This report was not approved formally by the Committee prior to the suspension of the Assembly on 14 October 2002, but is published by order of the Speaker.
Committee for Enterprise,
Trade and Investment
Monday 14 October 2002
MINUTES OF EVIDENCE
Energy Bill:
Committee Stage
(NIA 9/02)
Members present:
Mr P Doherty (Chairperson)
Mr Neeson (Deputy Chairperson)
Mr Armstrong
Mr Clyde
Mr McClarty
Dr McDonnell
Mr McMenamin
Dr O’Hagan
Mr Wells
Witnesses:
Sir Reg Empey )
Mr J McKeown ) Department of Enterprise,
Ms H Vaughan ) Trade and Investment
Mr J Wolstencroft )
The Chairperson: I welcome the Minister of Enterprise, Trade and Investment. Mr Jim McKeown, Ms Helen Vaughan and Mr Jim Wolstencroft from the Department of Enterprise, Trade and Investment are also present.
The Minister of Enterprise, Trade and Investment (Sir Reg Empey): I will make a few introductory remarks and then answer Member’s questions. Bringing the Energy Bill to the Committee represents a milestone for the Department; it has been a huge body of work. Now that the Bill has passed Second Stage, it is appropriate to get on with it. Despite the difficulties of the situation today, it is important that we proceed with this to make clear the will of the Assembly with regard to this legislation.
I will briefly address a few matters that were raised during the Second Stage of the Bill. Afterwards, we can use the time to focus on the relevant issues and on concerns that have been expressed about any of the provisions in the Bill.
It was said that we were slavishly following Westminster legislation, but that is not the case. The Great Britain Utilities Act 2000 has been used as a model, although only in certain respects, and it has been tailored to best suit Northern Ireland. Although the provisions in the Energy Bill which establish the new authority here follow that model, I have made it clear that the legislative process will not be used to create a structure anything like that in place in GB. My intention is for the authority here to comprise a very small number of energy experts and for the existing regulator to chair it. Therefore we are not talking about the establishment of a huge organisation. The new consumer representation arrangements are totally different from anything in Great Britain. The Committee and the Department agreed on the form of that representation, and there is good support in the community for it.
There is also the renewables obligation, which is to ensure that, once the necessary amendments are made to the legislation in Scotland and Great Britain, trading of renewables obligation certificates can take place on a UK-wide basis. There are provisions in the Bill that are peculiar to Northern Ireland. Those include the postalisation arrangements and the provisions designed to separate out the systems operator function on electricity and, if required, on gas. Furthermore, a number of matters were raised in the debate, such as the abolition of the Government royalty tax on oil and gas; extension of a climate change levy; exemption for natural gas; and the future of the nuclear industry. All those issues fall outside the scope of the Bill, but I have no doubt that we will pursue them at another time.
The other common theme running through the debate was fuel poverty. Primary responsibility for that lies with the Department for Social Development, which is currently preparing a strategy to tackle the problem. The Department has identified no legislative requirements for implementing such a strategy. However, the Energy Bill rightly identifies consumers with low incomes as a vulnerable group. I referred to that on several occasions in response to Members’ questions.
Another issue raised in the debate was public appointments and how people become eligible for them. That is a huge issue, and it goes to the core of a number of matters, and we have to examine that closely. There is a prima facie case that in our attempts to be fair and open we may have created hurdles that some people, particularly those from vulnerable groups who suffer from fuel poverty, might find hard to get over. We must remember that 170,000 households in Northern Ireland are in that category. I am guessing, but I suspect that if a trawl were carried out, hardly any applications for public appointment posts would come from those households. We have to examine that issue in general, not specifically in this matter.
Electricity prices have caused the greatest concern, and the Department has been railing against those since devolution. Another issue was bonds and spreading costs of the existing generator contracts over longer periods, which is a kind of remortgaging. That may have fallen out of favour because of its "save now, pay later" dimension. However, we are being asked to consider the substitute mortgage option — a levy provision — that would enable existing financing arrangements to be substituted by more efficient deals based on security of revenue stream from customer payments. The provision in clause 31 may offer that facility, and the proponents of this option are examining that. However, in the debate I said that the Department would have to examine that area as the Bill passed through the Committee and beyond.
There are other issues with regard to reducing prices. However, until those have developed into specific proposals, we cannot predict what legislative provision may be required. It may be that adjustments to regulatory arrangements would be sought for the oversight of such a body, but it is too early to predict the implications.
I dealt fully in the debate with the difficult decisions ahead concerning the development of renewables, and that goes to the heart of many Members’ concerns. The Department is continuously asked about renewables and about the setting of targets. I am at one with the Committee on the importance of that matter; however, we need to be clear about the distinction between the provisions in the Bill, which I am satisfied provide a flexible platform on which to build, and targets for renewables. No targets have been set for renewables. Some people have said that it is a done deal, but it is not. The Department is looking at the energy strategy. Having looked at that and carried out consultations, the commitment was that a target would be fixed for later in the year, but that was going to be done after further discussion. Nothing is formally concluded in that matter. The targets will be set out as we move through the strategy.
I also mentioned gas postalisation. The Committee knows that those provisions are causing some concern, and has had correspondence to that effect. A balance must be found between the necessity for provisions to implement postalisation — which is an absolute requirement for the gas project to proceed — and the concerns of the industry if those provisions have to be imposed through licence modifications. This is a complicated issue. The regulator and the Department are working with the parties concerned to see if agreement can be reached.
