Baroness Taylor of Stevenage (Lab)

My Lords, I thank all noble Lords who have spoken on this group: the noble Lord, Lord Roborough, the noble Earl, Lord Russell, and the noble Baronesses, Lady Pinnock and Lady Coffey. Their amendments relate primarily to the bill discount scheme for communities near new and certain significantly upgraded transmission infrastructure, and other community benefit schemes; these are Amendments 82C to 82E, 83, 83A to 83C, 84, 84A to 84C, 85, 86 and 94. Before I turn to the specific amendments, I say to the noble Baroness, Lady Coffey, that I will not cover business rates retention in my response. That is a bit above my pay grade, and I am afraid that she will have to wait, as we all will, for the Chancellor’s Autumn Statement to see whether she intends to make any changes to that. That is the responsibility of the Treasury. As the noble Baroness is very well aware, there is a redistribution mechanism in the business rates retention, which enables those areas that are less able to raise business rates to benefit as much as some of those that are more able to raise business rates. I am afraid that any adjustments to that are not in my remit, so I will not cover that. I turn first to Amendments 82C, 82E and 83A to 83C, which aim to extend the scope of the financial benefit scheme for people living near new and significantly upgraded transmission network infrastructure to those living near energy generation infrastructure. While I believe that the spirit of these amendments from the noble Baroness, Lady Coffey, is certainly well intended—and the Government are committed to ensuring that communities that host clean energy infrastructure benefit from it, including clean energy generation infrastructure—I must resist these amendments for reasons that I will set out for her. Clause 26 specifically allows for the creation of a bill discount scheme for those living near new or significantly upgraded transmission network infrastructure, with a minded-to position of offering eligible customers a bill discount of £250 per year over 10 years. This ensures that communities living near this infrastructure are recognised for the service they provide the country in hosting the infrastructure and helping to achieve our clean power goals. The clause has been specifically designed to address transmission which, due to its long, linear nature, impacts communities without necessarily providing further benefits, such as local jobs or investment, that other infrastructure probably will bring. If this clause is amended as suggested, it would require further complex and detailed amendments to ensure that it operates effectively for each type of generation infrastructure, delaying the time that it would take for the scheme to be implemented. However, I can inform noble Lords that the Government have already presented proposals to expand the delivery of community benefits to other forms of clean energy infrastructure. On 21 May, we published a working paper on community benefits and shared ownership of low-carbon energy infrastructure, the responses to which are currently under review. Our proposals would require developers of low-carbon energy generation and energy storage infrastructure to contribute to community benefit funds to support families, businesses and local community groups living near these projects. As the noble Earl, Lord Russell, suggested, the scheme could help regenerate our coastal and rural communities—for example, via new community facilities, apprenticeships and education schemes—boosting local economies and growth as part of the plan for change. The paper also sets out how communities could own a stake in renewable energy infrastructure through shared ownership, resulting in profits being reinvested in the community. Through these proposals, we aim to provide communities with consistency and certainty that they will benefit from hosting new generation infrastructure. I hope that the noble Baroness accepts these reasons why these amendments would not be appropriate, is reassured that we are looking into ways to ensure that communities hosting new clean energy-generation infrastructure are properly recognised for the service they are providing to the country, and will agree to withdraw Amendment 82C. Turning now to Amendment 83, tabled by the noble Lords, Lord Roborough and Lord Offord, which seeks to set the discount amount for the bill discount scheme at £1,000 a year for 10 years for households living within 500 metres of eligible infrastructure, I really sympathise with the noble Lords’ intention to ensure that households closest to the new transmission infrastructure benefit, but I am going to have to resist the amendment, for reasons which I will set out. The Government’s minded-to position is to provide electricity bill discounts of up to £2,500 over a maximum of 10 years for households living within 500 metres of new and significantly upgraded electricity transmission network infrastructure. This proposal provides a balance between ensuring that communities are recognised for the role they play in hosting the infrastructure and limiting the additional cost to electricity bill payers in Great Britain from the scheme. We are still conducting final analysis on the overall cost of the scheme. On 8 August, we published a consultation on our current proposals for scheme design, and that consultation is open until 26 September. Final analysis will be published in our impact assessment, alongside secondary legislation. The Government consider that the overall level of benefit ought to be set out at that stage, which will still allow for sufficient parliamentary scrutiny once secondary legislation is laid. I hope noble Lords understand our position on this matter. I look forward to working closely with them at the appropriate time on this important detail of the scheme. I turn to Amendment 84, which seeks to extend the scope of the financial benefit scheme for people living near new and significantly upgraded transmission network infrastructure to those living near onshore wind turbines. I welcome the intent of the noble Lord’s amendment. The Government are committed to ensuring that communities which host clean energy infrastructure benefit from it. Clause 26 allows for the creation of a bill discount scheme for those living near new or significantly upgraded transmission network infrastructure, with a minded-to position of offering eligible customers a bill discount of £250 a year over 10 years. This ensures that communities living near this infrastructure are recognised for the service they provide to the country. While it may seem logical to extend this scheme to other infrastructure, such as onshore wind, the clause has been designed specifically to address transmission, which, as I said, due to its long linear nature, impacts communities without providing further benefits, such as local jobs or investment, that other