House of Commons
Monday 7 December 2009
The House met at half-past Two o’clock
[Mr. Speaker in the Chair]
Oral Answers to Questions
Work and Pensions
The Secretary of State was asked—
Young people have been particularly heavily affected by the impact of the global financial crisis and the recession. Many employers have chosen to delay new recruitment, which is why the £5 billion investment that we have put in place to help the unemployed includes a £1 billion future jobs fund as well as extra training and support for young people across the country.
I thank the Secretary of State for her reply. She will be aware that many people who are not graduates also need help and support in finding employment. What measures are the Government taking to ensure that those without degrees are given as much help and support as those who have left university?
The hon. Gentleman makes an important point because we need to help young people, whatever their circumstances or their level of qualifications, to be able to get into work as rapidly as possible. Currently, more than half of young people are managing to leave the claimant count new jobseeker’s allowance within three months, so a lot of people are getting help. As well as support for graduates, particularly through internships, we are providing additional help for young people through additional training places, the September guarantee, and the young person’s guarantee that no young person should become long-term unemployed. The future jobs fund is also providing youth jobs in the hon. Gentleman’s constituency, and I hope that his party will change its policy and support it, as it is making a difference to young people.
Will the Secretary of State place in the Library information on the breakdown by educational qualification of those who are young and unemployed? That would show just how important the Government’s education reforms are in supporting a safe move from school into work.
I am certainly happy to make sure that that information is available. My right hon. Friend is right that those with lower qualifications and skills are at higher risk not just of unemployment generally but of becoming long-term unemployed. That is why it is important not only to raise the education-leaving age so that more young people stay on in education, but to provide the guarantee that young people do not end up stuck on the dole for the long term. The £5 billion investment to support that is also important.
In the last Department for Work and Pensions questions on 19 October, as reported in Hansard at column 620, I effectively asked the Government to adopt our proposal to give the young unemployed specialist help through welfare-to-work providers after six months. The Secretary of State dismissed this, but yesterday in The Sunday Telegraph, it was reported that the Government were going to change the young person’s guarantee so that in future it will kick in at six months. That is not enough, but will the Secretary of State now admit that she got it wrong and we got it right?
Let us be clear of the consequence of the programme we have already put in place. Youth unemployment figures for the right hon. Lady’s constituency show 2,200 young people on the dole at the moment compared with 4,300 in December 1992—half the level it was in the early 1990s. I would also point out that the investment we have put in place not only provides support at six months but provides it from day one of unemployment—from the very beginning when young people lose their job and need to find work. We are investing to deliver the young person’s guarantee with £5 billion of additional investment. Her party opposes that and she also opposes the young person’s guarantee that we want to bring forward. She has opposed it because she cannot support the investment to guarantee jobs and training for young people.
The Secretary of State is always keen to contrast the performance of the last Conservative Government and this Labour Government with selective figures, so I will give her a contrast. In the last five years of the last Conservative Government, youth unemployment fell by 251,000. In the five years of this Labour Government before the recession began, youth unemployment rose by 129,000. We will give earlier help through welfare-to-work providers and create hundreds of thousands of new apprenticeships, training places, places at further education colleges and work pairings. Is not the clear contrast the one between a Conservative party that has policies to help young people and a Labour Government who have let them down?
What utter and complete nonsense! The right hon. Lady will not guarantee young people a job or training or real-work opportunities for young people right now, and she will not fund the additional investment of £5 billion to help young people right now. As long as Conservative Members oppose the £5 billion investment, they cannot back our young person’s guarantee and the extra help. I have to say to her again that the 18 to 24-year-olds claimant count is 462,000 right now; in the early ’90s it was 784,000; in the mid-80s it was 980,000. This investment helps young people through the recession rather than abandoning them like the Conservatives did time and again in previous recessions and want to do again now because they want to cut the investment and support that is aimed at giving those young people a chance.
May I bring to the attention of my right hon. Friend the report from my constituency, “Northampton Young People and the Recession”? Will she say how she is going to meet one of the challenges mentioned in it—providing targeted help for young people who have quite complex needs and making sure that they get support with social issues as well as training to get them back into the job market as quickly as possible?