I have written to the Secretary of State to say that I give the highest priority to the Energy Bill, especially to the postalisation provision. I emphasised that the Bill cannot be abandoned during any suspension of the institutions. The gas project and the construction of the power station at over £200 million are critical, and these requirements are necessary to allow that to proceed. I would welcome the Committee’s support for the provisions of the Bill, regrettably proceeding now by Order in Council, to enable that assurance to continue.
Today, our time will be best spent confirming our joint support for the Energy Bill and identifying and discussing the areas where some adjustments may be required.
Mr Neeson: Minister, thank you for your briefing. During the debate you emphasised strongly that the Committee was considering putting in an amendment relating to some form of financial mechanism to deal with the long-term contracts. It would be helpful if you were to confirm if such an option would be provided in the Bill, even though the option might never be taken up. The Committee completed its report on industrial derating last week. At lunchtime some Committee members met with a major local company, and one issue that was mentioned, and which keeps cropping up, was the high cost of electricity. Therefore it is important that the legislation contains some mechanism to at least provide the option to deal with that.
Sir Reg Empey: There is no ideological problem here. The issue is about finding what works. For a number of years, there has been a linkage and a justification for the industrial derating of the manufacturing sector. Part of the rationale in favour of industrial derating was that electricity prices have traditionally been higher here than they are for our major competitors. Improvements made in the past few years such as interconnection, the Moyle interconnector and gas interconnection have improved the whole structure and environment and will ultimately have a positive impact, as will the construction of new generating plant, which will bring more efficient electricity generation to bear.
Initially, the matter looked pretty simple. A contract extends for "X" amount of years and is financed because a private company must get "X" amounts of return, which therefore adds to the cost. If we bought those contracts at a lower rate we could pass on the savings to the consumer. It looked like a fairly straightforward proposal. However, on closer examination, it is not that simple. I said in the debate that I was open to ideas and that we would consider seriously any of the Committee’s suggestions on the matter. The most important thing is to ensure that consumers are not left with those stranded costs. We have already taken measures to try to avoid that by way of the financial mechanism. We need urgent feedback from members — either in their capacity as former Committee members or as party members — on the provisions in clause 31 because they could go some way towards providing a mechanism. I hoped that we would have had the opportunity to tease ideas out at Committee Stage. Again, there is no ideological problem; it is a question of what will work for us, and more importantly, what will work for the customer.
Mr Wells: I want to pick up on the issue of stranded costs. We wanted the provision to be enabling rather than mandatory. Therefore the final decision on whether to trigger it would be down to the Minister — we thought that would be you, but it will obviously be somebody else now. Are you suggesting that if the Committee can reach a conclusion on this matter today, the legislation will proceed as an Order in Council with a note attached stating that the matter has been agreed?
Sir Reg Empey: First, I cannot guarantee what any successor will do. When we prepared the legislation we were under the cosh of time — we had limited time to prepare a complicated Bill. It became clear during the debate on Second Stage that the Committee would probably make some amendments. The issue was flagged up by several members, and we heard about those concerns on the grapevine. I expected that the Committee would introduce an amendment to which the Department could respond, or that the Department would introduce one to which the Committee could respond, or, indeed, it could even come up at Consideration Stage. Those options were available. The chances of a successor Minister’s including the necessary provision in the legislation would be enhanced if the Committee were clear about what it wants. Such a decision from Committee would be helpful, if that is the direction in which it wishes to move. It is important to get a clear sense of the Committee’s view in Hansard as opposed to delivering letters today. That would be adequate — we do not need to run about with bits of paper today.
I am not totally satisfied that there will be a rush of people to fill the void on the financing side. However, clause 31 enables a levy to be applied. My advice is that the Committee should make its views clear in the Hansard report of this meeting. I have no ideological problem with it. It is an enabling clause. Parliamentary draftsmen are nervous about Government accruing enabling powers unless there is a genuine intention to do whatever the powers would prescribe. That is my only issue with the matter.
Mr Wells: Can we discuss the mechanics of the Bill and how it will be dealt with? This is the last Committee meeting that will be held in this Building for quite some time. It is clear, therefore, that from midnight the Bill goes into an Order in Council situation, straddling the end of devolution and the resumption of direct rule. We were in Coolkeeragh in Londonderry in June, where it was made abundantly clear to us that if postalisation does not go ahead, the gas pipeline to the north-west is simply a dead duck. One of their experts was flown in to tell us to get it through quickly or Coolkeeragh would be doomed. That is being totally blunt about it.
Is there any indication that moving to an Order in Council could delay the legislation? What are the mechanics of getting it through over the next few months?
Sir Reg Empey: No incoming Minister is under any obligation to do anything, Mr Wells. They can leave pieces of legislation half finished if that is what they want. I have emphasised to the Secretary of State the critical nature of the points that you have made. I know that a project that we have all worked on for many years is critically threatened unless there is legislation.
I, therefore, expect and hope, but cannot guarantee, that a successor Minister will wish to take an Order forward. We are in a good position for that to happen because the Second Stage has been completed and the will of the Assembly on the principle has been established. I am glad that this meeting is taking place today, because it would be helpful for an incoming Minister to see that there is widespread support for such a measure.
