Mika Minio-Paluello and Mike Clancy gave evidence.

We will now hear oral evidence from Mika Minio-Paluello, who is the senior policy officer for industry and climate at the TUC, and Mike Clancy, who is the general secretary of the Prospect union. We have until 10.20 am for this session. Will the witnesses please introduce yourselves—and pronounce your name correctly, which I abjectly failed to do?

Mika Minio-Paluello:

No worries; nobody ever gets it right. I am Mika Minio-Paluello and I co-lead on industry, climate and energy for the Trades Union Congress. Thanks for having me.

Mike Clancy:

I am Mike Clancy, general secretary of the Prospect trade union. We represent people across the range of public and private sectors, and we have 22,000-plus members in the energy sector.

I call the shadow Minister to ask the first question.

Q I think it is fair to say that at the recent TUC congress some scepticism was expressed about the current Government’s plans for the energy sector, not least in respect of fears about the tens of thousands of jobs that are currently under threat in the oil and gas sector. How do you see GB Energy fitting into the overall piece when it comes to seeking to protect those jobs through the transition?

Mika Minio-Paluello:

It is true that trade unions want to see good-quality jobs going forward, and that there are concerns about how we deliver a just transition, because we see the reality that transitions are not easy. To make that happen, we need some levers—some tools that can help to ensure that workers either have their existing jobs future-proofed or have transfers to new places. GB Energy is a tool that can help to make that possible that we currently do not really have in the UK. In France, Norway, Denmark and Germany there are a lot more institutions—the public sector effectively has a bigger stake—and we do not have that.

As Juergen said earlier, GB Energy can be part and parcel of enabling the supply chain growth that we have not seen in recent years, because CfDs have not delivered that as they are. It can also deliver the co-ordinated collective pathways for workforce, as well as upskilling, which does not really happen given the piecemeal way it is working at the moment. It can also play a role by ensuring that renewable jobs will be good jobs, both through procurement and through, in effect, ensuring a race to the top. That is all part of a plan, and what came out of our congress recently was that we need to see a plan. To have that plan, we need institutions like GB Energy.

Q Do you have enough clarity thus far, through this Bill and the creation of GB Energy, to give confidence to those people in the sector who are worried about their jobs—

Order. I do not think there is anything in the Bill about jobs, shadow Minister, so I am being steered by the Clerk to get you off the subject. Let us go to Olivia Blake.

Q My point follows on slightly. Do you think the Bill will help to ensure a just transition for UK workers? You hinted at that, but I wonder whether Mike Clancy has a comment.

Mike Clancy:

Following on from what Mika said, and as we are focusing on the content of the Bill, we welcome the creation of GB Energy but our concern is that for some time energy policy has been long on rhetoric but short on delivery. By that we mean that, in the context of a just transition, the losses of jobs—

Order. The Whips are saying there is something wrong with the mics—nobody can hear me either. You need to speak into the mic because nobody can hear what anyone is saying.

Mike Clancy:

It is unusual for a trade union official to be asked to increase their volume; none the less, I will run counter to type and try to do that.

We welcome the creation of GB Energy and we welcome the Bill, but the reality is that communities are facing job losses now. The promise of jobs tomorrow is where the challenge lies. As we are talking about the Bill, I should say that we certainly want to see GB Energy created as an exemplar in terms of social partnership, job creation and turning the promise of quality green jobs into a reality. That is the pathway that the Bill has to provide for communities that are directly affected by technological and other changes. I guess that in other questions we will bring out further things about organisational design, because we certainly have some views on whether the Bill leads to an organisational design that will enable that.

Mika Minio-Paluello:

You asked, “Will it ensure?” We very much welcome the Bill, but will it, in itself, ensure a just transition? No. Does it provide a mechanism and a tool that the Secretary of State and the Government can then use to help to deliver that? Yes. We also think the Bill is good because it creates a basis for GB Energy to grow. Ultimately, if we are going to see that successful transition, and all the jobs and the prosperity that we need to see in the UK, GB Energy needs to be on a par with the equivalent companies that we see in other countries, such as Ørsted, Statoil or Equinor, Vattenfall, or EDF. That is a long-term process, and over time, it can be good for workers and it can make the whole country richer.

