Great British Energy Bill

Committee (1st Day) (Continued)

20:13:00

Amendment 21

Moved by

21: Clause 3, page 2, line 18 at end insert— “(e) the production of nuclear energy.”Member’s explanatory statement This would amend Great British Energy’s objects to include the production of nuclear energy.

My Lords, Amendment 21 is in my name. The UK led the world, becoming the first country to split the atom. This was followed in 1956 by the world’s first nuclear programme and a nuclear power station at Calder Hall—Windscale. At its peak in the 1990s, the UK generated approximately 13 gigawatts of power from nuclear energy, but this has slipped to around six gigawatts today. This story of decline stands in stark contrast to our modern understanding of nuclear power as the only current form of reliable, secure, low-carbon electricity which can be deployed at scale in the UK and therefore has to be considered a key component in the drive for net zero. In January this year the previous Government published their policy paper, Civil Nuclear: Roadmap to 2050, and this was considered vital so that nuclear could offer the reliable, resilient and low-carbon power we need to reach net zero by 2050 and ensure our energy security so that we are never again dependent on the likes of Putin. Many other nations, including the USA and France, have endorsed a net-zero nuclear declaration which calls for a global tripling of nuclear energy by 2050. Global energy is increasingly based around electricity. That means that the key to making energy systems clean is to turn the electricity sector from being the largest producer of CO₂ emissions into a low-carbon source that reduces fossil fuel emissions in areas such as transport, heating and industry. While renewables are expected to continue to lead, nuclear power can also play an important part, along with fossil fuels, using carbon capture, utilisation and storage, and indeed the removal of flaring, turning our hydrocarbon fields into the greenest in the world. Countries envisaging a future role for nuclear account for the bulk of global energy demand and CO₂ emissions, but to achieve a trajectory consistent with sustainability targets, including international climate goals, the expansion of clean electricity would need to be three times faster than at present. It would require 85% of global energy to come from clean sources by 2040, compared with just 36% today. Along with massive investments in efficiency and renewables, the trajectory would need an 80% increase in global nuclear power production by 2040. We recognise the importance of renewables in achieving net-zero goals. However, going for a 100% renewable energy scenario represents a considerable gamble, especially given that grid balancing and storage technologies are still relatively nascent. One of the most pressing concerns is that solutions to renewables’ inherent variability fail to materialise quickly enough, and Britain either has to live with constraints and interruptions to its energy supply—an economic no-no—or pivot back towards an energy mix of yesteryear, reliant on fossil-fuelled power plants to provide a dependable baseload of electricity, albeit at a great environmental cost. If this were to transpire, the UK would seriously risk reneging on its 2050 net-zero target. A lack of investment in existing and new nuclear plants in advanced economies would have implications for emissions, costs and energy security. In the case where no further investments are made in advanced economies to extend the operating lifetime of existing nuclear power plants or to develop new projects, nuclear power capacity will decline. Nuclear power blends the best attribute of renewables, zero-carbon generation, with the best of fossil fuel power stations, dependability. According to the International Energy Agency, over the past 50 years, the use of nuclear power has reduced CO₂ emissions by over 60 gigatonnes —nearly two years-worth of global energy-related emissions. The Prime Minister has made a vital promise to lower energy bills for households across the country—a commitment that resonates deeply with families facing financial pressures—but to ensure that this promise is more than just words, the Government must take decisive action to secure a diverse, competitive and sustainable energy supply. One critical way to achieve that is by expanding the production of nuclear energy. Nuclear energy has the potential to significantly increase the UK’s energy supply. By introducing more nuclear power into the grid, we create a stable and abundant source of electricity. This additional capacity can ease pressure on prices by reducing reliance on imported fuels, particularly during global energy crises. With a greater supply of energy comes the opportunity for competition. Competition in the energy market pushes prices down for consumers, ensuring that families and businesses benefit from fairer, and lower, energy costs. Nuclear energy, as a reliable and low-cost source of power in the long term, plays a key role in fostering this competitive environment. In respect of this amendment, nuclear energy is not just a technological option but a strategic necessity for the UK’s future. As the Government themselves have stated, nuclear energy “will play an important role in helping the UK achieve energy security and clean power”. To fulfil this vision, surely the Department for Energy Security and Net Zero must place nuclear energy at the core of its policies and strategies. With 40% of the UK’s energy currently imported, this leaves us vulnerable to global market volatility and geopolitical tensions. Nuclear energy, with its long operational lifespan and domestic production potential, reduces our reliance on foreign energy sources. As electrification expands across sectors, from transport to heating, the demand for clean and reliable electricity will surge. Nuclear energy can meet this demand, ensuring a secure and steady energy supply for the long term. I beg to move.

My Lords, I must inform the House that if Amendment 21 is agreed to, I cannot call Amendment 24 for reasons of pre-emption.

I draw attention to my interests as outlined in the register and thank my noble friend for introducing this amendment. His insights underline the importance of collaboration as we address the dual challenges of energy security and achieving net-zero carbon emissions. The amendment would build on prior commitments and take the steps needed to ensure that nuclear energy plays a full role in our energy mix. The amendment is not a new initiative but an essential next step in fulfilling the Government’s stated commitments to nuclear energy. It would ensure that we moved from exploration and consideration to concrete action in facilitating, encouraging and participating in the production of nuclear energy. By accepting it, we can bridge the gap between aspiration, implementation and participating in the production of nuclear energy. The Government have already acknowledged the importance of nuclear energy, but acknowledgement alone will not suffice. There must be a tangible, unequivocal commitment to its production. This includes setting clear targets for both large-scale nuclear reactors and, more importantly, small and advanced modular reactors. A stronger commitment sends a signal to investors, developers and the broader energy sector that the UK is serious about leading the world in advanced nuclear technology. Public investment is critical to establishing a foundation for nuclear development, but, equally, we must incentivise private sector involvement. This requires the Government to offer meaningful incentives, loan guarantees, tax breaks or grants so that private investors see nuclear as a viable and profitable area to support. Such a strategy will not only unlock funding but drive innovation, reduce costs and bring nuclear projects online faster. I must also highlight the critical role of Great British Nuclear, which my noble friend mentioned earlier. Established by the previous Government, GBN is uniquely positioned to co-ordinate and drive nuclear development across the country. The Government should not only recognise the value of GBN but ensure that it is fully resourced and empowered to develop on its mission. GBN can act as a central point for collaboration between public and private stakeholders, fostering innovation and scaling up nuclear energy production. The importance of nuclear energy in securing the UK’s future cannot be overstated. It is vital for energy independence, affordability and achieving our climate goals. By accepting this amendment, the Government would take a decisive step towards fostering a robust nuclear sector, one that combined public investment, incentivised private participation, reduced barriers to progress and built on the foundation laid by Great British Nuclear. I was delighted to hear earlier in the Committee the Minister mention a new siting policy. As he will know, this will be crucial in supporting the ambitions of data companies such as Microsoft to base operations in the UK. If we can deliver security of supply of energy, with that will come jobs, new technologies and the possibility of levelling up those areas of the country which so desperately need it.

My Lords, I will speak very quickly in support of my noble friend Lord Offord. Nuclear fuel is very much a positive, as it is a baseload generator, which to me is critical. That is what we are short of in this country. Unfortunately, wind, solar, whatever, are not always with us. The excess that is produced by wind and solar when they are actively working, which is fantastic, could then be used to drive hydrogen production—we have touched very briefly on that in this House this afternoon. Hydrogen is the clean fuel of the future, possibly the cleanest; but we need to be able to store and then burn it, in times of need, to generate the electricity that will reduce our dependence on gas generation, particularly, which I know we are all in favour of. I just wanted to add that to this small debate, knowing that nuclear reactors are also most useful for data centres.