Earlier this morning I was given reason to believe that I would be consulted on several matters. I would welcome a clear statement by the Committee along the lines expressed by Mr Wells, because I share that view. The more of the Bill that is deemed to be an agreed position, the more of it is likely to appear in an Order in Council.
Any amendment would have to be accepted by a new Minister before an Order in Council is made. As you well know, from the bad old days to which we are unfortunately returning, once an Order in Council is laid it is not subject to amendment. After a debate of an hour and a half, it is take it or leave it. Everything that we want in that Order, assuming the Government will take it forward, must be agreed now. We must insert those amendments before it becomes an Order and is laid before Parliament. Once it goes onto the Floor of the House of Commons, it cannot be amended.
Therefore I would support the Committee in emphasising that. I have already made that clear to the Secretary of State. I have conveyed my views forcibly to the Chairperson and the Deputy Chairperson of the Committee today. They know where I am coming from, and I urge you to proceed this afternoon to get that onto the record.
Dr McDonnell: I welcome the Bill as a good move in the right direction. I wish to digress a little from the content of the Bill. Is there not a strong case for the full-blown energy agency that myself and others have suggested previously? There is a need for aggressive proactivity on the question of energy, as you have shown, Minister. There are questions about the long term, about keeping things going, and about building confidence. Is there not a case to follow that up at some stage? Or is that a bridge too far?
Sir Reg Empey: The member may have answered his own question with his last remark. It is a bridge too far at this stage. We have to distil the matter down to the critical issues. We have already mentioned the critical issues in this Bill. The member has raised his suggestion on the Floor once or twice over the last six or nine months, and the idea is not sufficiently firmed up. We were talking about having this Bill introduced into law by early spring 2003. In view of that parliamentary timetable, there is no way that the issue could be incorporated into any piece of legislation, however meritorious the idea may be.
We would therefore be far better to concentrate on what is deliverable. I strongly urge the Committee to focus on that. By putting certain key issues into the record of your proceedings today, you would demonstrate unanimity of support, albeit with possible qualifications and amendments. The Minister will be provided with the Hansard transcript of today’s meeting. That will ensure a better chance of getting the necessary critical pieces of legislation through. I do not believe that any fresh initiatives have the slightest chance of being implemented within the sort of timescale suggested by the member. Indeed, it has been pointed out to me that, if you introduced new provisions, there would have to be an entire consultation process. We certainly do not have time for that.
Dr McDonnell: I entirely accept that, and I am quite happy for Hansard to record my unreserved support for what we have done here; it is a very large step in the right direction.
Perhaps you might comment on a point which occurs to me again and again. I have scribbled down some of the issues such as renewable energy and fuel poverty. Those are both very much cross-cutting themes and therefore require some sort of cross-cutting agency to drive them forward. Electricity prices generally and the question of bonds are perhaps easily enough dealt with in the Department, and the same is true of gas postalisation. However, I am concerned at not being able to do enough on renewable energy and fuel poverty.
Sir Reg Empey: The Department for Social Development is preparing a strategy; probably no further legislation is required to effect it. Progress is being made, and pilots have already been conducted. One is running in my own constituency. Although I should have preferred the take-up to be better, the outcomes and outputs are extremely positive on an individual level.
I have seen the transformation in people’s lives and health for comparatively small sums of money. If those people enjoy better housing conditions and health, they are less likely to be stranded on hospital trolleys with respiratory illnesses, and so on in the winter months. Virtually everyone who spoke in the debate last week mentioned that at one stage or another. Some statistics describe the number of people who die every year as a result of fuel poverty — effectively dying of cold. The figures are greater than for those who died as a result of terrorism in each of the last 30 years. As a general practitioner, the member will know only too well from his own casebook whether I am right or wrong. There is a wonderful opportunity. If the Assembly is reinstated at some point, it will certainly have an opportunity to do that. It would change people’s lives very dramatically for comparatively small sums of money, something that, in a cost-benefit analysis, would release public money for other purposes.
Dr McDonnell: Is there any way that renewables can be driven forward?
Sir Reg Empey: There are several provisions. The question of opening up a trading zone for the United Kingdom as a whole in renewable certificates will require legislative change in Scotland and England, and the request for that has been put forward to the Scottish Executive and to the Department of Trade and Industry in London. The whole renewables scene is becoming very exciting; however, in the debate we referred to a dilemma. Everyone wants renewable electricity. In fact, more people in Northern Ireland are prepared to pay a premium to get it. Proportionately, more of Northern Ireland Electricity’s customers pay a special tariff than in any other part of the United Kingdom. That indicates a desire for that to happen. Moreover, climate changes may be connected with the way in which we provide our energy sources and how we use or abuse energy.
We must take care not to be overly ambitious when setting targets. Wind will be, and will remain, the major source of renewable energy in Northern Ireland for the foreseeable future. The windmills that capture that energy will be in places of prominence — for example, on top of mountains or offshore. In either case they are in, close to, or adjacent to, areas of outstanding natural beauty and will, therefore, run up against people’s perceived quality of life with regard to issues such as tourism and amenities.
Those are huge dilemmas that we must resolve as a community. Anyone who thinks that that can be done for nothing is mistaken; it is going to cost. As I tried to point out at the Bill’s Second Stage, there are other forms of renewables, such as anaerobic digestion, combined heat and power (CHP) schemes and willow. There are several other issues out there, and they all have their contribution to make. Some of those other forms have the capacity to provide a steady stream of electricity, whereas wind, by definition, is intermittent.