Q Thank you both for coming. In relation to that specific point, which is also in the written evidence that you provided, you referenced Ørsted, EDF, Vattenfall and Statkraft. GB Energy will be capitalised with £1.6 billion per annum. How does that equate to the delivery of projects similar to those of Ørsted, EDF, Vattenfall and Statkraft? Is that not quite a leap?

Mika Minio-Paluello:

I mean, you would not build an Ørsted in one, two or five years. ESB, the Irish state-owned company, moved into offshore wind gradually, step by step. It took it about four or five years to get well inthere. We think we should aim to get there by 2040 or 2045. You start somewhere, so you start with the capitalisation. We can all talk about whether the Government could access more borrowing, and the fiscal heritage, but you can start with that. It will not be on that scale by 2030, but it can put in place the mechanisms and a plan so that by 2040 or 2045, we are a more powerful and richer country because we are finally on a par with our peers.

Mike Clancy:

We have made some commentary about the treatment of public debt and this space in relation to GB Energy, and whether the debt rules, which are subject to current debate, should be adjusted so that public investment companies are appropriately excluded because they will provide a return to the Exchequer. We are also interested in the structure of GBE arising from the Bill in this regard. Clearly it is going to be a public investment vehicle, but if it is going to be an operator like Ørsted and so on—obviously we heard Juergen talk about the nature of the assets that it may bring under its control—these are significant engineering assets and propositions. If you are going to build a company in that respect, you had better start now, and you had better think about the labour markets in which you are going to obtain the skills, which are very competitive. I could keep you all morning talking about how that will not happen if it is constrained by public sector pay constraints.

A serious point is that there is more than one pathway for this entity, and if it is going to have a dual pathway, it needs to be thought through pretty early. That is because realising the floating offshore wind proposition—whatever sea it may be in—is a very significant endeavour, requiring an operational, management, engineering, construction, planning, and indeed operating capacity that need to be thought about right now, at the Bill stage.

Q Thank you both for coming in. This Bill and GB Energy are a hugely exciting return to public steering, which we have not seen before for our energy system. One of our big challenges, before we even start building new systems, is the skills shortage we face, and the real challenge we have had in nuclear, renewables and other forms of energy production. I ask you both: how do you feel the Bill can stimulate and relate to the need to develop skills, deliver new jobs and ensure skills development in different regions of the country as well as in traditional areas?

Mike Clancy:

Andrew, you are absolutely right. There are various things that need to be brought together that the Bill itself probably needs to consider, in terms of the skills profile generally and other forms of generation that are within this space. There is going to be an office of nuclear jobs developed by the Secretary of State, and so on. Our view is that it comes down to the extent to which the Bill can specify that GB Energy should be an exemplar company, and that it sets objectives for its board in relation to not only its community engagement, but how it conducts its processes to ensure that the short-termism that sometimes emerges from the private sector form of energy ownership is not characterised by a public company, which should be an absolute champion in these areas.

It comes down to governance and to the objectives and how they are set for a public company, and knitting them into the other parts of the skills landscape. That is why I also make the point—not in a usual trade union way, may I say—that we have to think about the labour markets in which GBE is going to play because they are very tight and very demanding, and there is a whole range of infrastructure that this country needs to invest in to deliver the growth mission.

Mika Minio-Paluello:

There is good practice to learn from other countries: from Ørsted, Statoil—now Equinor —and Statkraft. They took a proactive role and identified where they thought the country needed to be in 10 years —not just where they might need to be from a minimalist, reactive position, but where the country needed to be—and then how to invest for the long run in those skills.

Order. The Clerk is saying that we are straying from the scope of the Bill. We are okay for time because we have until 10.20 am, but it is getting a bit hypothetical about what will happen on top of the Bill, which, I am being told, is not really allowed.

Q This question is aimed at both of you. In terms of the job prospects for GB Energy, we have had figures such as 650,000 jobs, with 69,000 of those in Scotland as and when they come. However, I am sure that your members will be looking at not necessarily future jobs, but current jobs and the implication of the Bill for them. What would you like to see in the Bill to ensure that the jobs that are there today are protected? Do you think the Bill as it stands can and will impact them?