My hon. Friend is right. People, especially those with complex needs, need individual support to deal with particular circumstances. She will know that the future jobs fund is providing real job opportunities for young people. The Conservatives have said that they would abolish it, but I know that it is already making a difference in her part of the world. We want to expand on that to provide additional help for, in particular, those with the greatest needs, who might otherwise be at the greatest risk of long-term unemployment.
Winter Fuel Payments
This winter, older people will again receive the higher levels of winter fuel payment: £250, and £400 for the over-80s. We are also maintaining the cold weather payment at last year’s higher rate this winter.
Given that, of all the initiatives introduced by the Government, the winter fuel payment is probably the most universally popular with the over-60s, what does my right hon. Friend think of Members who have described that assistance as a gimmick and believe that it should be abolished?
There are pensioners across the country who certainly do not regard extra cash in their pockets at the time when they need it most as a gimmick. They regard it as a lifeline that helps them to pay their fuel bills in the winter. In 1997-98, about £60 million a year was spent on helping pensioners with fuel bills; now we spend about £2.7 billion a year. I think that that represents a justifiable increase in investment in helping people to get through the winter months.
Workplace Pension Saving
Our reforms to workplace pension saving, including automatic enrolment and the introduction of the personal accounts scheme, will result in between 5 million and 9 million people newly saving, or saving more, for their retirement.
The Minister will be well aware of Conservative criticism of the Government’s appalling record on pensions and the savings culture, but she may not be aware of the comments of the chief executive of the National Association of Pension Funds, who said the other day:
“"The Government can no longer sit on its hands. It must take bold and positive action to help support employer-sponsored pensions.”
Even at this late hour, can the Minister get a grip on the issue, do something about it, and reverse the culture towards pensions that has prevailed in this country for far too long?
The Government are determined to support the provision of good private sector schemes. That is why we are in the middle of putting into effect the Turner commission’s proposals, which will ensure that between 5 million and 9 million people who do not currently have an opportunity to save begin to do so. We know of the hon. Gentleman’s views on the stresses on defined benefit final salary schemes so perhaps he will explain why the Conservatives want to reduce pension saving in the public sector.
What evidence have the Government that tax relief on pension contributions, particularly for higher-rate taxpayers, has any effect on savings for pensions? If the Government have such evidence, will they please send it to me?
I have seen no such evidence, although I have heard plenty of assertions since my right hon. Friend the Chancellor decided to reduce the tax relief available to those who earn more than £150,000 a year. As for the distribution of tax relief accorded to pensions savings, I do not know whether my hon. Friend is aware that 230,000 of the best-off people in the country currently receive £6.1 billion, or 25 per cent. of all that tax relief.
The Minister will know that the Personal Accounts Delivery Authority is now reduced to just two potential bidders to provide the massive IT system for personal accounts and that it will have personal data on millions of employees who have never been pensioned before. Is she concerned about that and, in particular, would she be concerned if one or both of those bidders held those sensitive data offshore?
I would certainly not be concerned about the fact that the competitive dialogue being led by the authority has now reduced the number of potential bidders from four to two. One would expect that as part of a dialogue. Clearly we must be careful about the way in which personal data are held, and it is certainly true that the security of personal data is very important in this context. I assure the hon. Gentleman that those concerns are being taken into account adequately in continuing discussions between the Personal Accounts Delivery Authority and the potential bidders who are still left in the competition.
Workplace pensions are extremely important for employers and employees, but will the Minister also have discussions with the trade unions to encourage them to play a positive role in encouraging such schemes?
I regularly see stakeholders on all sides of the pensions issue, including trade unions, as well as suppliers and stakeholders in the pensions industry itself. The trade unions have long played an important role, such as by providing trustees to ensure that pension funds are properly and adequately looked after and administered. I intend, of course, to continue seeing representatives of all sides of the pensions industry. It is important that employees as well as employers have the confidence that the pensions they are putting aside are being properly administered. That is why it is also important that, for the first time ever, we have the Pension Protection Fund, which ensures that, in the event of private sector insolvency, there are protections for those who have paid into, and invested in, private pension funds.
