Constitution Committee report on the Energy Bill

The House of Commons Constitution Committee has published its report on the Energy Bill.

Introduction

1.The Energy Bill (“the Bill”) was introduced in the House of Lords on 6 July 2022 and second reading took place on 19 July 2022. Committee stage is scheduled to begin on 5 September 2022.

Size and breadth of the Bill

2.The Bill contains 243 clauses and 19 schedules, divided into 12 parts, each regulating disparate areas of the law connected to energy provision. It seeks to implement a range of policy objectives, following various consultation exercises and reports in recent years.1 We have previously described such broad bills as “omnibus bills” and have expressed concern about the ability of Parliament to scrutinise such bills effectively. For example, in our 2009 report on the Coroners and Justice Bill, we concluded:

“The constitutionally important process of legislative scrutiny is hindered by omnibus bills … which include too wide a range of proposals, all inherently significant in their own right.”2

3.While we accept the Government’s legitimate desire to make progress in this important policy area, it is harder for Parliament effectively to scrutinise legislation that covers several disparate issues. We note that the Bill is currently scheduled for eight days in Committee. It is important that sufficient time is dedicated to the Bill to allow for adequate parliamentary scrutiny: more days may be required.

Delegated powers

4.The Bill contains a significant number of delegated powers and can therefore be regarded as a framework bill. The Government’s Delegated Powers Memorandum lists 123 individual powers and draws attention to several “framework clauses” in the Bill.3

5.Before examining two categories of delegated powers under the bill which are of constitutional concern, we note that the bill also contains examples of good practice. For example, the procedural requirements for regulations under Part 1 and guidance under clause 220 are commendable, as is the process for approving a Carbon Capture, Usage and Storage strategy and policy statement under chapter 3 of Part 2. We have previously criticised ‘disguised legislation’, which has been defined by the Delegated Powers and Regulatory Reform Committee as “instruments which are legislative in effect but often not subject to parliamentary oversight”.4 The guidance provisions in this Bill include robust parliamentary oversight.

Part 7

6.Part 7 regulates heat networks. Clause 165 includes a Henry VIII power empowering the Secretary of State to change the definition in the Bill of a “relevant heat network”, a “district heat network”, a “communal heat network” and a “heat network”.5 These regulations are subject to the negative resolution procedure.6

7.We do not consider the negative resolution procedure an adequate level of parliamentary control of regulations amending the definition of a “relevant heat network”, a “district heat network”, a “communal heat network” and a “heat network”. This is because there is no limit to the changes that may be made to these definitions as the purpose for which the power may be exercised is not specified, and because of the width of the powers to regulate in these areas as set out in clause 168. We recommend that the Bill be amended to include a duty on the Secretary of State to consult on any changes to the above definitions similar to that provided for in clause 3 and to make regulations under clause 165(4) subject to the affirmative resolution procedure.

Creation of criminal offences by delegated legislation

8.The Bill contains several provisions empowering the Secretary of State to create criminal offences through delegated legislation:

• Clause 83(3) empowers the Secretary of State to “make it an offence to contravene specified provisions of the regulations” made under clause 82 on the financing of and security provision for decommissioning carbon storage installations.7 The Bill requires that any regulation creating a criminal offence must include provisions as to the mode of trial and punishment of offences. This must not authorise imprisonment or impose a fine exceeding the statutory maximum in the case of a summary conviction, though it may include imprisonment for a term of 2 years or less for a conviction on indictment.8
• Clause 103(5) enables delegated legislation to create offences for failure to comply with a requirement imposed by or under a low-carbon heat scheme.9
• Clause 190(3) provides for regulations that create offences relating to requirements imposed by authorities under the energy smart regulations.10
• Clause 200(3) provides for regulations which make it a criminal offence to fail to comply with energy performance regulations and related matters.11
• Clause 207(6) provides for regulations creating criminal offences in relation to improvements to core fuel sector resilience.12
• Clause 211(5) provides for regulations making it a criminal offence to fail to comply, without reasonable excuse, with a requirement to provide information to the Secretary of State relating to the regulation or maintenance of core fuel sector resilience.13
• Clause 225(6) empowers the Secretary of State by regulations to create criminal offences for breaches of provisions in regulations regulating marine oil pollution.14

9.The powers described above are accompanied by restrictions on their use, including details of mode of trial and maximum penalties. They are all subject to affirmative resolution.

10.This Committee has expressed concern in previous reports with the use of delegated legislation to create criminal offences. In The Legislative Process: the Delegation of Powers we stated: “In recent years the Government has sought to create criminal offences … through delegated powers. This is constitutionally unacceptable”.15

11.In principle, the use of delegated legislation to create criminal offences is constitutionally unacceptable. We recommend that the House consider amending the Bill so that criminal offences are set out in the Bill itself, allowing them to be subject to full parliamentary scrutiny.

12.In making the above recommendation, we note that the Bill provides for some statutory safeguards over the creation of criminal offences. For example, many provisions set out the nature of the possible criminal offences and set maximum penalties, accompanied by a discretionary power to include these criminal offences in delegated legislation. All delegated legislation in this Bill creating criminal offences is subject to the affirmative resolution procedure. We do not consider these requirements are sufficient to mitigate the constitutional implications of delegated legislation creating criminal offences, and remain concerned by the absence of full parliamentary scrutiny of these provisions.

