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Energy Bill

I thank both noble Lords. Clause 54 makes it a criminal offence for an operator or a person with obligations under an approved programme not to comply with the programme unless they prove that they exercised due diligence to avoid committing the offence. Failing to comply could in extreme circumstances result in the taxpayer being called on to meet the costs of decommissioning and therefore in our view warrants the use of criminal sanctions. No one seems to have disputed that. Is it right that the two-year maximum period should be increased to five years? The message we want to send is that where there is a breach, the operator will have to demonstrate that they did everything they could to avoid committing that breach. We think that this is what the clause as drafted achieves, and we believe that two years maximum is an appropriate penalty with a sufficient deterrent effect. We do not think that increasing the maximum sentence to five years—basically, just for the sake of it—would materially change the deterrent effect of these provisions. Instead, it is the existence in the first place of the potential for imprisonment itself that is likely to influence the behaviour of individuals with obligations under a decommissioning programme. The penalty is consistent with the penalty regimes for offshore renewables and oil and gas installations decommissioning. If we are to alter that to make it inconsistent with those other regimes, we ought to have good reason for doing so. The criminal offences in this chapter have been created only for the most serious infringements that could undermine the effectiveness of the structure as a whole. In order to do that, my department sought the advice of the Ministry of Justice in relation to the creation of the new criminal sanction. Its experts were content that the proposed two-year imprisonment term was appropriate. It is important to remember that the Bill encompasses civil sanctions as well as criminal offences. The Secretary of State may seek a court order to compel a person to provide him with information about the programme under Clause 50 of the Bill. It is true that there are higher penalties in other areas of legislation, such as Section 2(2) of the Nuclear Installations Act, which creates a maximum penalty of five years’ imprisonment for enriching uranium or extracting uranium or plutonium from spent fuel without the relevant licence, and the Health and Safety at Work Act 1974, which set the criminal sanctions for breaches of certain nuclear matters where the offence could put public health at risk. We do not think that they are on all fours with this. The deterrent effect of Clause 54 of the Bill, however, is to ensure that the operator puts money aside to pay for the full costs of decommissioning and the full share of waste management costs. The Government believes that this framework creates the necessary powers to ensure that funds are accrued to meet those costs, and that any offence should be consistent with the overall purpose and aims of this legislation. I shall explain how we see the sanctions process operating. Where there is a failure to comply, it is our intention that where time permits, or where the gravity of the breach is not too severe, the Secretary of State would seek to enter into discussions with the operator in order to understand why and how the breach occurred and see if informally it could be put right. In normal circumstances we would seek recourse through the provisions in the Bill to correct the breach only after we had failed to do so using these methods. I think the Committee would be broadly in favour of that approach. Where the breach is more serious or significant, however, or where informal agreement cannot be reached, the Secretary of State may seek to impose a direction under Clause 55. In other words, a failure to comply with a programme would not necessarily result in the immediate initiation of criminal proceedings. It is also likely that in practice, before beginning criminal proceedings, the Secretary of State would, among other things, consider whether or not it was in the public interest to prosecute. However, that does not prevent the Secretary of State from commencing a prosecution without first imposing a direction to remedy the breach. The clauses as drafted provide the Secretary of State with the flexibility to respond to a variety of situations. We think that this flexibility is an important part of the procedure and of ensuring that programmes are adhered to. Amendment No. 49 seeks to remove the term ““misleading”” from Clause 57. Again, we are unable to support the amendment; frankly, it would undermine the deterrent effect of the provisions as currently drafted. ““Misleading information”” can be taken to mean information that a person knowingly or recklessly includes in, or omits from, the material submitted to the Secretary of State. That would mean that the information or material misled, or did not provide an accurate or full picture to, the Secretary of State. The Government believe that the proposed amendment is much too wide and would mean that it would be acceptable for an operator to submit information that was not necessarily false, but perhaps did not provide the full picture—and I suggest that it is that full picture that is important to the general public—about a particular issue. For example, that could result in the submission of information that deliberately provides an incomplete picture, such as including information about investments that are performing well but omits to mention other factors—changes in discount or interest rates—that may negate these gains. In our mind, the act of ““misleading”” is a deliberate act and not the result of a clerical error. Of course there would be discretion, as there always is in these cases, for the prosecuting authorities. To put it in a nutshell, we are convinced that the public would not feel comfortable for a Minister to say that it was acceptable for a person knowingly or recklessly to submit misleading information without facing any sanction. Therefore, we think that the amendment would undermine one of the foundations of the regime, which is that the Secretary of State must be able to take decisions on the basis of full and accurate information. It is best that companies should know that from the start. We hope that Clauses 54 and 57, to which the amendments apply, send a clear message to operators about what is and is not acceptable behaviour. On that basis, we cannot accept either amendment.