But can the Minister confirm that 100,000 pension schemes have been wound up since 1997 and that the number of active members has halved from 5.1 million in 1995 to 2.6 million according to the latest Office for National Statistics figures published very recently? Is it any wonder that a survey conducted by the Minister’s own Department showed that 51 per cent. of people do not trust the Government to act in their best interests on pensions?
It is important to understand that the decline in final salary or defined benefit schemes, which the hon. Gentleman refers to, has been going on since the 1960s, when I was at school, so it was rather a long time ago. There is no magic bullet in preserving defined benefit schemes. Perhaps he will also acknowledge his party’s role in the creation of personal pensions and the mis-selling scandals of the 1980s, which also destroyed confidence in pension-saving schemes.
The “Shaping the future of care together” Green Paper set out our vision for a new national care service. There may be a case for bringing together some disability benefits and the adult social care system into a single system, as a better way of providing support to older and disabled people. The Department keeps all our benefits under review.
Many folk in Clacton who have disabilities and whose need is genuine have contacted me to say they are very concerned that they could lose their allowances. Can the Minister guarantee that the deficit will not be fixed on the back of vulnerable people in Clacton who genuinely need these allowances?
I welcome the hon. Gentleman’s interest in disability benefits. We are, of course, concerned about pensioner disability benefits—both attendance allowance and disability living allowance. As the hon. Gentleman will know, about 1.7 million extra people are going to need social care by 2026, so we do need a new system, but I can assure him that those people who are receiving the affected benefits at the time of reform of the care service nationally will continue to receive the same level of cash support.
I represent the most centenarians in the country, and a huge number of senior citizens in my constituency are greatly concerned about any changes to their allowances. Will the Minister put their minds at rest by saying that the changes to, or even abolition of, the attendance allowance, as referred to in the Green Paper, will not mean that 2.5 million pensioners will be £3,500 a year worse off?
I have given an assurance about the arrangements for existing claimants if we introduce a national care service. Many of the hon. Gentleman’s constituents are currently living to 100, and he will be aware that that number will quadruple in 20 years’ time—and I hope he is among them, and that you are, too, Mr. Speaker. The Wanless report identified that, because of the ageing population profile in this country, we will need an additional £6 billion, so we do need a new system. I have assured the House that existing claimants will continue to receive the same cash levels as before, but I think that everyone recognises that we need a new system, and that is why we are determined to bring forward this debate.
The Government have a good record as far as disabled people are concerned, but does my hon. Friend recognise the genuine anxiety among many disabled people about the Green Paper? It is necessary to reassure them that no one who is genuinely disabled will lose out as a result.
My hon. Friend will have heard the scaremongering from certain quarters. I think that we all accept that, with the ageing population, we need a system that is fit for purpose. With increasing age comes increasing cost, and there is a demand for more quality, too. Grappling with these competing demands necessitates that we should come up with a new system. If we do not, the current system will buckle and fall. I hope that my hon. Friend will take the assurance from me that existing claimants will continue to receive the same cash level of support if we introduce a national care service.
May I draw the Minister’s attention to a problem that is affecting some of my constituents who are in receipt of disability and other benefits? If they report any change in circumstance, there seems to be a very long time lag before their new benefit is agreed. In the meantime—and these people are on very low incomes—they are left with no income at all. Will the Minister look into this?
I am grateful to my hon. Friend for bringing to our attention the concerns of her constituents in Milton Keynes. If she provides me with the details of those constituents who have experienced a delay, I shall certainly look into the matter.
It is no good the Minister pretending that this is all Conservative scaremongering, because 34 Labour Members have signed early-day motion 1 and they, along with all the disability organisations, oppose taking away attendance allowance and disability living allowance and folding them into the social care system. The simple question for the Minister is this: the Secretary of State herself, in evidence to the Select Committee, said that older people valued attendance allowance and disability living allowance and the independence and control that they gave them, so how do they benefit if those benefits are taken away and, at best, they are not even given back to them in an individual budget or, at worst, if they lose that independence and control? How do they benefit?