The problem of our ability to distribute wind-generated electricity has not received much attention. That is because its erratic nature — on or off, high or low — requires a huge burden to be placed on the current distribution system. The spillover from the different power plants that produce wind electricity is erratic. That puts a huge strain on the distribution network, which will require reinforcement and a great deal of investment. It could even cost as much to restructure the distribution network as it costs to provide the sources of generation. I cannot stand over that for certain but, as far as I can gather, that is so in the general run of things. We must understand that when setting targets. There is no point in our talking about our uncompetitiveness because of our higher electricity prices if, in the same breath, we impose a significant price increase on our consumers as a result of too high a target for renewables. The balance must be struck. I do not say where that balance is, because we must debate that as a community.
It was my expectation, as we move forward with the development of the strategy, that this debate would take place when we had hard and fast figures on what is involved. I inject that note of caution into the debate because that issue must be dealt with. We are all in favour of renewables, and I am no exception. However, we must take into account what we are asking the consumer to bear.
The Department would argue that the Bill provides a flexible platform so that whatever size of target we set, we have a provision to deal with it. It provides a support mechanism for the renewables obligation so that trading can take place over a much larger area, and it provides an enabling power for even EU trading. We have the geometry much better into place as a result. Basically, the target is a matter of costs and the physical provisions of the grid, rather than with the legislation, and that debate must take place in one form or another. It would have been preferable if we were able to deal with it ourselves. However, we will have to deal with it in a different way.
Dr O’Hagan: I met members of the General Consumer Council to discuss representation for the fuel poor. Notwithstanding the difficulties there, has your Department given any thought to how it could represent the fuel poor?
Sir Reg Empey: Other members have mentioned that matter too. Six members of the General Consumer Council for Northern Ireland currently work with the fuel poor because of the nature of their occupations, and that is coincidental. When we choose members for that council — indeed, a competition is under way for a chairperson — we try to get a broad range of people who understand. Therefore that is already picked up in the criteria for membership. However, that raises a wider point about whether, in setting out the present Peach-type provisions for public appointments and setting out requirements and qualifications, albeit to have fairness and openness, we are allowing a large slice of the community to fall down the grating. That is a wider debate than just energy. It affects public appointments per se.
I had a meeting with Dame Rennie Fritchie, who currently advises the Government on those matters, and I have a feeling that the pendulum has swung too far in favour of complicated procedures and interviews. Sitting before a panel of senior people, even though they may try to be as independent as possible, is an intimidating process. I wonder how many people who are in those circumstances will get past the initial stages of meeting the minimum criteria. How will they cope with the interview process? Yet those are the people with the experience. Even though there are people on the council who faithfully represent the views of the people they encounter in their day-to-day work, the reality is that we will not have the same genuine response and information — however well meaning those folks are — that we might have from someone who is in that position. As a community, we must examine the whole aspect of public appointments. Maybe we need certain derogations to encourage particular groups to get involved. Maybe we should look across the board to see if we can involve people. It is an intimidating and difficult process, even for senior people, whether from a business, trade union or political background
It is not an easy job. Nevertheless, it cannot be left to Ministers or senior officials to pick people at random, however fairly they may try to do that, because they will always be open to allegations of favouritism. As a community, we need to look at all of that and see if we can make it easier for people in those positions to have reasonable expectations of aspiring to hold such a position.
Dr O’Hagan: How much do you think the imminent suspension will change the timetable of the Energy Bill? Will it change it at all?
Sir Reg Empey: With regard to the previous matter the chairperson of the General Consumer Council for Northern Ireland, Joan Whiteside, is willing to talk to any Committee members about appointments. The General Consumer Council for Northern Ireland has a power of co-option for people with particular expertise, but some steer must be given. That may exist in the case of the General Consumer Council for Northern Ireland, but I am not convinced. It is not just an issue for the Department of Enterprise, Trade and Investment; it is an issue for all Departments. Therefore members will have the opportunity to speak to the General Consumer Council about this.
Dr O’Hagan asked how the suspension will affect the timetable for the Energy Bill and what it will mean for getting legislation through. The current session of Parliament comes to an end later this month, and a new session begins with the Queen’s Speech in early November. The Government will not have provisions in their legislative timetable for Northern Ireland business, because they were not anticipating having to do so. However, every Queen’s Speech contains the phrase:
"Other measures will be laid before you".
That is a catch-all phrase that means that the Government reserve the right to bring things forward.
An exercise was conducted last week across our Administration to find out what each Department’s urgent requirements were. I wrote to the Secretary of State last week and stipulated that the Energy Bill and certain provisions within it are our critical number one issue. Therefore we have laid it before the Government. As Committee members know, an Order in Council process — if it gets onto the Order Paper in the House of Commons — is treated quite brutally. Once it is laid it cannot be amended, and it is given only an hour and a half’s debate. It is debated in the House of Commons and the House of Lords, but it is totally inflexible and no amendments are permitted. That is why I said that whatever goes on the Floor is all that can go through. It can either be accepted or rejected, but it cannot be amended.
If I am asked or consulted, I will clearly state that we risk losing, financially, the largest piece of North/South business that has been conducted since partition. Many jobs hang on this, and our future energy demand is critically affected, because we need that power station at Coolkeeragh in the proposed time. The opportunity to get natural gas network distributed to about 72% of the Northern Ireland population hangs on this decision. If we do not get the power station, we do not get the distribution. As members know, the regulator has asked for expressions of interest from potential distributors as to whether they would be prepared to distribute to towns en route.