My Lords, I really cannot disagree with anything noble Lords have said in this debate, although I do not believe we need an amendment. I utterly agree that nuclear power is essential to the future; it provides the essential baseload; it is safe, secure and reliable. We have great opportunities in the UK to develop nuclear energy and the supply chain, even more than we have now. Obviously, Rolls-Royce, from a UK company point of view, has great potential. We are keeping a very close eye on Hinkley Point C; the operational date that has been given for the first unit between 2029 and 2031 is very crucial. We are working very hard to get Sizewell C to final investment decision in the next few months. We have the SMR programme, and I agree with the noble Baroness, Lady Bloomfield, about the importance and value of the work of Great British Nuclear. We are regularly engaged with GBN, and I pay tribute to the great work that its chair and chief executive are doing. I have met a number of companies who are very interested in developing AMRs. We have all seen the experience of companies such as Amazon, in the US, linking small modular reactors and advanced modular reactors with data centres; clearly, we wish the UK to be very much part of that. In terms of the UK’s growth agenda, if we combine military and civil nuclear defence requirements, we know that the nuclear skills task force has now estimated that we need about 40,000 extra people in the industry by 2030, and moving on with even more people by the 2040s. This is at once a challenge and a huge opportunity, because the careers that are offered in the nuclear industry are secure and well paid, and it is a very exciting industry to go into. The noble Lord, Lord Offord, quoted figures from the IEA. Although we have seen a global downturn in nuclear energy, it is right to now talk about a renaissance. At international gatherings, it is pretty clear that there are countries coming back to nuclear, as we are, and other countries that wish to develop nuclear energy for the first time. This is very encouraging; we know that, in terms of popular opinion, there is a much more positive attitude among the public towards nuclear energy. In saying I do not believe that the amendment is necessary, I do very much embrace the comments of the noble Lords and I can assure them that, in the department, we see nuclear energy as having an essential role for the future.

I thank the Minister for his clarity and unequivocal support of nuclear, and, indeed, for his reply to my noble friend Lord Howell of Guildford, who asked a specific question in relation to the GB Energy Bill. GB Energy can, if required, participate in nuclear, but the clear understanding is that discussions are ongoing with GB Nuclear. So I would encourage the Government to continue to clarify what that will look like and how it will be funded going forward.

If I may come back on that, the noble Lord may have seen that the energy Select Committee had a hearing at which the chair of Great British Energy and then the chair of Great British Nuclear gave evidence. It is clear from what they said that we will have no difficulty at all in establishing a co-operative relationship.

That is noted. I thank the Minister. I beg leave to withdraw the amendment.

Can I ask my noble friend why the new power station in Somerset is costing four times as much as an identical one in South Korea? Surely this will add to energy costs, not detract from them.

I am not sure which “noble friend” that was aimed at, but I will have a go if the noble Lord likes. I was at the department when we started talking about Hinkley many years ago. Two or three things happened. First, it took an awfully long time to come to a final investment decision. Secondly, EDF thought it could bring a design model from France and place it in Hinkley Point C without having to make design changes. The reality was that it had to make thousands of design changes because of the requirements of the regulatory system in the UK.

20:30:00

The good news is that work is progressing very well indeed at the second unit at Hinkley Point C because it learned an awful lot from its experience with the first unit. The additional good news is that Sizewell C is an 80% replica above ground of Hinkley Point C. The lessons learned from the first unit at Sizewell for the second unit mean that we should see improvements.

The model that is being used for the financing of Sizewell is to bring in a number of private sector investments to provide the commercial discipline in relation to cost and timing. Although the noble Lord is right to point to the cost and time overruns at Hinkley, we are learning and are confident for the future. The whole point about small modular reactors is that their modular nature should enable great efficiencies to be secured as more modulars are built in factory mode and then placed on site.

Amendment 21 withdrawn.

Amendment 22

Moved by

22: Clause 3, page 2, line 18, at end insert— “(e) the exploration of oil and gas in the North Sea where the UK’s energy security is compromised.”Member’s explanatory statement This would amend Great British Energy’s objects to include the exploration of oil and gas in the North Sea where the UK’s energy security is compromised.

My Lords, Amendment 22 in my name is about energy security. Energy security is a matter of utmost importance—a foundation on which our homes, businesses and industries depend. We must ensure that our nation can provide reliable power to keep the lights on and our economy running. I was not in this country during the 1970s but lived in the Republic of Ireland. We suffered power cuts that caused significant disruption. I recall a farming friend who lost his entire pig herd due to a lack of ventilation—a stark reminder of the devastating consequences when power systems fail. We cannot afford to let such a situation arise here. While I wholeheartedly support the goal of achieving net zero by 2050, we must temper ambition with pragmatism. The United Kingdom accounts for 1% of global carbon dioxide emissions, compared with 33% from China and 12.5% from the United States. While we strive for cleaner energy, we must be realistic about the scale of transformation required. Getting electricity production to net zero by 2030 is a noble aspiration, but it remains a significant challenge. Progress has been made. According to the Department for Energy Security and Net Zero, the UK’s carbon dioxide emissions decreased by almost 50% between 1990 and 2023, including a 6.6% drop in the year ending 2023. Electricity generation contributes 11% of our greenhouse emissions. Efforts to reduce this share are ongoing. However, our energy mix relies on a delicate balance. Nuclear power—which we have just discussed—and biomass provide baseload capacity most of the time, while solar and wind offer renewable contributions that are inherently variable. Interconnectors, though helpful, depend on surplus supply from neighbouring countries. The swing producer in our energy system remains gas, which under certain circumstances—when the wind is not blowing and the sun is not shining—supplies upwards of 60% of our energy needs. As the Government push for greater electrification, whether in transport, heating or industry, the strain on our grid will only increase. Targets for offshore and floating wind are ambitious, as are those for solar power, which raises concerns about land use and its impact on food production—an amendment for later discussion, I am sure. Onshore wind also faces resistance, and these challenges make clear that gas generation will remain a critical component of our energy mix for years to come. Let us not forget that electricity accounts for only 20% to 25% of the energy consumed in this country, and that 87% of UK homes rely on gas for heating and hot water, yet domestic gas production declined by 10% between 2022 and 2023 and nearly 14% to August this year, according to Offshore Energies UK. This leaves us increasingly reliant on imports, as our current production is about 40% of requirements. Imported gas comes via pipelines from Europe or as LNG shipments. Global instability, such as sanctions on Russia, has tightened supply, while demand in Europe has risen. Norway, a trusted ally, provides the majority of gas imported by pipeline, some 35%, placing many of our eggs in one basket. The additional 25% required comes as LNG, sourced from countries such as the United States and Qatar, both of which have indicated that their supplies will increase. This has a significantly higher carbon footprint—on average four times more than our domestic production—due to transport and production methods. The North Sea Transition Authority’s 2024 Emissions Monitoring Report indicates that UK gas production is a top-quartile performer according to kilograms of carbon dioxide equivalent per barrel of oil equivalent—kgCO₂e/boe. The NSTA report also shows a good methane emissions performance—arguably a greater concern than carbon dioxide emissions—with the UK having an intensity of 1 kgCO₂e/boe versus the global average of 16 kgCO₂e/boe. I apologise for all the figures. New UK developments are being delivered far more cleanly than the average of current existing UK developments. New UK developments are significantly cleaner than imports, producing emissions roughly 10 times cleaner than LNG imports. We are fortunate to have an abundance of hydrocarbons in our offshore waters. Despite the decline, there is still potential for two or three decades of production, as I mentioned at Second Reading. Exploiting this resource responsibly would protect some 200,000 direct and indirect jobs, sustain some critical industries and provide a bridge to the renewable future. Moreover, recommencing the issuance of oil and gas licences would help reduce global emissions by avoiding the higher carbon intensity of imports, stabilise our energy and bolster our economy. However, I must caution that the current tax regime risks an 80% slump in investment in the UK oil and gas industry over the next five years, according to OEUK. This would undermine both energy security and our ability to transition effectively. Lifting the ban on new exploration and production licences, while ensuring robust environmental standards, offers a pragmatic path forward. It will protect jobs, reduce emissions and, most importantly, help secure the energy future of the United Kingdom. I very much look forward to the Minister’s response and beg to move.