The hon. Gentleman is approaching this from a one-dimensional perspective. I have set out that we have an ageing population and that there will be additional costs in order for us to deliver on a required new system. It took the hon. Gentleman and his colleagues about four months to read this paper before we got a scaremongering response. I have said to his hon. Friends and other hon. Members that existing claimants will have their cash-related income protected as regards attendance allowance and DLA. We need to put in place a system that is fit for the future. We will have a national care system in the same way that we have a national health service, and that is opposed completely by the Opposition.
From October 1997 to the end of October 2009, the numbers claiming jobseeker’s allowance in England have gone up by 163,277 and in Wellingborough by 1,578. This is a change of 14.1 per cent. and 105.1 per cent. respectively. In the same period, employment has risen by 2,685,200 in England and by 11,700 in Wellingborough.
In 1997, Tony Blair said that things could only get better. In Wellingborough, unemployment has more than doubled since 1997. How could Tony Blair have got it so wrong?
Things have certainly got better for those 11,700 people who, thanks to the policies of this Government, are now in work and who would not have been in work before. Things have got better for the 137 people net who came off jobseeker’s allowance last month in the hon. Gentleman’s constituency. I do not hear him celebrating the fact that the figures are now starting to come down in his constituency. All in all, the management of the economy that we have seen over the past year through this recession is in stark contrast to that when his party was in power, when unemployment was deemed a price worth paying. We have now seen unemployment figures that are 400,000 less than those predicted at the time of the Budget in April.
In Leicestershire and Northamptonshire, including in Wellingborough, those who have been on jobseeker’s allowance for 12 months are referred by the local jobcentre to a private sector organisation, the offices of which I visited last week to discuss its approach. How confident is the Minister that the training and support that those outsourced contracts provide will be appropriate to those who seek to find work in a very difficult market?
My hon. Friend is right to point out that, however good the providers are, we also need to ensure that we have policies in place to create work for people to move into. Those providers are paid on the basis of results—for those whom they successfully get into work—and that is a strong incentive for them properly to match the support that is needed with the individuals. The biggest threat comes from the policies that have been put forward by the shadow Chancellor, which The Economist has said would lead to a doubling of unemployment to 5 million.
Was not the pledge of Labour in 1997 to get 250,000 under-25s off benefits and into work? Is it not the case that today there are 300,000 more under-25s out of work than there were in 1997, and that that figure has been rising for many years? Was it not higher before the recession took hold than it was in 1997? Is there not a problem of structural youth unemployment today, and do we not need some fresh thinking rather than the failed policies of the Government?
I am afraid that that is more rubbish from the Conservative party. The pledge on the famous pledge cards in 1997 was about long-term youth unemployment and what would be delivered through the new deal. As the noble Lord Freud said a year ago, that was a huge success. We were able to tackle long-term claimant youth unemployment, which is currently an 18th of what it was in 1997. It has been slashed, thanks to the imaginative ideas of the Government. The problems that we have now are in relation to short-term levels of unemployment.
We have launched a number of targeted initiatives to tackle youth unemployment, as hon. Members have been hearing. From next month, the young person’s guarantee will ensure that all 18 to 24-year-olds on jobseeker’s allowance will be guaranteed either the offer of work, work-focused training or meaningful activity. They will then be required to take up one of those opportunities. The future jobs fund will create 150,000 jobs. About 95,000 jobs have already been approved and some have already started, but the Government cannot prevent youth unemployment on our own. That is why we have launched Backing Young Britain, and I am delighted to report that, as a result, more than 330 employers are already pledging new opportunities for young people.
What measures within the future jobs fund and other initiatives within the Department are focused specifically on disabled young people, the vast majority of whom want to experience the same job opportunities and job satisfaction as has been the experience of their peers?
My right hon. Friend is well known in the House as a champion for disabled people. The future jobs fund is designed to help all young people and, with my hon. Friend the Minister with responsibility for disabled people, the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Chatham and Aylesford (Jonathan Shaw), I am looking to secure good access to all future jobs fund opportunities for young disabled people. Among the future jobs fund bids, First Movement in the east midlands will offer creative arts and outreach activities for people with disabilities, and, in Scotland, the Royal National Institute of Blind People has proposed a number of jobs, including positions such as facilities officers, conferences officers and an admin director.