That process is ongoing, together with the fact that the Irish Government agreed a substantial contribution towards the cost of the line to enable it to go into County Donegal. That would also fall if the legislation did not go through. I will be stressing to the Government the urgent need for the Bill, and I would be astounded if there were not a positive response. I see no reason why it cannot be dealt with.
We have prepared the legislation. It can be tidied up, and it can also be shortened if desired. However, it would be helpful if today the Committee could put clearly on the record its position on that. That would also strengthen my hand in any consultations that I might have.
The Chairperson: Before Billy Armstrong speaks about fuel poverty, I want to inform you that we received a letter today from Fred Cobain, the Chairperson of the Social Development Committee, agreeing to our suggestion to hold a joint Committee seminar. I bring that up to show the widespread concern and support that exists. Mr Cobain also proposed that the Committee Clerks should liaise about a mutually convenient date, so you have a few hours to get that together. [Laughter].
Mr Armstrong: Sir Reg, you spoke earlier about health and poverty. The health of our people is important. I return to the issue of renewables and the use of pollutants, which must be disposed of in another direction. It would be good and healthy if those were used in some way to create energy. As we all know, our pollutants are found in highly populated areas; they are not in isolated areas. That does not involve a large expense. I note that clause 58 is entitled "Grants for energy purposes", so I presume that some financial benefits can be obtained for the use of what people call "pollutants" as an energy source.
Sir Reg Empey: I presume that Mr Armstrong is referring to such things as slurry discharges from farms. We are not the only Department with an interest in this. The Department of Agriculture and Rural Development is also involved because of EU Regulations and concerns in the countryside over the manner in which some of this material is dealt with. For instance, the outputs of food- processing factories are currently spread on the fields, often in less than desirable circumstances. Particularly in the countryside, undoubtedly the potential exists to kill two birds with the one stone — to get rid of a pollutant and simultaneously produce energy.
There are several applications currently with the Government for such schemes. The Department of Enterprise, Trade and Investment, with the Department of Agriculture and Rural Development, is considering those. Those can be carried out under several European programmes. I have written to Bríd Rodgers supporting one or two projects in particular that were drawn to my attention, which happen to be in the County Tyrone area. Undoubted potential exists.
During my earlier remarks about wind-powered energy, I went out of my way to stress that just because wind will provide the bulk of renewable energy for us as far as we can currently determine, it will not provide it all. As technologies improve and as we attempt to solve two different problems, which is what you are referring to, there is potential for such schemes.
I know that there are proposals currently with the Administration, and I have written to Bríd Rodgers encouraging and supporting some of those because of the very points that you have made. We get energy and clean up a potential pollutant, so everybody is happy. There is potential for that, and I strongly support it.
Mr Armstrong: Urban areas may perhaps have as many pollutants and landfills. As the saying goes, if you sweep something under the carpet, it will come up again later.
Sir Reg Empey: I know that a waste management strategy is under review by the Department of the Environment. Local government is involved heavily in that. We are probably the worst performers in Europe at recycling. Less material is recycled here than anywhere else. People talk about the Germans having three or four different bins for their domestic refuse. There are bins of different colours for different items. Our current difficulty is persuading a sufficient number of people to put refuse into one bin. We have huge problems with that.
Indeed, only something like 3% to 5% of our refuse is recycled. We are still using landfill, but what are the alternatives? There are huge problems with incineration. People are concerned about the production of poly- chlorinated biphenyls (PCBs), and that incinerators will pollute the areas around them. There is a tension between wanting to do something about landfills and the thought of the alternative. There are a limited number of alternatives. However, if we do not examine them, we will just keep filling holes in the ground, which also causes problems such as seepage into waterways.
I made the point that anaerobic digestion has the advantage of a continuous flow of electricity as opposed to the intermittent wind-driven electricity. Several projects are being supported under the pilot energy demonstration scheme, which tests what works and what does not. You have touched on an area that has great potential and which is being supported by Government. Not only does it provide clean electricity, but it also resolves the problem of a major pollutant in the countryside.
Mr Armstrong: It is important that legislation is introduced which, instead of fining people for pollutants, ensures that the pollutant product is outlawed in the first place.
Sir Reg Empey: The problem is that things are out of kilter. European legislation exists, and we are already in danger of facing infraction proceedings on several issues. Europe’s eye is bigger than its belly. I think it has taken on too much too soon, and we are not ready. The legislation relating to issues such as the disposal of refrigerators exists, but the mechanisms to enforce it do not, resulting in mountains of unused and expensive disposal options.
Northern Ireland is behind other regions in several ways, partly because we have not been concentrating on the problems, and partly because of our infrastructure deficit. Nevertheless, we support those projects; they have a contribution to make in finding a solution to those two problems.
Mr Wells: It might be useful to return to the Energy Bill. I wish to pick up on two issues that you mentioned. I appreciate that you have told the Northern Ireland Office that you regard the Bill as a priority. Has there been any consensus with other Ministers as to its place in the pecking order? Some might say that the Harbours Bill or the Housing Bill are more important than energy. Is it at the top, the middle or the bottom of the raft of legislation that is passing from the devolved institutions to direct rule tonight?