Mike Clancy:

I am not sure. As extensive as the powers of Parliament are, I am not sure a Bill in itself can give any of those guarantees. I am not trying to avoid an answer; the reality is that the Bill will set up a company with certain objectives, and those objectives should address directly the generation of employment. You have already heard and asked questions about how many jobs there will be in Aberdeen, what that will scale up to, and what it will mean in terms of the supply chain.

We are seeing a lot of very considerable numbers in a lot of different energy spaces: potentially great demand and very high-quality jobs in both the public space and the private ownership of utilities. But it is all promise. Some of the numbers are so significant in aggregate that you have to wonder where they are going to come from, because there is pressure on different parts of the infrastructure. There are lots of synergies between this sector and others—the skills are the same in aviation, defence and so on—and the basic throughput of science, technology, engineering and maths skills in this country is a long-term inhibitor to our productivity and our delivery. In terms of the narrow focus of the Bill, this organisation needs to be the stimulus for that supply chain, with good employment conditions throughout.

One of the issues in a just transition is that you replace public and private structured, high-quality jobs with jobs that are flimsier, more fragile and more temporary. If GB Energy can be a champion for long-term, durable relationships with its workforce—and that is how you want the energy sector to go—that is your best bet for having the jobs promise to replace those that have to be removed due to the climate impact.

Mika Minio-Paluello:

The easiest solution is to keep someone working in their current workplace, precisely because, as Mike explained, there is a significant risk that, in shifting across, you end up with more precarious work. A lot of the onshore supply chain for offshore oil and gas has been struggling; we have seen a big decline over the past 14 years both within the supply chain and directly. Chunks of that supply chain can be future-proofed to support offshore wind and other parts, and GB Energy has a significant role to play in supporting those supply chain sites. Whether it is Shepherd Offshore, Smulders or cable manufacturers, GB Energy should say, “We will be purchasing from you, and not just from China.” There is a big risk of China coming to dominate the offshore wind supply chain. We could end up in a situation with offshore wind like the one with solar at the moment, where if you buy a solar panel, it is 97% made in China. GB Energy can play a role in making sure the offshore wind supply chain is situated here, and that is part of the protection.

The other part is about what could be done in the Bill, although it will not necessarily protect jobs—Mike is right; the Bill itself cannot entirely protect individual jobs. In our submission, we suggest that there could be an amendment to the strategic priorities section and that the statement of strategic priorities should have regard for a just transition, job equality and job creation. It should be embedded as a core part of the statement so that, when the Secretary of State sits down to prepare it, they go, “Okay, part of what we are going to put in here is about a just transition, job equality and job creation.” That is a possible amendment.

We have also suggested an amendment on protection, particularly given that a lot of the job creation and economic impact will be in Wales and Scotland, so the Bill will play an important role for those nations. That means that those nations should probably have a say, through their devolved Governments, on what happens down the line to GB Energy. Let us say that down the line a future Government goes, “Well, actually we are going to privatise it,” or, “We are going to instruct it to dispose of a lot of assets,” Scotland and Wales should be able to have a say and go, “Well actually, this is about our economy here and we think that shouldn’t happen.” We suggest doing that through an amendment but you could explore different mechanisms, including golden shares for those devolved Governments that specifically say that.

Order. Sorry, but I did tell off the shadow Minister for talking about jobs when they are not in the Bill. I think we are straying quite a fair distance away. We are meant to stick within the scope of the contents of the Bill. With that in mind, a brilliant example will be Josh MacAlister.

Q Welcome to you both. Mike Clancy, this is a question for you. The Bill allows for future flexibility in the relationship between Great British Energy and Great British Nuclear, which is welcome. Can you share a bit about your and your members’ reflections on the Bill in relation to the establishment of Great British Nuclear under the last Government and any lessons for the autonomy and operation of GBE under this Government, as enabled by the Bill?

Mike Clancy:

We are always dealing with very long-term propositions when it comes to energy assets. Whether it is public or private, you need stable investment conditions so that the entity can build confidence and recruit the staff it needs to deliver its mission. I will keep coming back to this: it is an extremely challenging space if you create uncertainty, and even more so for a public entity, in terms of whether high-calibre people wish to commit their energies and talents in what is a globally competitive environment for their skills.

