My Lords, I apologise to my noble friend the Minister, the noble Viscount, Lord Simon, and to officials for having put down notice of my intention to oppose the Question that Clause 26 stand part so late, but after I studied the amendments that had been tabled it seemed that this gave an opportunity for a wider debate on the whole question of community involvement. I am very grateful to the noble Baroness, Lady Worthington, for recognising that when she moved the previous amendment.
At Second Reading on 18 June, I expressed my worries about the rush to a statutory scheme when the voluntary approach seems already to produce a very good result. Since then, I have read the draft report of the Shared Ownership Taskforce, which was published a week later. One thing is abundantly clear, no doubt because of the terms of reference the task force was given by Ministers: it is wholly based on the voluntary approach to community involvement. There is no mention in the report of legislation or even the threat of it.
Yes, there was at one time pressure from some voluntary organisations to say that this would work only if the Government forced firms to give community involvement, but those organisations are not saying that now. I have had representations from some of them to say no, they are wholly in favour of the voluntary approach which seems to be working. Therefore, why do we need this so-called backstop? The Government’s argument—no doubt, we will hear this again this evening from my noble friend—is that we want the voluntary approach to work. However, to quote the words of the noble Baroness from a few moments ago, only if that approach is not successful would the Government introduce the backstop. I have a number of questions on that.
Before I come to them, I draw the attention of the Committee to the letter written by the Secretary of State last April to the chairman of the task force, Maria McCaffery, and to the task force vice-chairman, Rebecca Willis from Co-operatives UK. The Secretary of State set this out with complete clarity. He wrote:
“It is my view that shared ownership is better achieved through the flexibility and adaptability of a voluntary process and I welcome your efforts to make this a reality”.
Lower down he wrote:
“It is therefore my intention that the backstop powers will not be overly prescriptive. Regarding the timescales … I would like to reassure you that there is no intention that these powers would be exercised before 2016, if they are exercised at all”.
That is the Secretary of State’s letter, and I attach some importance to it because it is clearly what he meant. However, I fear that the reference to “before 2016” rather gives the game away. The Bill will, I hope, be law before the end of this Parliament—probably early in 2015. So what is that reassurance actually worth? It means that the Government really want to introduce this as soon as possible. That is really very bad psychology.
My first question to the Minister is: where is the evidence that the voluntary approach is not working? All the evidence that I have received suggests that it is actually working rather well. The task force itself gives examples of a various models of share ownership in Annexe A of the draft report. They include: split ownership schemes, such as the Baywind Energy Co-operative in Cumbria and the Fens Co-op/EDF scheme near Spalding in Lincolnshire; shared revenue schemes, such as the Falck-Energy4All schemes, with many sites across the country, and Drumlin, with several sites in Northern Ireland; and joint ventures, such as the Neilstan Development Trust-Carbon Free Developments wind farm in East Renfrewshire. This may not be a comprehensive list but it shows that there is a good deal going on.
The question I therefore ask my noble friend is: do the Government keep a register of shared ownership schemes that are being planned, introduced and operated? Can she give me the names of any schemes where shared ownership has been refused? Is there any evidence of that? It may well be that there is, but no one has put that to me. I will be interested in her reply.
The task force’s draft report lays huge importance on the value of flexibility: different solutions for differing circumstances. I have quoted what the Secretary of State said—he did not want to be “overly prescriptive”—but is it not absolutely inevitable that statutory regulations are bound by their very nature to be proscriptive? Examples of this are already in the Bill, such as limits on the size of a scheme, limits on the size of the voluntary share, limits on the kinds of organisation that can represent the community and limits on the nature of the stake that may be held. One only has to read subsequent amendments to realise that these proposals are already causing considerable concern. So the Bill is bound to be proscriptive. The simple fact is that a voluntary system can embrace a wide range of possibilities. Indeed, the noble Baroness, Lady Worthington, and my noble friend a moment ago indicated that there would be a wide range of possibilities for voluntary community involvement.
A statutory system is bound to force future developments into a legislative straitjacket. I cannot believe that that is the right approach. Furthermore, it sends a very clear message—this point has been made to me forcefully by the industry—that, despite all their reassuring words, Ministers simply do not trust the industry to deliver. My noble friend was quite right when she talked about the main motivation for a voluntary approach being to smooth the path to local support and reduce opposition, and there is plenty of evidence for that. That is the main attraction of a voluntary approach for firms and the local community. Yet only a few hours ago I received a note from Ofgem. It made the following point:
“However, we believe there is a question about whether community energy will necessarily provide a positive outcome for consumers”.