Sir Reg Empey: I cannot answer that, because I have no knowledge of what other Ministers have put forward. The Office of the First Minister and the Deputy First Minister asked for this to be done, and we have provided them with our views. They have sight of the total picture. As far as I am concerned, there are few pieces of legislation in progress that would be more time-critical than the Energy Bill.
I will leave no stone unturned to ensure that that message is clearly expressed to the Government. I have received no undertakings or guarantees, nor do I have a sense of the order of Ministers’ priorities. Each Minister was asked to provide a list of his or her priorities, and everyone will have done so. I accept that other Ministers will take the same view of their pieces of legislation. However, the Government and the Secretary of State must determine what the priorities are and the order in which they are advanced.
The further we can take the legislation, the greater the chance that the Government will accept it. If it is clear from today’s proceedings that there is broad consensus on the issue, we will have a greater chance of putting that legislation at the top of the list.
Mr Wells: Clause 58 deals with grants for energy purposes. There is concern about the large wind farm that was proposed for the area close to Portrush, Portstewart and Castlerock, and there has been much public opposition to it. There is concern that clause 58 will provide the Department with the powers to provide significant grant-aid for that proposal, and that other energy producers would not have an even playing field if the scheme were to proceed. How much power does the Department have at present to grant-aid that type of proposal, and will clause 58 give it additional powers?
Sir Reg Empey: The Department’s principal power lies in giving its consent to organisations that want to generate electricity. Under clause 39 of the Electricity (Northern Ireland) Order 1992, the Department’s consent must be obtained by anyone who wants to generate electricity in Northern Ireland. The Department must take into account a wide range of issues in determining whether consent will be granted.
However, responsibility is split in the case of that particular project. The Crown Estate owns the seabed from below the low tide mark to the 12-mile limit. It has leased it to the group that wants to build the Tunes Plateau site, and it has given that group an opportunity to produce a feasible proposal. The group must carry out a major environmental impact assessment, which will take 12 months. That assessment must examine a range of issues, such as the impact on fishing and the visual amenities of the area.
That site was chosen because it has the lowest draught — in other words, because there is a plateau, the water is not very deep. Two years ago Kirk McClure Morton conducted a survey of sites around the island of Ireland where offshore wind power was likely to be feasible. Tunes Plateau was the only site off Northern Ireland where it was likely to be successful. It has the highest mean wind speeds in Europe. The site was chosen only because of its geographical advantages.
I understand that the Committee has visited Denmark and has examined the benefits of wind power there. I have not seen such generators in operation on a grand scale; I have only seen them from a plane or the land-based plants, and I have not visited the Danish plants.
Clause 58 could allow the Department to provide grant-aid if it chose to do so. However, the provision of grants for offshore projects is the responsibility of the Department of Trade and Industry in London.
The UK Government provided a sum of money which, at the initial stage, excluded that site because they were trying to encourage offshore developments around UK waters. If the project is viable, and if the impact is deemed to be tolerable, the sponsors would claim from the Department of Trade and Industry in London and not from my Department.
I had a meeting with Patricia Hewitt, the Secretary of State for Trade and Industry, some months ago, and at that stage it was not clear whether this project could be admitted to that scheme. However, it now appears that it can, and the UK Government would pay any grant-aid.
Mr McClarty: You said that that area off the north coast had the highest mean wind speeds. Is that such a critical factor, since when the wind reaches a certain speed the turbines would have to be shut down in any case?
Sir Reg Empey: It matters because the more consistent the wind speed, the better the return on the investment, and these are very expensive undertakings. Kirk McClure Morton carried out the survey, and a copy is available in the Assembly Library. I understand Mr Clarty’s interest in this, which has nothing to do with his question. However, it is an act of God that that site happens to have a wind consistency that makes it best suited to the provision of this type of wind farm. It is the best and only viable site on the shores of Northern Ireland — apart from some localised stuff.
Mr McClarty: There is concern in the area about the proposed development. How would you seek to assuage the fears of those who would be less than welcoming of the proposed development?
Sir Reg Empey: The Department’s role is not to assuage fears: it is to play a regulatory role. The Department will have to make a judgement when all the information is available and the environmental impact surveys are complete.
Leaseholders are required to carry out a consultation exercise with local authorities and other interest groups in the area, and that is ongoing. However, the Department is not taking a pro or negative position at this stage. It must determine the consent according to several issues, and it is not a personal preference. The Department will also examine the environmental impact assessment and judge whether the project would be advisable. There is the question of renewable energy, and without something on this scale it will be exceptionally difficult for Northern Ireland to meet any target along the lines of figures that have been bandied about recently.
Offshore energy from wind is more expensive than onshore energy. However, in this case, if the cables are landed on the north Londonderry coast, they can be tied in with the network reasonably well. Much of the infrastructure is already there, especially from Coolkeeragh, that would have the capacity to cope. The Department will examine the project as a whole, and it will not persuade people one way or the other. The Department will exercise its responsibilities under the Electricity (Northern Ireland) Order 1992 according to well-tried and tested rules.
Having said that, we understand that, for various reasons, it is a unique situation. We would be making Regulations transposing the environmental impact assessment Directives for offshore wind consents into Northern Ireland law. Those will require extensive consultation, something that is already happening. To collate all that information, we shall have to sift through everything. The promoters will have to assess what support they might get from the Department of Trade and Industry in London, the technical requirements, the feasibility and the cost. There is a range of issues, and it is not a done deal.