My Lords, I thank my noble friend Lord Ashcombe, whose amendment I support, for his insightful contributions on the important issue of energy security. This issue cannot go unaddressed when discussing the Bill because of the consequences to our country’s energy production, supply and security. Indeed, Clause 3 explicitly states that GBE’s objects “are restricted to facilitating, encouraging and participating in … measures for ensuring the security of the supply of energy”. However, the Bill makes no provision to ensure the security and future of our energy supply, and I express my deepest concern that the tunnel-vision focus on renewable energy to achieve the Government’s overly ambitious target of clean energy by 2030 will inevitably compromise our energy security. The UK’s energy security should indeed be at the forefront of the debate on the Bill. 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. However, this is simply not true. Instead, the Government’s renewable plans will cost the British people and our national energy security. We on these Benches of course recognise the need to cut household energy bills for families, to accelerate private investment in energy infrastructure, and to protect and create jobs in the energy industry across the UK, but the Bill gives no indication as to how this will be achieved. It does not include any measures to ensure the effective delivery of a reduction in household energy bills, nor an increase in British jobs, nor the long-term security of our energy supply. We understand that the purpose of Great British Energy will be to assist the Government in ramping up renewables to achieve their self-imposed target of 100% clean energy by 2030. This is a target that I believe to be driven by political ideology and which industry experts have described as aggressive, unrealistic and expensive, requiring far more than the allocated £8.3 billion of funding. It is an undeniable truth that renewable energy will always be naturally unreliable. As my noble friend Lady Bloomfield brought to our attention at Second Reading, over the last couple of months, as was the case this time last year and in March, we have seen another dunkelflaute. Indeed, in March, the measure of how often turbines generate their maximum power failed to reach 20%, and we have recently seen levels drop to nearly zero. Relying on new interconnectors to Belgium and Holland will not offer energy security if their wind farms suffer the same weather conditions as ours or if their countries’ needs are greater than ours. All this being said, it is therefore vital that we acknowledge the UK’s North Sea oil and gas industry when we discuss the future of our energy production and security. This industry has suffered under the Government, as they increase their taxes on North Sea oil to punitive levels. Energy firms have described increasing the windfall tax by 3%—with the headline rate of tax now a staggering 78%—and extending this to 2030 as a devastating blow. This hike will cut investment in UK natural resources and oil and gas production, as indicated by my noble friend Lord Ashcombe, which will make the UK increasingly dependent on imported supply. This will compromise our energy security, but consumers will also be exposed to price fluctuations. The country will become increasingly dependent on imported electricity and will therefore be forced to pay the market price for power as fossil fuel powered generators are closed at a quicker pace than we are ramping up the necessary capacity to replace them. Not only this, but if investment in UK oil and gas decreases then the revenue generated from the energy profit levy, which the Government are relying on to help fund GBE, will decrease. By pressing ahead with ending oil and gas licences—a move no other major economy has taken—£12 billion in tax receipts have been lost from the North Sea. This, combined with the £8 billion which will be spent on GBE, is a staggering £20 billion of taxpayers’ money. Analysts have spoken out and warned about relying on North Sea oil taxes to fund the Government’s green energy plans while the Government tax the operators to the point that revenues fall by 80%, as indicated by my noble friend Lord Ashcombe. We must address the fact that the revenue generated from the energy profit levy, or windfall tax, may fall if investment in UK oil and gas decreases. Alongside private sector investment, the Government are relying on windfall tax revenues to fund GBE and support the transition to clean power by 2030. Furthermore, the £8 billion allocated to GBE does not compensate for the amount of investment in energy projects that will be doomed by the Government’s plans to prematurely shut down the UK oil and gas sector. The North Sea oil and gas industry is not only critical to the UK energy supply but a bedrock for many economies and communities. Economic ecosystems have developed around this industry. It is therefore critical that we manage the energy transition properly. The Government’s plan for GBE, combined with the energy profits levy, puts the industry at risk at this vital time. The proposed increases and the removal of the investment allowances could be detrimental to investment. Offshore Energies UK has warned that the tax increase could see investment in the UK cut from £14 billion to £2 billion between now and 2029. That is not scaremongering; it is what the industry is telling us.

20:45:00

The only detail we have heard about the number of jobs to be created by GBE came from the Secretary of State’s hand-picked chair of that body, who said that “hundreds” of people will be employed at the Aberdeen headquarters. We have since found out that the chair himself will be based in Manchester. More importantly, these few hundred people will hardly make up for the 200,000 jobs the Government are putting at risk with their plans to shut down the North Sea and the missed opportunity for jobs thanks to the go-slow on nuclear. On the Secretary of State’s watch, we have already seen thousands of jobs in the industry lost.

I thank my noble friend Lord Ashcombe for moving the amendment, which gives vital consideration to the role the North Sea oil and gas industry might play if our national energy is compromised. I support my noble friend’s efforts and thank him for his contribution. The establishment of GBE is an effort to fulfil the Government’s rushed, unprecedented and unilateral target for clean power by 2030, which will come at a great cost to the North Sea oil and gas industry and the UK’s energy security. I am therefore thankful to my noble friend for bringing this issue to the forefront of the debate on the Bill.

I hope the Committee will forgive me. I was slow on the uptake and should have preceded my noble friend instead of following him. I think doing so is legitimate within the rules of Committee. I very much support my noble friend Lord Ashcombe’s amendment. The Minister has already made the point that I have the greatest possible reservations about net zero. This is not because I have some tremendous hang-up and that I want to pollute the atmosphere and make the place less liveable than it might otherwise be, but because we are now reaching the point on net zero where the costs are starting to come in and getting very severe indeed. That is why we have to think very closely and carefully about where we go from here. We have done an awful lot to lower our net emissions into the atmosphere, largely by closing down vast areas of our generation industry, in which coal-fired power stations have now been phased out almost completely. What has happened? We think we are setting a wonderful example to the rest of the world but our net emissions come down and world emissions go up. That is hardly surprising, because the Chinese and the Indians are still building coal-fired power stations. They account for massive amounts of coal-fired energy, which keeps their energy prices low and makes them very competitive with the rest of the world. Are we really going to see a change of heart from China and India? Will they suddenly say, “No, no, we’ve been polluting the atmosphere too much and we must now start cleaning everything up and working to net zero”? I do not think they will. They want to keep their competitive position. That is why it is so essential, to refer back to my noble friend’s amendment, that we continue to accept that we will need oil and gas for much longer than we might originally have thought. The cost of saying we will not explore for any more oil and gas in the North Sea is absolutely massive in terms of jobs for people living in Scotland. The pigeons are starting to come home on all this. That is one of the reasons why I have the greatest possible reservations about driving on towards this net-zero target: the costs are becoming prohibitive. Our energy prices are already higher than almost everybody in Europe. This will cost us jobs and competitiveness in the world generally for years to come.

My Lords, one of the joys of debating energy is that, on every occasion, we come back to the substance of the whole argument about energy and where we are going. I am grateful to the noble Lord, Lord Ashcombe, for stimulating such an interesting discussion. The noble Lord, Lord Hamilton, in a sense, has brought this into the open. Clearly, it was his Government who signed up to the legislation on net zero by 2050. The last Government, as much as we do, saw the huge risks involved in climate change and the need to take action. The international position is that, despite what the noble Lord says, the fastest growth in use of renewable energy is occurring in China. The International Energy Agency indicated in its recent renewable energy report that we will see a 2.7 times increase in the use of renewables globally between now and 2030. So, there is a global movement towards clean power and net zero. Yes, it is going at different paces, but we believe the UK can gain great advantage by taking a leadership role. The National Energy System Operator—NESO—has shown that there is a pathway to clean power by 2030. We are now committed to taking that and turning it into an action plan, which I hope we will be able to publish very shortly. I would not deny that North Sea oil and gas still have important roles to play, and I am of course listening to what noble Lords say about the tax situation and proposals, and the investment issue. Clearly, the Government are in very close discussions with the industry. Our aim is an orderly transition, and that is what we mean to achieve. So we clearly see the value of what happens in the North Sea, and we need it to continue to provide supplies to the UK in the years ahead. Equally, however, we need to manage the transition to clean power and net zero. On the issue of jobs, obviously, the number of people employed by GBE will not balance out the people who may be lost to the oil and gas industry in the future. This is important. It does not really matter where the chair comes from; the point is that the headquarters of GBE will be firmly based in Aberdeen. I have already referred to the extra 40,000 people we need in nuclear by 2030. If you look at the other sectors we are talking about investing in—CCUS, hydrogen—all of them will need more people. So, the energy sector as a whole will provide a huge number of opportunities, but I accept that, if there is a reduction in the number of people employed in the North Sea, it is our responsibility, with industry, to help manage that transition effectively. In the end, we may disagree about this, but the Government are confident that we are right to go towards clean power as quickly as possible. We have had endorsement, both from the Committee on Climate Change and the Office for Budget Responsibility, that investing in clean energy now will pay dividends in the long term.