The most important thing we can do is create that stable investment circumstance. For Government, that means accepting the different challenges there are fiscally and in terms of spending. We would say that there can be no successful transition without a nuclear component, and we are obviously advocates of that. Therefore, we are strong advocates of Great British Nuclear. It will need to have—shall we say—that ability to operate within its own circumstances. Nuclear is particular; it has to be done to time and cost, and that is the big issue. The most important thing that the Bill can do is ensure that you have that stable investment and that you make the commitment.

I have been around for a little while. I have probably been involved in more nuclear and energy renaissances than anyone else in the room put together, and I think we need to get to the actual renaissance and get building. If you can give that stability, people will come to this because they are mission-driven, committed individuals who will want to be part of that renaissance.

Q Good morning. I want to come back to clause 5 of the Bill, which is about the statement of strategic priorities. Most of what I have heard this morning is that we are a bit worried about there not being enough detail on certain things. Should there be more detail about the strategic priorities in the Bill, such as job creation, or should there be a precise timeline for when we can actually expect that? The whole purpose of the Bill is to speed up all that energy transition, and currently we do not know when we will see a statement. Is it important that we actually get some timelines in the Bill?

Mike Clancy:

The simple answer is yes. The longer there is a concept phase, albeit a positive concept phase, the more that we are talking about a multiplier effect from GBE in many respects. If GBE is delivered, starts to operate and gives confidence to the direction of energy policy, other investors will see this as a serious proposition and therefore we will be engaging in this huge process of energy transition.

As I said just a moment ago, it also means that talented people can see a future. We want to be part of that. So, within the process of parliamentary drafting, the more that we have a clear set of objectives—actually differentiating it as a public entity and setting the tone for what you want from energy assets in the future—the better, because that will give that confidence. That also has a knock-on effect for the confidence of private investors in other parts of the energy environment.

Q Thank you both. I really welcome hearing the views of trade unions in this session, especially about keeping workers at the heart of this. Do you think that GB Energy can help to drive the demand for skills and apprenticeships and prepare our workforce for a just transition?

Mika Minio-Paluello:

There is a lot of demand at the moment, and a part of the challenge is a significant lack of supply. Part of the reason for that lack of supply is that there is a lack of investment. We as a country have not invested into our workforce sufficiently over time, which is why you get into a situation where different sectors effectively end up poaching people who are most in demand.

GB Energy provides a mechanism as part of solving that. It will not solve it as a whole—the Government have other plans as well to try put that investment in— but it can have a significant role in going, “Yes, here, we are going to provide that long-term investment directly.” Also, clearly, GB Energy will be partnering with the private sector. In that co-operation, it can then say, through its procurement powers, “Okay, in our joint project on this big offshore wind farm, we are going to require the supply chain across the board to be investing into apprenticeships, whether that is one, two or three tiers down,” so that we get that overall growth. It therefore can play a significant role there.

Mike Clancy:

I have already touched on this. It might sound strange, but we probably have a bit of a mission at present because of the constraints applied by the previous Administration to remove our members in technical occupations in the energy field from the public sphere, because the labour markets that they operate in reward better in the private sector. The private sector is in a war for talent in this area because, in this country, over the many decades, we have not valued STEM skills and engineering. I speak as a humanities graduate who is always in awe of people who actually go to institutions and learn things that matter and are then applied for the health of the nation.

We have to start with valuing STEM—valuing it on a diverse basis, ensuring that the workforce reflects our diversity objectives more generally—and having a clear understanding that, even within Government, there can be an element of robbing one to pay for the other, such as with defence and aviation. Lots of areas need these STEM skills, which are then easily transferable into digital skills, and there are better salaries for some of those elsewhere.

If you want to deliver that promise about high-quality jobs, you really have to think and have a labour-market strategy for GB Energy that works in this competitive context at all levels—from apprenticeship, through to technical, through to engineering and even through to doctoral level. Again, in terms of the direction and objectives of the Bill, it is about being an exemplar for the entire energy sector in relation to the skills matrix, with how people are employed and the diversity objectives that any public company should have. That is what the Bill should try to address in sufficient detail.

Order. Just a reminder again that we are talking about what is in the Bill—not blue-sky thinking about what GB Energy might do and that kind of stuff.

Q I think we are all agreed that

“the production, distribution, storage and supply of clean energy” should include nuclear energy—very important to your members, Mr Clancy. But to build on the point from the hon. Member for Whitehaven and Workington, I think there is a lack of clarity in the Bill at the minute over the operational independence and the autonomy of Great British Nuclear. Are you seeking that from the Government? Is it something that we should seek to have in the Bill as it moves through Committee?