Mr McClarty: That was going to be my next point. Judging by some of the letters in the local press, it seems that there is such a presumption. I take it from your comments that you would refute that.
Sir Reg Empey: Absolutely; I would refute it completely. If we act to carry out our duties under the law, we must examine all the information when it becomes available to us as part of the process of making a judgement under the Electricity (Northern Ireland) Order 1992. We cannot judge that at this stage.
I have seen those letters, and I am aware that people have a natural disposition to think about such matters. However, I can assure you that we have taken the position — as I have done in any answers in the Assembly — that, although it is clearly an exciting prospect, and something of that sort could happen, there are other issues to take into account. I do not know whether it will be physically or financially possible for the developers to do what they must, and they do not know either. That was why the Crown Estate gave them a lease for a period to enable them to carry out all the work. The Department of the Environment also has consents to give under the Food and Environment Protection Act 1985. It seems an odd Act to deal with this matter, but it concerns the environmental aspects. However, that Department has a role in the matter too. We have certain statutory duties to perform, and we shall not take a position at this stage.
The Chairperson: Before I allow members to ask any final questions, there are two points which I should like to clarify. The Committee has discussed postalisation on several occasions. I should like to confirm formally that we absolutely agree with your position. In the words which you used today, it is "an absolute requirement". In the take-note debate, you said that postalisation was a "principle". That is the Committee’s position, and we did not reach it without much consideration. We put a great deal of thought into the matter and talked it through. We absolutely agree with your position.
As Minister, are you happy with the enabling powers in clauses 31 and 32?
Sir Reg Empey: Some companies think that it is over-restrictive; some of the correspondence which we have received has indicated that. That is an area which we planned to discuss with the Committee as the Bill proceeded. It is a complex area, but we were quite prepared to examine other proposals to achieve our objectives without being over-restrictive as far as the companies were concerned. The Department will continue to examine that area over the next few weeks, and we certainly intended to have a major discussion with you on the matter as the Bill progressed through the Committee Stage. We must keep open minds on that for the moment.
Mr Neeson: As I mentioned, last week we took evidence from the Northern Ireland Advisory Committee on Telecommunications.
The Committee shares your concern that Northern Ireland is not represented on the proposed Office of Communications (OFCOM) consumer panel. We have written to Patricia Hewitt and Tessa Jowell on the issue.
Sir Reg Empey: I appreciate those comments, and those that you made earlier about postalisation. The Department has fought resolutely for Northern Ireland’s representation. Last December, it visited the former Minister of State for e-Commerce and Competitiveness, Douglas Alexander, who had responsibility for it before the Government reshuffle. I believe that the former Financial Secretary at HM Treasury, Stephen Timms, has replaced him. The Department has made those points repeatedly.
I have written to Patricia Hewitt two or three times. I raised the issue with her on her recent visit to Northern Ireland. Douglas Alexander visited the Department earlier this year to examine the satellite scheme that is used for broadband. The Department has, therefore, brought the matter to the attention of the Department of Trade and Investment at both ministerial and departmental level. I do not know what more the Department can do.
The devolved regions are in the same boat as Northern Ireland. The Department is working in conjunction with the other devolved Administrations. A proposal was put forward that we share representation, and take it in turns. We offered several options for regional representation to the Department of Trade and Investment. The Department of Trade and Investment kept repeating the mantra that it wanted a small group of people; that the representation of local Committees would be taken into account; and so on.
The Department has met with continuous opposition from the Department of Trade and Investment. The Scottish and Welsh Departments are in the same position. The Department of Trade and Investment said that if it gave each region representation, it would end up with a cast of thousands. The Department saw shared representation as a possibility and worked with the other regions to determine how it could come about. However, so far that has not been accepted. There are, of course, opportunities for amendments to be made when the Bill goes through. That is a valid point that should be kept in mind. However, I agree with you entirely. I cannot see how having two or three extra people on a body will make such a critical difference.
We know from experience that proposals are made by people who do not understand the Northern Ireland dimension. That was demonstrated in the taxation proposals for quarry tax and the climate change levy, which caused a huge battle. Quarry tax was supposed to be an environmentally friendly tax. However, all it has done is transfer jobs across the border. It has not achieved its objective. Do people really believe that Customs and Excise should chase after 30-tonne lorries to collect £35 worth of tax, when tankers are flying over the border at a loss of £10,000 worth of duty each time? It is madness to suggest that customs officers should be diverted towards that.
I appealed to the Secretary of State over a year ago. When he visited the Department I asked him whether he could establish a group in Whitehall that would discuss any such proposals with HM Treasury in advance, so that the Northern Ireland dimension would be taken into account at an early stage, before any difficulties arose. I have repeated my request to him to follow that up. I certainly support Mr Neeson’s views.
The Chairperson: Minister, I believe that you want to discuss Harland & Wolff with the Committee.
Sir Reg Empey: Harland & Wolff has caused much concern over a long period of time. The company approached the Department in February 2002. It said that it had not found new work, and believed that it was uncompetitive.
Harland & Wolff had a new proposal, and it wanted to inform us of its intentions, so I said that I would listen. It presented a business plan to us, which involved making a compact yard out of its land. My Department’s involvement at that stage was purely consultative, because Harland & Wolff did not ask for any resources. In any case, land is a matter for the Department for Regional Development. I asked that Department for advice and we worked together from that point. The Minister for Regional Development accompanied me to all my meetings with the company, and if my officials held meetings, officials from that Department accompanied them.