I am grateful to the Minister and, indeed, to my noble friends. I continue to worry that, as we import LNG, our effective emissions, by passing the problem elsewhere, are significantly higher than they would be using our own production. That is an important fact in this debate. We may have to come back to this issue on Report, but for now, I beg leave to withdraw my amendment.

Amendment 22 withdrawn.

Amendments 23 to 34 not moved.

Clause 3 agreed.

Clause 4: Financial assistance

Amendment 35

Moved by

35: Clause 4, page 2, line 32, leave out “grant” Member's explanatory statement This would probe into the types of financial assistance which can be provided to Great British Energy by the Secretary of State.

My Lords, I rise to speak in support of amendments tabled to Clause 4 of the Great British Energy Bill, particularly those in my name and the name of my noble friend Lady Noakes. These amendments are crucial as they aim to provide clarity, ensure accountability and protect the taxpayer in what is undoubtedly an ambitious and complex policy area. Let me first address the central issue that these amendments seek to probe: the nature and scope of the financial assistance the Secretary of State can provide to Great British Energy. We all agree that our energy future is crucial, both for achieving net zero and for ensuring security of supply in an increasingly uncertain world. However, noble intentions must be underpinned by rigorous safeguards, and the current wording of Clause 4 leaves far too much ambiguity. Amendments 35, 37 and 38 in my name are designed to question the breadth of the financial powers the Bill affords the Secretary of State. It is entirely appropriate to scrutinise these provisions. The taxpayers of this country, who have faced significant financial pressures in recent years, deserve reassurance that the Government are deploying their public funds prudently. The inclusion of vague terms such as the ability to provide assistance by way of guarantees, indemnities and other financial assistance could allow for open-ended commitments. These are not theoretical concerns. History is replete with examples of well-meaning initiatives that spiralled into financial mismanagement. By narrowing or better defining these provisions, we can ensure that GBE operates within a framework that prioritises efficiency, accountability and value for money. I turn to Amendment 36 in the name of my noble friend Lady Noakes. This amendment questions the inclusion of specific provisions under subsections (2)(b) to (2)(d). These allow for financial support in connection with acquisitions, liabilities or the provision of assets. While there may well be situations in which such support is necessary, we must ask what checks and balances will be in place and what mechanisms will ensure that public money is not used to underwrite reckless decision-making or speculative ventures. These amendments are not designed to obstruct the creation of Great British Energy or its objectives; rather, they are about ensuring that its financial underpinnings are solid, transparent and accountable. British principles dictate that the Government must always act as a careful steward of public funds, balancing ambition with fiscal prudence. It is also worth noting that robust safeguards will strengthen the Bill. Clear financial rules do not hamper innovation; they foster confidence for investors, for industry and for the British people. In conclusion, I urge the Government to take seriously the concerns raised by these amendments. By supporting them, we send a clear message that while we are committed to achieving our energy goals, we will not do so at the expense of fiscal responsibility. The energy transition must be sustainable, in not only environmental terms but economic ones. I beg to move.

My Lords, in this group I have Amendment 36, which partially overlaps Amendment 37 from my noble friend Lord Offord of Garvel. My noble friend asked some general questions about the financial assistance clause. My Amendment 36 is somewhat narrower: it is trying to find out exactly how paragraphs (b) to (d) actually work. I understand how paragraph (a) works: the Secretary of State gives money to Great British Energy, or possibly lends it money, or guarantees or indemnifies something that Great British Energy does. However, when we get to paragraph (b), somehow the financial assistance is provided by the Secretary of State acquiring shares or securities, but Great British Energy does not appear to be involved at all in that transaction.

21:00:00

Similarly, the next paragraph seems to involve the acquisition by the Secretary of State of an undertaking or assets. Again, how is Great British Energy involved? Since, in Clause 4, financial assistance has to be provided “to” Great British Energy, it is a complete mystery to me how the construct of subsection (2) provides that the acquisition of assets or shares can be financial assistance “to” Great British Energy, as the nexus to Great British Energy is not established in any way in that subsection.

I have to say I am completely defeated by Clause 4(2)(d) when it says that financial assistance may be “pursuant to a contract”. What kinds of contracts are we talking about? Does Great British Energy have to be party to the contracts or not? I am mystified by it.

We can contrast this with the much simpler formulation in the UK Infrastructure Bank Act 2023. That provides a much more straightforward framework, because the Treasury has a clear understanding of what financial assistance is and how it is to be provided. The drafting of Clause 4 of this Bill leaves me concerned that there is no clear view of what financial assistance is within the Department for Energy Security and Net Zero.

My noble friend Lord Offord has not spoken to his other amendments in detail. I had a number of comments on them, but I imagine that we are trying to speed through to the conclusion of this day’s Committee and I will refrain from commenting further.

My Lords, I support this amendment, but for all sorts of different reasons from those given my noble friend Lady Noakes. I am very worried that this money will be wasted. At the end of the day, there is a whole mass of commercial companies out there that are more than happy to invest in energy projects of one sort or another as long as they show a return. Why we need taxpayers’ money is slightly beyond me. I do not quite understand why that will make a big difference, unless the taxpayers’ money goes into projects that are completely uncommercial and therefore lose money for the taxpayer. This comes back to the remarks I made earlier about the Government trying to pick winners. They have no record of success on this whatever. Indeed, if Ministers were so good at picking winners, no doubt they would be doing it commercially somewhere else and not bother to be in this place. It worries me that, at the end of the day, they will be left with nothing but the non-commercial aspects of development of energy projects rather than those that work and make money, because if they work and make money, the private sector will invest in them anyway. I would like to know the Minister’s view on this, because it strikes me that there is a contradiction in terms. There are not going to be a mass of profitable projects that Great British Energy can invest in; there will merely be those that people say are not profitable and do not work. Therefore, the only way of getting them going is to shove taxpayers’ money into them and probably lose it. That is why I support my noble friend’s amendment.