Mike Clancy:

That is not just in terms of the Bill, I think; the actual future of Great British Nuclear has a degree of uncertainty around it, per se, because, again—I am in danger of repeating myself—we have been here before. I used to be a member of the Nuclear Industry Council some moons ago, and we are rightly evangelists for our members, who deliver nuclear energy. We recognise that there are lots of controversies down the back end, in terms of decommissioning, but nuclear is an essential part of the future energy mix and the achievement of our climate goals. Therefore, there has to be a range of certainties in response—that is not a glib remark at all—and, in the GB Energy area, it is about companies knowing that they can invest and get the return. The Bill needs to be consistent with that.

Q You have spoken eloquently and rightly about the energy transition, jobs, skills and STEM, but I have double checked and the Bill contains absolutely no detail about any of those things. Is that correct?

Mika Minio-Paluello:

My understanding is that it is not currently in there, but it will be contained in the statement of strategic priorities. There are questions about how much should be added in. We understand that the logic is that the Bill will create an enabling vehicle—it will enable GB Energy to act and do things—so is it useful to put in many, many limitations? Probably not, because adding in too much detail will slow it down. Is it, on the other hand, useful to put in a clause that says that the statement of strategic priorities should have regard to a just transition and job creation? That could be a consideration.

Q But, for clarity, the things that have been spoken about in this context are not in the Bill. Similarly, is there anything within the Bill that gives you certainty that energy bills will be brought down by £300?

Mika Minio-Paluello:

Bringing energy bills down is a complicated process that depends on lots of things, including—

Q Is it within the Bill though?

Mike Clancy:

I suppose my response would be, “How could it be within the Bill?”

Mika Minio-Paluello:

Theoretically, the Bill could say, “We will cap energy bills at a certain level,” but it would not be part of GB Energy’s role to cap energy.

Mike Clancy:

You cannot divorce this from the fact that GB Energy will operate in a still-privatised energy asset environment, and consequently there are much broader questions about how bills are composed, the energy mix and so on. Those issues are not in the Bill, and I am sure the Chair would stop me going down that path. But I was the field official in energy, so if anyone wants to talk about that we can spend hours on it and the construction of the energy sector. I understand why you asked the question, but GB Energy is one entity within a much broader firmament of energy assets, owned in different ways.

Mika Minio-Paluello:

Does the Bill enable the creation of a company that can, over time, grow to be something like EDF, Ørsted or Vattenfall? EDF brought bills down significantly during the energy crisis, when we had soaring bills. Does the Bill create the capacity to do that? Yes.

Mike Clancy:

Often the focus in energy policy is on retail, because it affects domestic consumers more than wholesale when things are going a certain way. The biggest thing for us—we represent engineering and science staff—is where the generation is going to come from, what is going down the pipes and how we ensure that consistently and for the long term so that we have energy security and energy down those lines at a competitive price. Clearly, a public sector champion in that regard can be a significant contributor to changing the trajectory of energy prices and giving us indigenous energy security.

Are there any further questions from Members?

If there is still time, I am happy to come back.

Well, we are not going to fill the time for the sake of it. If you have a genuine question—

Q With all due respect, asking a question is not just filling time; it is my job.

For full clarity, you have clarified that it is possible for these things to happen—I do not think anyone would disagree with that—but as it stands the Bill does not provide any certainty about any of those points.

Order. Is this a repeat of the previous question? I think—[Interruption.] Okay, there is a minute left. Go on.

Again, just for clarity—because you pushed back and said that EDF brought down bills—there is nothing in this Bill, unless you tell me otherwise, that says that GB Energy will do likewise. Is that correct?

Mika Minio-Paluello:

I do not think it forces GB Energy to do likewise, but I doubt the legislation that set up EDF forced it to do that. I think it probably set up EDF as a company to operate and gave it freedom to act. The question for Members is: “What do we do to enable the UK to finally be on a par with our peers elsewhere?” Does this create a basis for that? Yes. Then, yes, can you please push and hold the Government to account—

Order. I am afraid that brings us to the end of the time allotted for the Committee to ask this section of questions. I thank our witnesses on behalf of the Committee.