The company presented a plan, we examined its arithmetic, and we appointed PricewaterhouseCoopers to advise us. After adding amendments we ended up with a plan to value the land, which the Valuation and Lands Agency carried out. The Department for Regional Development made that decision; the Department of Enterprise, Trade and Investment had no decision to make because we were not asked for any, so we were there simply to give our view on the company’s commercial future. Our key role was to ensure that some of the land was used for industrial development, about which we were anxious.
However, I supported the Minister for Regional Development’s decision, which he argued was a stand-alone decision on the grounds that if half the yard were derelict and lying idle, it was adding to the costs and would simply not be used or needed again. Therefore the deal went ahead and we were advised a few weeks ago that matters had deteriorated further, the market had softened to the extent that the company did not have any new work, and it would not be able to implement the full plan, but was willing to implement a reduced version. Again, the company did not ask my Department for anything, so our role was merely to remain informed. As the Department for Regional Development felt that the proposal was stand-alone, it continued to work with the master planning of the new Titanic Quarter area because it said that that was the best way to regenerate that area.
Harland & Wolff has subsequently announced a 90-day consultation period for the 265 people who remain on the workforce. It will also concentrate on project-orientated deals for which it has a fairly strong and profitable design and technical department. It also continues to carry out profitable ship repair work on the Irish Sea routes. It is retaining a sales and a technical team to enable it to apply for new orders, and it wants to concentrate on renewables, which again, was part of its original business plan.
Therefore the company currently occupies just under 100 acres of land in that area, and it says that it wishes to continue to do so. It will continue with those particular aspects of its business, but it says that it is suffering as a result of a major downturn in the offshore sector, which is in severe difficulties across Europe, and many major shipyards in Europe are also feeling the pain.
That is the position. Certainly no departmental funds have been sought or given for a couple of years now, and Europe withdrew intervention aid grant from 1 January 2000, which was the major source of funding for Harland & Wolff over the years. My Department’s only involvement would have been at company development programme level, helping with training and so forth; selective financial assistance was not applied to Harland & Wolff.
The Chairperson: Thank you, Minister, for all your co-operation when we worked together. It has been a good experience. We have always endeavoured to be constructive and helpful and, at the same time, to retain our capacity to criticise if necessary.
Sir Reg Empey: Thank you very much, Chairperson and members. I wish to record my appreciation, and that of all levels of the Department, of the Committee’s consistent co-operation. I support the Committee system; powerful Committees such as these are good for democracy in that they can hold Ministers to account. After 30 years of direct rule, we were paranoid about that. We seem to have a predilection for returning to direct rule from time to time; however, that is another matter. Nevertheless, the concept is right. Committees play a role and have consistently taken seriously the part concerning policy development. I have never seen the Committee as the enemy or the opposition but have tried to regard it as a partner, because the Members on the Committee represent the Assembly. If the Assembly cannot be a partner with its own Administration, the system will never work.
We all know that there are personality clashes in all walks of life. However, we have managed to make a difference in the past few years. If and when we get ourselves sorted out again — and I hope that we will — there are many things to do. It has, perhaps, taken a bit longer to get round to those than was wished, and there has been some frustration that we have not gone further more quickly. We were, however, dealing with a new and complicated system.
The irony is that we have been building momentum, because much major legislation is now coming online. You will remember the criticism that we were not doing enough legislation; now there is a snowstorm of legislation. This is the largest piece of legislation that has been introduced since Assembly operations began. There will be more, because we shall wish to introduce a second Bill after the strategy is determined. I hope that that will give all of us the incentive to ensure that the necessary steps are taken to allow devolution to be re-established. The longer we leave it, the more the grass will grow and the harder it will be to get things going.
I thank every member of the Committee, including those who have moved on to other areas and are no longer members, for the courtesy and co-operation that I have received over the past three years. In the short term, I suspect that when Ministers take office they will be anxious to continue some of the work. That is my hope with regard to this Bill. Your co-operation today in putting these matters on the record will go a long way to strengthening my hand in any advice that I may be asked to give. If I am not asked for advice, I shall offer it in any case. It will be helpful to see Hansard as soon as it is available. I assume that that takes four or five days, and I shall look anxiously for it. I shall make my views known. Thank you very much, Chairperson, Deputy Chairperson and members for your co-operation.
Dr McDonnell: I have, at times, damned myself for praising the Minister on radio programmes. His constructive attitude over the past few years has been exemplary. Will the Department maintain that, or will it revert to type?
Sir Reg Empey: This side of midnight, yes. They will hedge their bets. I know civil servants receive much criticism, and I have criticised them over the years. However, many of them are talented people who work very hard. I have never asked them to do anything that has not then been done. Sometimes people assume that civil servants will just go ahead and do something. The important thing is that they must be asked to do things, and you must be clear about what you want them to do.
The worst thing that you can do is not to give them any steer or direction, because then what do they do? They have to tolerate the fact that I wander about the corridors and just walk into the room unannounced and so on. Whether Ministers will visit them as frequently in the next few weeks is uncertain, but I hope they will because it is important that Ministers engage with and understand the people and relevant issues. I can tell whoever takes up this role that it will take them three years to get the hang of dealing with energy.
The Chairperson: Thank you, Minister. I believe that the Department will be on its best behaviour because we will return.
Sir Reg Empey: As McArthur said.