Programmes such as the young person’s guarantee are to be welcomed, and I am sure that they will do a lot of good. However, does my hon. Friend realise—I do not know what was in the press yesterday, but as far as I am concerned this is the case with the rules today—that there are daft rules? There is a 39-week eligibility wait before one can qualify for that scheme, which means that about a third of young unemployed people in the north-east will not qualify at all. Will the Minister look into this issue and scrap the rule to make sure that all young people get their rights from day one?
Given that my hon. Friend comes from the part of the world that he does, which has been hard hit by the recession, I naturally listen carefully to his encouragements. Of course, we continue to consider the point at which people become eligible for increasing levels of support, according to the risks that they have of becoming long-term unemployed. We will have more to say about that in the next few days.
I am sure that the Minister recognises the anger and frustration of young people and families who find themselves unemployed at this time. Why have the numbers been rising steadily, even before the credit crunch? Does he understand and accept that unemployment when one is young has a long-term, scarring effect, from which people often do not recover?
We know only too well, from our memories of the recessions of the 1980s and 1990s, when the Government of the day thought that unemployment was a price worth paying, about the scarring effect of unemployment, especially on young people. It can damage their self-confidence for the rest of their working lives. That is why we have put such a focus on preventing long-term youth unemployment through the £5 billion investment—opposed by the hon. Gentleman and his party—which has been successful, as I have already said in answers today. That is why, if we consider the international position, we see that our youth unemployment is below the European average and that of countries such as France, Italy and Spain.
Local Housing Allowance
We are taking forward a review of the first two years of the operation of local housing allowance. In many respects, it is effective, but we will shortly consult on the reform of housing benefit. Our aim is a system that is fair to customers, landlords and the taxpayer.
Does the Under-Secretary agree that more private rented accommodation might become available if tenants could opt to have their LHA paid directly to the landlord? The landlord would thus be guaranteed to receive the rent and tenants would not be at risk of accumulating unmanageable debt.
I am afraid that we have no independent evidence to support the hon. Lady’s proposition. Indeed, the number of people living in the private rented sector has increased by 200,000 since November 2008.
The local housing allowance was designed to give people an incentive to shop around; if they could get a rent for below the going rate, they could keep the difference. However, the Under-Secretary knows that the Government plan to scrap that. In those circumstances, why would landlords offer rents below local housing allowance level? Will not they simply put up rents as a result? Is not that a direct transfer from the taxpayer to landlords?
At the moment, we are considering the consultation responses to our proposals about the £15 excess. We will respond to that in due course. I am afraid that I do not accept the hon. Gentleman’s proposition. We believe that the freedom that we have given tenants enables them to shop around. It also gives them more choice, enables them to manage their benefit payments and open bank accounts, and improves their financial inclusion generally.
But why do the Government persist in refusing tenants’ request to have their local housing allowance paid directly to their landlords? That is what tenants want. There is much evidence to show that money goes straight to loan sharks or drug dealers. The policy also reduces the supply of social homes to local housing allowance tenants. When will the Government give tenants the choice for which they are asking?
As I have said, the evidence is unclear. The feedback that we have had from local authorities generally is that most tenants manage their benefit payments and do not get into increasing arrears. Choice is only one aspect of the local housing allowance; responsibility is a key principle. I would have thought that the hon. Gentleman would accept that principle.
Through targeted support and additional funding, we have got 900,000 pensioners out of the relative poverty in which they were living in 1997. However, there are still 2 million pensioners in relative poverty, which we define as 60 per cent. or below of median household income.
Does the Minister acknowledge that a reason for that is the complexity and delay involved in applying for benefits, particularly pension credit, for which the form is 18-pages long and the guidance is 19 pages? Does she not accept that, for many people, that is simply a deterrent, which means that they do not claim benefits? Is that not the Government’s intention? If it is not, surely they could find a better way of ensuring that people who are entitled to benefits get them.