My Lords, before I move on to the substance of the quite extensive amendments, let me say that this has struck me as being a very constructive and interesting debate, with some genuinely deeply interesting contributions. For those of us who served in the House of Commons—I was there for 22 years, and I am fairly new here—what is striking is that the way of working here seems to be that we have confrontation only when it is necessary. For those who do not know, at the other end of the Corridor, it tends to be the other way round; you have confrontation whether you need it or not. Amendments 35, 36, 37 and 38 in the names of the noble Lord, Lord Offord, and the noble Baroness, Lady Noakes, seek to understand how the specific mechanism envisaged in this clause might be used and why it represents financial assistance. The Government have committed to capitalise Great British Energy with £8.3 billion, as we are all acutely aware, over this Parliament. Clause 4 gives the Secretary of State the power to provide financial assistance to Great British Energy—simply put, to allow the Secretary of State to fund the company. Subsection (2)(a) allows the Secretary of State to provide financial assistance in the form of a grant to Great British Energy. That provision might be used while Great British Energy is in its initial set-up phase, and before it can undertake revenue-generating activities. It could also be used in circumstances where the Secretary of State required Great British Energy to undertake non-revenue-generating activities. At Second Reading, and in conversations inside and outside the Chamber, noble Lords have asked how Great British Energy will be able to raise equity. Subsection (2)(b) allows the Secretary of State to acquire shares in Great British Energy. This will be an important mechanism by which the Secretary of State will fund Great British Energy through this kind of equity injection. This method has been used to fund other public bodies, such as the formerly publicly owned but no longer publicly owned Green Investment Bank. Great British Energy must be wholly owned by the Crown, so it will not be possible for other parties to acquire shares. Subsection (2)(c) allows the Secretary of State to acquire assets on behalf of Great British Energy. This provision might be used while Great British Energy is in its initial set-up phase, before it can undertake its own acquisitions. It could also be used in circumstances where it might be more appropriate for an asset to sit on the balance sheet of the Department for Energy Security and Net Zero—or DESNZ, to use one of the worst acronyms I have ever heard—rather than on that of Great British Energy. Subsection (2)(d) allows the Secretary of State to enter into contractual arrangements with Great British Energy. This might be used where Great British Energy acts as an agent of the department under a contractual arrangement; for example, to deliver a support scheme. Subsection (2)(e) allows the Secretary of State to incur expenditure on behalf of Great British Energy, similarly to how I have already set out with regard acquiring assets. This provision might be used while Great British Energy is, again, in its initial set-up phase, before it can undertake its own acquisitions and operations, and/or where it might be more appropriate for expenditure to sit on the balance sheet of DESNZ rather than on that of GBE. Similar provisions can be found in other legislation; for example, in Sections 320 and Section 129 of the Energy Act 2023, the latter regarding financial assistance in respect of carbon capture and low-carbon hydrogen production. There is therefore nothing unusual about the inclusion of these forms of assistance. Amendment 39 in the name of the noble Baroness, Lady McIntosh, who I am glad to see is now in her place, seeks to make the provisions of Clause 4 regarding the ways in which the Secretary of State can provide financial assistance to GBE subject to a condition that a plan be developed for the transition to clean energy. We must resist this amendment because it is not needed and would produce what could be perceived as an unhelpful result, although I appreciate that the noble Baroness may simply be probing the Government’s priorities in providing financial assistance to GBE. Her amendment would mean that the Secretary of State would have no means of providing funding to GBE until the condition had been met and would, in effect, prevent the company being set up, recruiting any resources or undertaking any of the general activities required to create a new business. This would be a highly unusual provision and would curtail GBE’s ability to operationalise its activities through lack of financial assistance. We have already set out GBE’s mission and five functions in its founding statement. Its mission is to drive clean energy deployment to boost energy independence, create jobs and ensure that UK taxpayers, bill payers and communities reap the benefits of clean, secure, homegrown energy. I am happy to reassure the noble Baroness that in due course GBE will clearly set out plans as to how it will contribute towards the transition to clean energy and the nature of interventions in specific sectors. Amendments 40, 41, 42, 44, 45 and 108 are in the name of the noble Lord, Lord Offord. Amendment 40 requires any financial assistance to GBE to be included in the national debt. I am happy to assure the noble Lord that this is the case. Therefore, the amendment is superfluous to the situation. As a company wholly owned by the Secretary of State, GBE will sit fully within the consolidated accounting boundary of DESNZ. It will be on the department’s balance sheet and funds provided to it will be shown transparently through not just GBE but the department. Similarly, investments in projects or businesses made by GBE will also be shown in its annual report and on its balance sheet. Amendment 41 seeks to require that GBE cannot sell shares without the approval of Parliament. Clause 1 already requires that GBE must be wholly owned by the Crown. It is entirely appropriate for that to be the case and for the Secretary of State to be the sole shareholder—we debated that earlier this evening. GBE will not be able to sell its shares to a third party, so the amendment is not needed. If the amendment also includes the Secretary of State as a party who may acquire further shares in GBE—which, as set out in Clause 4, is one of the means by which the Secretary of State may provide financial assistance to the company—it is not necessary to require additional parliamentary approval for these individual issuances of share capital, not least because Parliament’s approval is already being sought through the Bill to allow the Secretary of State to provide financial assistance to GBE. Amendment 42 seeks to limit financial assistance to GBE, above the announced commitment of £8.3 billion, without laying regulations approved by a resolution of each House. I again resist this amendment, as there are existing parliamentary controls and processes if any additional financial assistance were considered for GBE in the future. Any spending of public money requested by the Government must be voted for in the other place. There is an annual process that we are probably all aware of: the estimates cycle. Although I acknowledge that your Lordships’ House has no role in the estimates process directly and passes supply and appropriation Bills without debate, the other place provides the required degree of scrutiny, including the use of Divisions. Amendment 44 would require the Secretary of State to produce an annual report on all financial assistance provided by GBE and to lay it before Parliament. I resist this amendment because, again, it is unnecessary. The reporting requirements upon GBE are already sufficient to achieve the objective of the noble Lord’s amendment. Detail on any financial assistance received from the Secretary of State will be included in the accounts of GBE, submitted as part of its annual report and accounts, as per its obligations under the Companies Act 2006. Amendment 45 requires the Secretary of State to make regulations, to be approved by both Houses, to define the conditions that the Secretary of State may impose on financial assistance provided to GBE. I again resist this amendment. It is right that the Secretary of State can set out appropriate conditions for financial assistance provided to the company, but it would create a great deal of inflexibility if the Secretary of State were required to itemise any potential conditions in regulations. Where conditions for financial assistance are occasionally outlined in legislation, these are typically not limiting, as is the case in sections of the Energy Act 2023 relating to Great British Nuclear—GBN. In that case, Section 320 details financial assistance to GBN, and subsections(3)(a) and (3)(b) stipulate some potential conditions. However, that list of conditions is explicitly exhaustive and their application is left to the discretion of the Secretary of State. The Energy Act provides some good examples of the types of conditions that the Secretary of State may decide to put in place for GBE, but it is important that the legislation grants flexibility to the Secretary of State not only to provide financial assistance in any manner but to set any conditions deemed appropriate. I assure the noble Lord that, while there is a broad power, it will of course be subject to the normal spending and budgeting controls. It will be subject to parliamentary scrutiny through the estimates process and to HM Treasury financial delegation controls, which are applicable to all government departments and tailored to mitigate specific risks, and it will be overseen by the accounting officer of the department, who can be called before various Select Committees, particularly the Public Accounts Committee. Amendment 108 in the name of the noble Lord, Lord Offord, seeks to add a new clause allowing the Secretary of State to limit the ability of GBE to finance itself through borrowing. Noble Lords will be aware that, as a publicly owned company, GBE will not be permitted to borrow money from commercial bodies without explicit permission from His Majesty’s Treasury. Generally, the Exchequer can always borrow money more cheaply than financing from the private sector. If circumstances were to change and GBE received such permission, then, because it is a public sector body, any borrowing by Great British Energy would appear as a liability on the Government’s balance sheet and therefore would be transparent and visible to any interested party, including us.

21:15:00

I would be most grateful if the Minister could answer my question. Is there not a danger that, if there is a profitable energy project, the private sector will pick it up and make money on it but, if it is much dodgier and more speculative, and it might lose money and the risk is much higher, GBE will be left with it and probably lose money for the taxpayer?

I see the point the noble Lord is making, but that is a matter for the board. I have a certain degree of faith in the Secretary of State and we have an extremely competent chair with a well-proven track record. In due course, we will hopefully have a board with a similar track record. I do not think we will be dealing with the sort of people who fritter money away because they happen to fancy it. But that is a matter for the board of GBE.

At the outset, the Minister said that Great British Energy was going to be capitalised at £8.3 billion. That formulation was used in the manifesto, the July statement, et cetera. He then seemed to imply that the amount of financial assistance given under Clause 4 was not within the £8.3 billion. Could he clarify whether it is or not?

Yes, it is within the £8.3 billion.