For that we wait to see. The note continues:
“We are watching with interest around what happens with the taskforce on community energy (which we do not sit on). We may have concerns about using our enforcement powers around this if the voluntary approach does not work”.
Coming from the main regulator, those are powerful words. I hope that my noble friend will respond to that.
Ministers then say, “Don’t worry. We are going to make this very flexible in all the regulations”, but when are we going to have sight of those regulations? At Second Reading, I asked that we should see the regulations before Report. Since then, we have had the report of the Delegated Powers and Regulatory Reform Committee, which examined the Bill, but not the regulations, of course, because we do not have them yet. It is encouraging to note that paragraph 7 of that report states:
“We accordingly do not find … the arrangements for Parliamentary scrutiny of the exercise of the powers, to be inappropriate. But we are conscious that, even with the amplified outline of the regulatory framework that Schedule 5 affords, the House will not begin to get a clear idea of the real shape and content of what would be a
novel statutory regime until the Government provide details of the provision that would appear in instruments made under clause 26. We therefore express the hope that the Government will make available to the House, preferably before Report Stage, as much as possible of the provision that would be included in the regulations”.
That is a pretty strong recommendation from the committee.
What have we had since then? We were all working very hard on Sunday. I was talking to some of the Minister’s officials about this, and about what I was going to say, and the Minister sent me a letter, also dated Sunday last, in which she answered some of the points that we have made. Under the heading, Future details on the regulations, she writes:
“In terms of providing further details on the regulations, as my officials explained, we are strongly supportive of the voluntary approach to shared ownership and would not want to prejudice the models and approaches coming forward by drafting any secondary legislation now. The provisions as they stand retain the future flexibility in order to allow us to respond to changing circumstances, and in particular to take on board any lessons from the voluntary approach”.
I think that means we are not going to see any regulations before Report. If I may say so with great kindness to my noble friend, I do not think that she is going to get away with that. The House will want to know the details of the regulations that the Government are taking powers in the Bill to introduce. I find this a very difficult situation. So, my next question to my noble friend is: does that response mean that we are not going to see the regulations before Report? I would be grateful if she would give a very clear answer to that.
My Amendment 98AB is grouped with the provision we are discussing. There is to be a framework document but, again, we have not seen it. The draft task force report sets out the timetable for monitoring and review. I will not weary the Committee with that because I am sure that many noble Lords will have seen it already, but it is clear that there is to be a significant process of review before there is any question of introducing the backstop provision. The task force draft report states:
“Six and twelve months after the publication of the Shared Ownership Taskforce’s recommendations”—
that will be this September—
“the Taskforce will conduct reviews of commercial renewable energy developers covered by the voluntary Framework”.
Then, as the noble Baroness has told us, there will be a period of consultation, which will take time, and then there will be a period after the consultation is complete before the Government can possibly produce a response, so there will have to be a period of at least a year, but I would suggest probably two years, before there is any question of introducing a statutory scheme. However, the Bill states that the Government want to have the power within two months of it becoming law. Why on earth do they feel that that is necessary? Two years is plenty of time, and psychologically it would be right for the industry. It would feel that this really is a backstop provision and not something that the department is bent on introducing as quickly as possible.
Indeed, I would go further than that. To threaten the industry that there will be statutory powers—a narrow statutory straitjacket—when it will be pursuing a wide variety of voluntary participation schemes by
local communities seems to be a very dangerous psychological error. I do not think that the Government understand how businesses react to that sort of thing, but they want to do it, and therefore they have taken the powers to do so within two months of the Bill becoming law. I cannot believe that that is the right approach.
Let me make it clear that I totally support the concept of community involvement in schemes of this sort, and indeed I have some sympathy with those who were asking in the last amendment why it was being limited to onshore renewables. We have heard that it may be extended to offshore later. In France, local communities are incentivised for major nuclear developments by being given cheap electricity. It is provided for the whole of the surrounding area. That is an extremely effective form of community involvement. It does not mean ownership, but it is something that provides a considerable community benefit. I am not suggesting that we should necessarily imitate that here, but again I totally support the notion of getting communities involved, as it were, emotionally rather than politically or financially, in the success of local energy schemes. Indeed, as noble Lords have suggested, this might even go wider than energy. However, to hang over the head of industry the threat that if it does not, it will be subject to a legislative straitjacket, is a deplorable misjudgment of the way industry behaves. I look forward to hearing my noble friend’s response.
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