demand will not fade. On the contrary, it will grow. Although there are mitigations, which I will address in a moment, they will not help the fact that we have to produce vastly greater amounts of electricity. The question is, who will pay?
There are good things in what the Minister and others have said: that this Government are anxious and realise that, being short of money, they will have to rely on the private sector. I would like to hear much more about the private sector, if we are talking about sovereign wealth funds, pension funds with £3 trillion, insurance funds or other international sources of investment. They have the money and the Government have the challenge and the need to finance this colossal energy transition. Somehow, we have to think of new ways to bring these two sides together, possibly as the grandson of the private finance initiatives of the end of the last century—something, at any rate, that faces up to the fact that very large new sums of investment are required.
Will they save the world, as the Energy Secretary wants? Well, we produce about 1% of emissions at present, a tiny little bit. Carbon emissions are rising faster than ever; methane emissions are 80 times as vicious in global warming and are rising faster than ever. Carbon capture and storage will need to capture the carbon that we will still be producing, because obviously will go on burning gas or electricity for many years to come. These schemes are beginning, but they have not got very far and we have not heard much about them.
Meanwhile, the wider world is still dedicated heavily to coal. The Secretary of State wants more jobs. Of course, there will be a lot more green jobs, but many jobs will be lost in the energy transition—thousands in oil and gas and in many other parts of the industry as well, particularly where that industry’s high energy costs undermine our competitiveness and we lose exports.
Lower bills? I just cannot see it. The consumer will have to pay somehow, in some way, for the huge transition. Far from being a world leader, as several people have suggested, we are falling dangerously behind. I will enumerate the real reasons why we are in serious difficulty.
First, the nuclear situation is a mess. Hinkley is turning out to be immensely expensive, years behind on timing, and years over budget. A proposal for Sizewell C as a replication of Hinkley is a very questionable proposition. No private investor will touch Sizewell C with a bargepole. It will cost £20 billion, take 10 years to build, and will not help at all with the move towards net zero.
Secondly, the entire grid needs a remake to accommodate the switching stations bringing our electricity—which has to increase on a great scale—from the North Sea to the market. We can bring it to the coast; it then has to be transmitted to consumers, homes and industry by an entirely new system of pylons. As an example, the Hinkley transmission system, which is being put in now, has taken 10 years to get going. It took seven years of planning argument followed by three years to build.
Thirdly, about 1,000 to 1,500 new pylons will be required. We are told by the national grid that they cannot go underground. I would like to hear a lot more about what Great British Energy can do to change that situation because that will involve years and years of planning as well.
Fourthly, the interconnector system, on which we rely very much, from all the countries around us, as well as from Morocco, is falling behind and not yet under way at the pace that it should be.
Fifthly, according to the Times, we are trying to take the whole thing at breakneck speed, and we all know that in politics the faster you push people without consent, the slower the realisation.
Sixthly, heat pumps are not yet fully efficient, especially below 40 degrees Fahrenheit, and therefore cannot solve the problems of heating domestic homes in the way we want.
Seventhly, this new organisation seems to be part of a sort of political or institutional indigestion. We now have GBE; we already have Great British Nuclear—how they are related I have no idea. We have NESO, which is the operator of the whole system of energy, or is said to be. We have Ofgem, of course, and the national wealth fund, which is deeply involved in this area. We have the UK Infrastructure Bank and many more ministries. All of these have a finger in the energy pie.
The need for co-ordination, and the working out of salaries of every individual, will be colossal. I think that we have an old “socialist Adam” showing through here. It is like the old Neddy system, on which I served many years ago—it is all right as long as we deal with the big boys in the trade unions and the corporations, and the other 99% of enterprises in this nation can go hang. That, I am afraid, will not solve the problem any more than some of these other organisations.
All the world is on fire at the moment, and energy reliability is absolutely essential for a modern industrial nation. This morning, we had Lord Cormack’s memorial service, at which someone reminded us that Lord Cormack would ask, wisely, about new policies: “Is it a plan or is it a story?” Even after listening to the marvellous clarity of the noble Lord, Lord Hunt, I am, frankly, not at all sure which this is. I am sure that the Great British Energy system needs to get its climbing boots on, because the mountains it has to climb are very high and very dangerous. This is the serious situation we face, and which we are only just beginning to address. There is a long, long way to go.