Perhaps I could take us on to another aspect of the £8.3 billion. Helpfully, the noble Lord confirmed in response to my noble friend Lord Offord’s Amendment 40 that financial assistance would be included in general government debt, so we expect to see the £8.3 billion in the measurement of debt. At Second Reading, I raised the issue that I could not see the £8.3 billion in the Budget Red Book and therefore within the forecasts produced by the OBR for government debt—one of the key items in the Chancellor’s fiscal rules. I failed to ask the Minister for direct confirmation of that at the time. I do so now: is the £8.3 billion included in the current OBR forecasts for government debt?

As far as I know, the answer to that question is yes. That is to the best of my knowledge. If it is not, I will have to write to the noble Baroness.

I would be very grateful if the noble Lord would write, because it is very difficult to see the £8.3 billion. The £125 million for 2025-26 is visible in DESNZ’s departmental numbers, but it is not clear that anything else is. If the Minister is right, there is no problem. If he is wrong, it looks like another potential black hole in the nation’s finances—one wholly of this Government’s making. So it is important that we sort this out.

I have answered the noble Baroness’s question to the best of my ability; I will write to her.

I thank the noble Lord for his response to these amendments. I reiterate that the core aim of these amendments is to protect the taxpayer, ensure proper scrutiny and secure the financial integrity of Great British Energy, so I am sure we will come back to that on Report. I am very taken with the advice given by my noble friend Lord Hamilton of Epsom, that nationalised industries do not have a great track record of producing profits and returns for the taxpayer. In the meantime, I beg leave to withdraw the amendment.

Amendment 35 withdrawn.

Amendments 36 to 42 not moved.

Amendment 43

Moved by

43: Clause 4, page 3, line 5, at end insert— “(6) Financial assistance under this section must not be provided if there exists credible evidence of modern slavery in the energy supply chain of any company designated Great British Energy.”

My Lords, in moving Amendment 43, I thank the noble Baroness, Lady Kennedy of The Shaws, the noble Lord, Lord Blencathra, and the right reverend Prelate the Bishop of St Albans for their support. I thank the noble Earl, Lord Russell, for indicating his support and that of his colleagues. I in turn am very happy to support his Amendment 100, which is grouped with Amendments 43 and 109. I begin by thanking the Minister, the noble Lord, Lord Hunt of Kings Heath, for making good on his promise of a meeting to discuss this amendment, and for the involvement at that meeting of the Inter-Parliamentary Alliance on China. The noble Baroness, Lady Kennedy, is co-chair of IPAC with Sir Iain Duncan Smith, Member of Parliament. He, she and I are all sanctioned by the People’s Republic of China with four other parliamentarians. The noble Baroness, Lady Kennedy, regrets being unable to be here this evening. During the meeting with the noble Lord, Lord Hunt, we discussed a number of questions I had raised at Second Reading. I would be extremely grateful if, when he comes to reply this evening—if he is in a position to do so—he could answer the question I put to him about the Foreign Prison-Made Goods Act 1897. In addition, can he say what assessment he and his officials have made of the implications of the Proceeds of Crime Act, which in the context of the Uighurs has been to the Court of Appeal on other issues, and for that matter of compatibility with the European Convention on Human Rights? I mention that as a member of the Joint Committee on Human Rights, which is about to be reconstituted tomorrow. I hope it will look at this question of human rights compatibility. I should also mention the reports that have appeared on BBC World in the last couple of days. One of those reports concerns tomato purée being sold in the UK under the false label of being Italian, when it was actually made by slave labour in Xinjiang. Reports included details of Uighurs who were beaten and subjected to electric shocks for not meeting their targets. Last night, “Panorama” reported that other Uighur Muslims told BBC Eye—the World Service investigations unit, made possible by a grant from the FCDO—that if they failed to pick 450 kilograms a day, they would be strung up by chains from the ceiling and beaten until they fainted. The BBC showed huge factories linked to the detention camps, with millions of square feet of space. It is easy to imagine solar panels being made in such places, which of course are not open to inspection. They are part of a vast collocated complex, which aims to undercut all competition and replace capacity, crucial to domestic and military needs in the United Kingdom, with a world dependent on an authoritarian state with hegemonic ambitions. This amendment returns to the question that I raised at Second Reading and poses a simple question to the Committee: do we want a slavery-free green transition, or are we content to allow the laudable aims of the Government to be achieved through forced labour? Some noble Lords may disagree with the framing of the question, perhaps because they are fearful of overstatement. Unfortunately, as I have just described, the reality is that stark. My argument revolves around the following three predicates. First, China dominates much of the renewables supply chain—an issue that was raised earlier in our debates by the noble Lord, Lord Hamilton, and others. Secondly, forced labour is widely and credibly demonstrated to be present throughout the Chinese renewables supply chain. Thirdly, net-zero targets are unachievable without Chinese-made renewables. Therefore, the argument runs that 2030 cannot be achieved without slavery. Let me unpack those predicates, beginning with China’s dominance. According to the International Energy Agency: “Solar … is on course to account for two-thirds of this year’s increase in global renewable power capacity and further strong growth is expected in 2024”. Indeed, the Minister referred to that in earlier exchanges. The International Energy Agency also said: “China has invested over USD 50 billion in new PV supply capacity—ten times more than Europe—and created more than 300,000 manufacturing jobs across the solar PV value chain since 2011. Today, China’s share in all the manufacturing stages of solar panels (such as polysilicon, ingots, wafers, cells and modules) exceeds 80%. This is more than double China’s share of global PV demand. In addition, the country is home to the world’s 10 top suppliers of solar PV manufacturing equipment”. This is a concerning picture. Yet this should not come as any surprise. It is no secret that China has, for a long time, wished to develop strategic monopolies over the renewables sector, together with other areas of critical infrastructure. As I have argued here before—some might say rather tediously, and I apologise if that has been the case—we have allowed ourselves to become more and more dependent on the CCP regime as our own national resilience has simultaneously been emasculated. As recently as 2020, Chairman Xi Jinping gave a speech to the seventh session of the Communist Party’s finance and economy committee, in which he said that China will aim to form a counterattack and deterrence against other countries by fostering killer technologies and strengthening the global supply chain’s dependence on China. The problem is broader than photovoltaics. The production of rare earths, which noble Lords will know is essential to the renewables supply chain, is again utterly dominated by China. As far back as the 1990s, Deng Xiaoping himself is reported to have said: “The Middle East has oil, China has rare earths”. A report by the Oxford Institute for Energy Studies says that “China dominates the supply chain, accounting for 70% of global rare earth ore extraction and 90% of rare earth ore processing. Notably, China is the only large-scale producer of heavy rare earth ores. This dominance has been achieved through decades of state investment, export controls, cheap labour and low environmental standards”. It is not just think tanks that are exercised about the degree of UK renewables market exposure. As James Basden, co-founder of Zenobē, said last year, China controls “the supply chain all the way from the minerals through to assembly and distribution. That means both our power sector and automotive sector are very dependent on Chinese products”. Suffice it to say, nobody disputes that China has a stranglehold on the renewables supply chain. I turn to my second predicate: forced labour is unavoidable in the renewables supply chain. Forced labour is widely and credibly demonstrated to be present throughout the Chinese renewables supply chain. The problem is especially pronounced in the solar supply chain. According to Jenny Chase, the head of solar analysis at BloombergNEF: “Nearly every silicon-based solar module—at least 95 percent of the market—is likely to have some Xinjiang silicon in it”. Why would it be a problem for 95% of the market to have Xinjiang silicon? First, it is important to understand that polysilicon material is crucial—it is the single primary material needed to produce most solar panels. Solar panels that do not use polysilicon enjoy a negligible share of the global solar-power market. Most crucially of all, according to a 2023 report by Crawford and Murphy, all manufacturers of this material in Xinjiang are tied to Uighur forced labour. The reason for this is that the entire process used to create metallurgical-grade silicon from mining to production is highly dependent on state-sponsored labour transfer programmes.