infrastructure can bring. If this clause is amended to include onshore wind, it would require further complex and detailed amendments to make sure that it operates effectively, delaying the time it would take for the scheme to be implemented. However, I am pleased to inform noble Lords that the Government have already presented proposals to expand the delivery of community benefits to other forms of energy infrastructure, including onshore wind. I spoke already about the paper that was produced on 21 May on the community benefits, and we are reviewing the responses to that. The proposals would require developers of low-carbon energy generation and energy storage infrastructure to contribute to community benefit funds—again, to support families, businesses and local community groups who live near these projects. The scheme could definitely help to regenerate those coastal communities. The paper also set out how communities can own a stake in those. Through these proposals, we aim to provide communities with consistency and certainty. I hope that the noble Lord is reassured that we are already looking into ways to ensure that communities living near new onshore wind generation are recognised for their service to the country. Amendments 82D, 84A and 84B, tabled by the noble Baroness, Lady Coffey, would remove the Secretary of State’s discretion to establish the financial benefit schemes as detailed in Clause 26. They would also ensure that eligible infrastructure projects constructed prior to Royal Assent to this Bill are included within the scope of the scheme. I acknowledge the intention of the amendments: to ensure that the scheme is not confined to those who live near eligible infrastructure built after the Bill is enacted. I must resist this amendment, for the reasons I will set out. The aim of Clause 26 is to ensure that households that will live close to new electricity transmission infrastructure are appropriately recognised for their service. The Government understand that many of these projects are planned over the next few years. It is our intention that the scheme will run for a set period of time, and the Government require the flexibility to review the effectiveness of the scheme and determine whether it ought to continue for a longer period or come to an end after a certain date. Amendment 82D would remove that flexibility and result in greater time and monetary costs to bring the scheme to a close. Additionally, Amendments 84A and 84B would expand the financial benefit scheme by including works which have already been completed. Around twice as much new transmission network infrastructure will be required by 2030 as has been constructed over the past decade. We believe it is only right that this unprecedented increase in the pace of construction is appreciated and that communities are recognised for the service to the country. Extending the scheme to historical infrastructure would be moving away from this purpose. We must also consider the substantial additional cost in extending the scheme in this manner. The increased complexity in identifying many more eligible households, as well as the increase in the number of discounts being paid out, would vastly inflate the cost of the scheme, as well as delay current rollout plans, due to the increased administrative challenges. However, although it would not be appropriate to modify the scheme in the manner that these amendments propose, I am happy to inform noble Lords that the Government are currently finalising details on eligibility for infrastructure where construction has recently commenced, as we recognise that there are projects vital to clean power 2030 that will have begun before the commencement of the scheme outlined in Clause 26. Amendment 84C seeks to prevent the costs of community benefit schemes being borne by energy bill payers. I understand and appreciate the intention of the amendment from the noble Baroness, Lady Coffey, to protect consumers from rising energy bills. However, I will again set out the reasons why I have to resist this amendment. One of the Government’s five missions is to make Great Britain a clean energy superpower. This will boost our energy independence and reduce electricity bills. Our electricity network is key to achieving this. As we increase low-carbon and renewable energy generation, we will need to increase the scale of the transmission network at pace to keep up with demand. It will not be possible to deliver secure electricity supply vital to growth and prosperity without a transmission network that can transport it. This financial benefit scheme aims to increase community acceptability of electricity infrastructure and, in doing so, has the potential to reduce opposition and associated planning delays. The Government’s current intention for the scheme, as outlined in Clause 26, is for the cost to be borne by an obligation on electricity suppliers. However, although they are not mandated to do so, it is expected that suppliers will recoup these costs by passing them on to their customers. For example, the warm home discount scheme is funded via an obligation on energy suppliers that is recouped via energy bills. Using alternatives, such as funding the scheme through Exchequer funding, would not be appropriate, as the bill discount scheme forms part of a broader package which has been developed to improve acceptability of transmission infrastructure, which in turn could help reduce constraint costs, if successful in supporting the accelerated delivery of critical transmission infrastructure. Because of this, the Government believe that it is most appropriate that the scheme should be funded through bills. Preliminary estimates for the cost of both the bill discount scheme and the community funds guidance are around 80p to £1.50 per year per average household electricity bill, although this estimate is subject to change in our future impact assessment, set to be published alongside secondary legislation. Should this community benefit package, alongside our wider package of reforms, succeed in supporting the accelerated delivery of critical transmission network infrastructure, we could avoid up to £4 billion in constraint payments in 2030, compared with the scenario where delays persist. Those costs will be met by the consumers. This is as outlined in analysis from the National Energy System Operator. I turn to Amendment 85, tabled by the noble Baroness, Lady Pinnock. We always enjoy hearing the Yorkshire dimension on our Bills in the House. The amendment seeks to expand the financial benefits scheme from households living near new and significantly upgraded transmission network infrastructure to those living near existing transmission network infrastructure. I acknowledge the good intent behind the amendment in recognising communities that have hosted infrastructure for years. However, for reasons that I will set out, I must resist this amendment.