Devolution

13.Energy is a reserved matter in respect of Scotland and Wales.16 However, certain aspects of energy policy are devolved; for example, competence over renewables was devolved by the Scotland Act 2016 and the Wales Act 2017. Energy policy is generally devolved in Northern Ireland,17 but it is a complex area in which competences overlap.18

14.Most of the provisions in the Bill extend to England, Scotland and Wales with some provisions also extending to Northern Ireland. Some provisions in the Bill extend to England and Wales or England only. The Government acknowledges that aspects of the Bill fall within devolved competence and has undertaken to seek the consent of the devolved legislatures for the provisions that engage the Legislative Consent Motion process.19

15.However, the Bill creates several delegated powers in areas that have been devolved. The Sewel convention does not apply to delegated legislation, meaning that UK ministers are not required by convention to seek the consent of a devolved legislature in respect of delegated legislation that affects devolved matters.

16.In areas where competence overlaps between the UK Government and devolved administrations, the Bill requires UK ministers to give notice to devolved administrations in relation to certain powers exercisable by the UK Government,20 while other powers must be exercised following consultation with devolved administrations,21 but none of those powers requires consent.

17.While the Bill delegates powers in areas of devolved or shared competence, we note that those powers are exercisable in relation to energy—an area that is, at least in relation to Scotland and Wales, mainly reserved. Given this, and considering the tangential impact of these powers on devolved competence, we consider the notice-giving requirements and the duties to consult included in these provisions sufficient, with one important exception.

18.Clause 238 allows the Secretary of State by regulations to make consequential provision. While this power, as a consequential provision, is constrained by context, it is framed in broad terms, allowing the Secretary of State to make provision not only in consequence of but also “in connection with” the Bill, or any provision made under the Bill, as the Secretary of State “considers appropriate”. This power may be exercised by amending, repealing or revoking this Bill or any other Act passed before it, or retained direct EU legislation. This power applies explicitly to legislation of the Scottish Parliament, Welsh Assembly and Northern Ireland Assembly.22 The affirmative resolution procedure applies to these regulations when repealing primary devolved legislation.23

19.Broad consequential provisions, which explicitly extend to devolved legislation, is a growing trend in legislation. An equivalent provision was in clause 80(2) of the Nationality and Borders Bill (now section 84(2) of the Nationality and Borders Act 2022).24 In our report on that Bill, we stated:

“The Sewel convention does not apply to delegated legislation but it would be constitutionally questionable for Parliament to circumvent that convention by legislating in a way that foresees or intends delegated legislation to change devolved legislation in areas of devolved competence …

Respect for the principle which underlies the legislative consent process for primary legislation should be applied to the exercise of the power in clause 80(2) in relation to enactments contained in, or instruments made under, legislation passed by the devolved legislatures. This clause should be amended to the effect that the power to amend those provisions may not be exercised without the consent of those legislatures.”25

20.We reiterate the principle that it is constitutionally questionable for Parliament to circumvent the Sewel convention by legislating in a way that foresees or intends delegated legislation to change devolved legislation in areas of devolved competence. We recommend that clause 238 be amended to require the Secretary of State to seek the consent of the relevant devolved legislatures before making regulations amending, repealing or revoking devolved legislation.

1 The ‘net zero strategy’; a consultation on carbon dioxide transport; The British Energy Security Strategy; The Heat and Buildings Strategy; The Ten Point Plan for a Green Industrial Revolution; The Hydrogen Strategy; The Energy White Paper; The Future Systems Operator consultation; elements of the Government and Ofgem Smart Systems Flexibility Plan; The Government’s 2018 Policy Paper Implementing geological disposal—working with communities: An updated framework for the long-term management of higher radioactive waste; The OECD Nuclear Energy Agency’s 2016 ‘Low Level Waste Exclusion’ decision and recommendation.

2 Constitution Committee, Coroners and Justice Bill (10th Report, Session 2008–09, HL Paper 96), para 2

3 Delegated Powers Memorandum on the Energy Bill [HL] Annex A and para 8.

4 Delegated Powers and Regulatory Reform Committee, Democracy Denied? The urgent need to rebalance power between Parliament and the Executive (12th Report, Session 2021–22, HL Paper 106), para 89

5 Energy Bill [HL], clause 165(4)

6 Ibid., clause 165(5)

7 Ibid., clause 83(3)(b)

8 Ibid., clause 83(4)

9 Ibid., clause 103(5)

10 Ibid., clause 190(3)

11 Energy Bill [HL], 200(3)

12 Ibid., clause 207(6)

13 Ibid., clause 211(5)

14 Ibid., clause 225(6)

15 Constitution Committee, The Legislative Process: The Delegation of Powers (16th Report, Session 2017–19, HL Paper 225), para 50

16 Scotland Act 1998, schedule 5, Part II, Head D and Government of Wales Act 2006, schedule 7A, Part 2, Head D.

17 Although nuclear energy is an “excepted matter” under the Northern Ireland Act 1998, Schedule 2, para 18.

18 The House of Commons Northern Ireland Affairs Committee has observed: “energy policy, markets, systems and infrastructure are complex and interconnected, which means that the UK Government continues to play an important role, both directly and indirectly, in shaping the electricity sector in Northern Ireland.” See House of Commons Northern Ireland Affairs Committee, The Electricity Sector in Northern Ireland (Third Report, Session 2016–17, HC 51), para 4.

19 Explanatory Notes to the Energy Bill [HL], para 103.

20 For example, clause 2, which concerns the prohibition of unlicensed activities, and clause 5, which empowers the Secretary of State by regulations to grant exemption from the prohibition on unlicensed activities.

21 For example, clause 9, which empowers the Secretary of State, or the economic regulator with the approval of the Secretary of State, by regulations to make provision about the form and manner in which an application for a licence must be made.

22 Energy Bill [HL], clause 238(1), (2) and (3)

23 Ibid., clause 238(5)

24 Nationality and Borders Act, section 84(2)

25 Constitution Committee, Nationality and Borders Bill (11th Report, Session 2021–22, HL Paper 149), paras 103–04