21:30:00

In 2021 Murphy and Elma published their landmark report, In Broad Daylight, which I cited at Second Reading, in which they set out the connection between labour transfer schemes in China and the solar industry. The report names a number of companies using labour transfer schemes. In the years following that, the problem has only got worse. The 2023 report, Over-exposed, says:

“None of the companies that were engaged in state-sponsored labour transfers in 2021 has announced any changes to its recruitment methods or shown any resistance to participation in the PRC Government’s programmes. Indeed, since that time, the PRC Government’s labour transfer programme has only increased in scale and the pressure on companies to absorb the workers the state deemed to be surplus remains high”.

The report names Canadian Solar, JA Solar, Jinko Solar, LONGi Solar, Maxeon Solar Technologies/SunPower, Meyer Burger Technology AG, Qcells, REC, Tongwei Solar, and Trina Solar. All companies were found to participate in state-imposed forced labour schemes. I note here that Canadian Solar was a major beneficiary in the recent solar development announcements made by the new Secretary of State. I note, too, that all the information used to compile these important reports comes from publicly available documents, many of which are Chinese government documents.

And what exactly are these labour transfer schemes that we would be signing up to and continuing to invest British taxpayers’ money in? The PRC has placed millions of citizens from the Uighur region into what it calls “surplus labour” and “labour transfer” programmes. Local governments and labour agencies are required to meet quotas for these programmes. As of September 2020, the Government of the Xinjiang Uigur autonomous region claims to have placed 2.6 million Uighurs and others in these state-sponsored programmes. In 2021, the Government reported as many as 3.2 million people transferred, and it appears that the programme is growing significantly.

Those who are conscripted into the programmes are compelled to transfer to work in farms and factories across the Uighur region, as well as into the interior of China. For those who do not come directly from the internment camps, the Government required that at least one person from every household in southern Xinjiang accept a state-mandated labour transfer to a factory or farm. And in December 2021, government directives required that all people who were able to work must be in some form of work. The PRC claims that these labour transfer programmes are part of a national campaign for poverty alleviation. However, the programmes involving Uighurs and other minority citizens operate differently from other poverty-alleviation programmes throughout China, because the constant threat of internment makes refusing the state-sponsored work placement impossible for individuals from the Uighur region.

Labour transfers are deployed in the Uighur region within an environment of unprecedented fear and coercion. Refusal to participate in any government programmes, such as labour transfers, for reasons perceived to be religious in any way is viewed as equivalent to aligning oneself with the three evils of separatism, terrorism, and religious extremism. Thus, anyone who refuses to work or attempts to walk away from their job risks internment or imprisonment. Therefore, the programmes are tantamount to the forcible transfer of populations, forced labour, human trafficking and enslavement by international definitions and protocols. I place on record here my gratitude to the Helena Kennedy Centre at Sheffield Hallam for its excellent brief on this point.

I turn to the third leg of the argument, namely that renewable targets are currently unachievable without slavery. On the face of it, the arguments seem to stack up worryingly. China controls the supply chain and state-imposed forced labour is present throughout it. How, then, will we meet our 2030 targets without slavery? The conundrum is that we appear to need Chinese solar to meet our climate targets, but Chinese solar is badly tainted, as I have described, with modern slavery.

This is not just about modern slavery and Uighur genocide: the CCP regime is the world’s biggest polluter, and it uses the Uighur region as its national hub for oil, gas and coal, fuelling their factories with cheap coal. So, the solar panels of Xinjiang are not only made by slave labour but have a higher carbon footprint than those manufactured elsewhere in the world.

So, what do we do? Despite this deliberately created monopoly, built on the broken backs of slaves, we do not have to become complicit. Other countries are facing the same dilemma and are acting to address it. German solar companies are calling on the German Government to support the domestic solar industry and help resurrect it. The US Government have included a ban on imports from a silicone producer in Xinjiang. Canada has banned the import of solar panels from specific Chinese companies, while Australia has called for more local renewable energy production and manufacturing and a “certificate of origin” scheme to counter concerns about slave labour.

What is clear is that if democratic nations like ours are to achieve decarbonisation, this will need a mix of approaches: developing alternatives not dependent on polysilicon, rebuilding domestic solar supply chains, focusing procurement on companies that have shifted supply chains out of Xinjiang, and developing better tools for reliable sourcing.

All this hinges on our Government insisting that they will not be purchasing solar panels from companies that use slave labour, prioritising instead ethical sourcing and labour practices and recognising that such firm action is the way to create demand for responsible production.

I hope that I have not exhausted the Committee, but these are crucial questions, and they involve much of the £8 billion that we are setting aside for these programmes. Rebuilding our national resilience and reducing our dependency on authoritarian states who threaten our freedoms should be in the DNA of every policy the Government promulgate. I beg to move.

My Lords, my Amendment 100 seeks to insert a new clause after Clause 7 that would require Great British Energy to verify its supply chain in respect of unethical practices and to attempt to engage in ethical supply chain practices only. I will also speak in favour of the principles contained in Amendments 43 and 109 in this group, moved by the noble Lord, Lord Alton, and supported by others. To be clear, I believe in people and planet, and we should not have to choose one or the other. The two are intertwined and co-dependent. Our goal of reaching net zero must not come at the expense of supporting repressive regimes which do not support the human rights of their own citizens, or on the back of slave labour. The truth is that it is certain that a proportion of the supplies and materials used in this country as part of our efforts to decarbonise have unknown ethical origins or, if we look more closely, are probably produced in regimes with modern slavery practices. Polysilicon manufacturers in China account for some 45% of the world’s supply, and some 80% of the world’s solar panel manufacturing. As the noble Lord, Lord Alton, alluded to, Sheffield Hallam University has linked forced labour in China’s labour transfer programme directly to the global supply chain of solar panels. Some 11 companies were identified as engaging in forced labour transfer, including all four of China’s largest polysilicon producers. Some 2.7 million Uighurs are subject to state detention and coerced work programmes. The combination of unethical practices, cheap labour and deliberate foreign policies means that China controls much of the world’s rare earth materials and manufacturing that is necessary to produce solar panels. China built more renewable technology than the rest of the world combined last year. But China is still opening and highly dependent on coal mines. It is time for China itself to choose which side of the green revolution it is on. It is not in our national interest to continue with such foreign power dependence in order to secure our net-zero goals. What actions are the Government considering or planning to undertake, along with our allies and partners, to verify supply chains and build our own manufacturing capacity, particularly for solar panels, so that we are not dependent on foreign countries for the materials we need to decarbonise, and so that we can be certain that the products we use are not the result of human suffering? I hope the Prime Minister raised these important issues in his recent meeting with the Chinese President. My amendment would place a duty on GB Energy to verify and engage in ethical supply chain practices. This is not the end of the journey, but it is a start. Of course, these problems extend way beyond GB Energy and these measures should be implemented nationally. Amendment 43 says that no financial assistance must be provided “if there exists credible evidence of modern slavery in the energy supply chain”. Amendment 109 calls for a warning to be placed on any products sourced from China that are used by GB Energy. Although I support the spirit and intention of both these amendments, my worry is that the Government will not be able to support them and that they will fail. My fear is that if Amendment 43 passed it would put GB Energy at an unfair disadvantage in relation to other competitors in the industry operating in the UK. For this reason, the Government will most likely reject it. On Amendment 109, I expect that the implication of labelling these products might simply be to prevent their purchase by GB Energy, while other competitors in place in the UK marketplace without this labelling requirement would be able to continue their supply. Again, my worry is that this would do more to put GB Energy at a disadvantage versus its competitors operating in this country. The Government will probably reject the amendment on those grounds. My hope is that my amendment or a newly tabled one on Report might help us to find a way forward together on this important issue, which we all need to make progress on. To be clear, this issue goes well beyond GB Energy, and the real long-term solutions to it sit with the verification of supply chains, strong and determined diplomacy, the creation of and investment in solar panel manufacturing on our own or along with our allies, or the research and development of new forms of manufacturing processes for these technologies. These are essential issues, but I suspect we will need to engage constructively together to find a way forward prior to Report, and that the solution, ultimately, goes beyond the scope of the Bill and GB Energy.

My Lords, I thank the noble Lord, Lord Alton of Liverpool, and the noble Earl, Lord Russell, for their amendments. We all agree that modern slavery is one of the great scourges of our time. It is estimated that tens of millions of people are trapped in forced labour worldwide, many of them in sectors tied to energy production and manufacturing. Indeed, as the noble Lord and the noble Earl pointed out very eloquently, renewable energy technologies such as solar panels rely on materials such as polysilicon, much of which is sourced from regions where reports of forced labour and human rights abuses are widespread. These amendments seek to ensure that GBE operates with integrity and accountability in its supply chain practices. Each amendment addresses a crucial aspect of ethical responsibility, and together they would bind the Government to ensure clean energy does not come at the expense of human rights, ethical labour practices or transparency. I encourage the Government to look at this matter carefully. Can the Minister explain what measures will be put in place to ensure that there is oversight of Great British Energy’s supply chains? If Great British Energy is to represent the values of this nation, there is a strong case for tougher measures to prevent public funds being spent in a way that supports or sustains supply chains that exploit human beings. On Amendment 109, while I recognise the sensitivity and complexity of this issue, it is crucial that we approach it with transparency and courage. Consumers and stakeholders have a right to know the origins of the products they use and the conditions under which they are made. I hope the Minister will listen carefully to the arguments made on this matter; we on these Benches will be very interested to hear his reply. As a publicly backed entity, Great British Energy has an opportunity to set an example and be a model to other countries. I am sure the Government agree there are opportunities here and we look forward to hearing their response.

My Lords, I thank the noble Lord, Lord Alton, for his expert introduction to the amendment. I also thank the noble Earl, Lord Russell, for his wise comments. I say to the noble Lord, Lord Offord, that we are, of course listening very carefully to this important debate, and I have no doubt whatever about the gravity of the issue. The amendments seek to highlight the importance of ensuring that our supply chains are protected from forced labour, and I wholeheartedly support this.

21:45:00

As a Government, we are committed to tackling the issue of forced labour in supply chains, including the mining of polysilicon used in the manufacture of solar panels. I refer to guidance issued by the last Government, published in July 2023, which highlighted the risk of doing business in Xinjiang. It urged businesses with supply chains in this province to exercise caution as they may

“face particular reputational, economic and legal risks, due to extensive and credible evidence of forced labour programmes, targeting Uighur and other ethnic minorities.”

There is, of course, also the enforcement action which can be taken against those who fail to report, as required under Section 54 of the Modern Slavery Act.

Great British Energy will be expected to respect human rights under the Human Rights Act. It will be subject to the existing provisions in legislation on forced labour supply chains under the Modern Slavery Act 2015, and under the Procurement Act 2023 when this is fully in force in February 2025. The noble Lord, Lord Alton, asked about another piece of legislation. We are still working on it, and I will definitely come back to him with a response.

The Procurement Act, which the noble Lord, Lord Alton, and I happily debated, will strengthen public sector contracting authorities to exclude suppliers and disregard their bids where there is sufficient evidence of modern slavery, which extends to supply chains across all countries, including China. This will apply whether or not there has been a conviction. GBE will also be committed to building supply chain activity in the UK to accelerate the deployment of key UK energy projects. Under the Procurement Act, where Great British Energy is a contracting authority, it will be able to disregard tenders where it is aware of forced labour or modern slavery existing in the supply chain. In addition, Section 54 of the Modern Slavery Act 2015 requires companies with a turnover of £36 million or more to publish an annual modern slavery statement setting out steps which they have taken to prevent modern slavery in both their operations and supply chains.

There are, in addition, other legal mechanisms. The UK supports voluntary due diligence approaches taken by UK businesses to respect human rights and the environment across their operations and supply relationships, in line with the UN guiding principles on business and human rights and the OECD guidelines on multinational enterprises. In summary, the Government expect UK businesses, including Great British Energy, to do everything in their power to remove any instances of forced labour from their supply chains, and they should not approve the use of products from companies that may be linked to forced labour.

I turn to the issue raised by the noble Earl, Lord Russell. Clearly, forced labour in supply chains is wide ranging in nature. The Bill, with its relatively narrow focus on setting up an operationally independent company and on making the minimum necessary provision for that purpose, is not the appropriate vehicle for tackling this issue. However, I want to assure the noble Lord, Lord Alton, that we are committed to tackling forced labour in supply chains. We have recently announced the relaunch of the solar task force, which has previously focused on identifying and taking forward the actions needed to develop resilient, sustainable and diverse supply chains free from forced labour. This is obviously very important, given our ambitious target to increase our solar capacity by 2030, to which the noble Lord, Lord Alton, referred.

The UK’s main solar industry trade association is leading the industry’s response by developing and piloting the Solar Stewardship Initiative to further develop a responsible, transparent and sustainable solar value chain. The UK Government supported this effort by co-sponsoring the development and publication of Action Sustainability’s Addressing Modern Slavery and Labour Exploitation in Solar PV Supply Chains Procurement Guidance. This provides further tools to the industry to ensure the responsible sourcing of solar panels.

In conclusion, we do not think that the Bill is the right vehicle for this but, through the reconvened solar task force, we assure the House that we are working widely across Whitehall and with industry stakeholders to take forward the actions needed to develop supply chains that are resilient, sustainable, innovative and free from forced labour. We will set out these actions in the solar road map, which is expected to be published in spring 2025.

In the meantime, I am very happy to engage further with the noble Lord, Lord Alton, and to feed his views into the task force. I hope to make progress.

I am indebted to the Minister—I will come back to that in a moment—and I thank the noble Lord, Lord Offord, and the noble Earl, Lord Russell, for their contributions to this debate. I was heartened by the in-principle support that they gave for what these amendments are seeking to achieve. I pick up a point from the noble Lord, Lord Offord, about the consumer having the right to know the origins of products. I feel very strongly about that and there is much more that we can do about it in due course. I am a free trader, but I am always struck that it was Richard Cobden who drew lines in the sand. He said no to free trade when it came to human beings in the slave trade and no when it came to the opium trade. A three-day debate in the House of Commons led to the overturning of that trade, which to this day has some relevance in the context of China. Consumers can play their part in those activities and campaigns, because they can say no by voting with their feet, but they have to know what the origins are. That means that we have to do more to detect them. The noble Lord, Lord Rooker, often says that we can look at the cotton that comes out of places such as Xinjiang to detect its DNA, or at silicon or other raw materials. And we should go right back in those supply chains. I made the point at Second Reading that 25,000 children are believed to work in cobalt and lithium mines in the Democratic Republic of the Congo. So these are things that matter a great deal to a lot of people in different places, and we can do more about them. I know the Minister is no stranger to these issues. He was right to mention the Procurement Act and the joint efforts we made successfully to raise amendments to that. As he knows, I was involved in the modern slavery legislation in 2015, and I always give great credit to noble Baroness, Lady May, as she now is, who was then the Home Secretary, in bringing forward what was bipartisan and bicameral legislation. Picking up a point that others have made this evening, the noble Lord, Lord Cryer—whose father I had the privilege of serving with in the other place— said earlier today that what he likes about this House is the willingness to try to find solutions, being less confrontational and working with one another to find ways forward. I hope we will try to do that. It is difficult to square the circle. There are contradictions and inconsistencies here; it feels almost like Jekyll and Hyde in some respects. We have the Business Secretary, Jonathan Reynolds, saying: “I give … an absolute assurance that I would expect and demand there to be no modern slavery in any part of a supply chain that affects products or goods sold in the UK … I promise … that, where there are specific allegations, I will look at those to ensure that” this happens. “It is an area where we have existing legislation, and indeed we would go further if that was required”.—[Official Report, Commons, 5/9/24; cols. 418-19.] So I welcome what the Government have been saying, but the reality, when you start to look at supply chains and where these products are made, does not sit very comfortably with those promises. On the basis of what has been said evening, I beg leave to withdraw Amendment 43, and I hope we can find scope to come forward with something on which we can agree at Report stage.

Amendment 43 withdrawn.

Amendments 44 and 45 not moved.

Clause 4 agreed.

House resumed.