First things first: I am proud to be part of the first Government ever to end the link between poverty and old age. A report published by the Joseph Rowntree Foundation on 3 December revealed that there has been a historic reversal in the fortunes of pensioners over state pension age, who are now at the lowest risk of being in poverty than any other age group. I do very important work with the Pensions Service in attempting to encourage pension credit recipients to claim, and that service makes 13,000 visits a week to the homes of vulnerable pensioners to take them through the claim form. People can claim for pension credit, housing benefit and council tax benefit in the same phone call, and the hon. Gentleman’s own local authority—Aberdeenshire—is one of 203 local authorities working in partnership with the Department for Work and Pensions to improve the take-up of pension credit, and we believe that we are succeeding.
In October 2009, there were 1,582,555 jobseeker’s allowance claimants in the UK, 78,234 in Wales, and 1,603 in the Clwyd, West parliamentary constituency. Employment levels have risen since 1997 by 121,200 in Wales and 6,700 in Clwyd, West.
Almost half of the last quarterly increase in unemployment across the UK was attributable to job losses in Wales, which was particularly hard-hit by the downturn. I know that the Minister’s Department works closely with the Welsh Assembly Government in the delivery of their ProAct programme, so can he explain why in the 12 months to October this year, not a penny was spent under that programme in the county of Conwy, which includes my constituency, where there has been a 50 per cent. increase in unemployment?
The hon. Gentleman is right that I regularly meet Ministers from the Welsh Assembly Government. Over the summer, we were pleased that Wales appeared to buck the trend and be moving in a positive direction. Some people put that down to the effectiveness of ProAct and ReAct. I cannot give him a detailed answer on spending in his part of the world, but I can tell him that in the past year, employment has risen in his constituency, inactivity has fallen and the number of people claiming jobseeker’s allowance fell in the past month.
Gloucester Works Project
This is a good-quality project, providing support to unemployed people and businesses in Gloucester, and bringing together the public and private sectors to ensure that local communities benefit from regeneration. During the first phase of the Quays development, the project has delivered 236 jobs for local people, 67 per cent. of whom had previously been unemployed or facing redundancy. I was very pleased to see this for myself when I visited the project in October to meet people who have secured jobs thanks both to the investment Government are making and to the tireless work of their excellent local Member of Parliament.
I am grateful to my right hon. Friend, who will be aware that Gloucester Works has contributed to a reduction in unemployment in the city of Gloucester in four of the past six months. The project is worth something like £4 million of investment from the Government, so does he share my concern that that funding would not continue should the Opposition ever come to power?
I share my hon. Friend’s concern, because the funding has come from two organisations about which the Opposition are sceptical—the regional development agency and the European Union. As I have said, the project has delivered 236 jobs that would not be delivered if the Opposition’s policies had their way.
Local Housing Allowance
I refer the hon. Gentleman to the answer I gave the hon. Member for Upminster (Angela Watkinson).
To return to where we were on Question 7, would the Minister be surprised to hear that, despite a private landlord contacting Scarborough borough council to inform it that three months’ rent that had been paid to a tenant had not been passed on, and that, before eviction proceedings could take place, the tenant absconded, the council said that it had no alternative but to pay the subsequent payment to the tenant, although they had left the property with three months of arrears?
The hon. Gentleman has told this story, but the overall picture is quite different. In total, across the whole country, there are a million people receiving local housing allowance. It is, on average, £110 a week, and they use that to pay their rent.
I am sure the Minister saw the story in the newspapers last week of a family in west London who were receiving some £180,000 worth of benefits, most of which formed their housing allowance. The hon. Lady previously had plans to cap the very large sums of rent that were paid to families. Can she explain how such an extraordinary state of affairs came about?
We have already acted to cap those high levels of benefit by capping the local housing allowance to the five-bedroom rate. We will shortly be consulting on reform of housing benefit to make it fairer and support access to reasonably priced accommodation. The hon. Lady makes a fair point. Nobody expects housing benefit to pay for a small number of people to live in extremely expensive accommodation, but I point out to her that fewer than 100 households across the whole country receive housing benefit of more than £1,000 a week.
We are taking decisive steps to reduce the level of unemployment, as we have been discussing. Since November 2008, the Government have made available £5 billion to provide more support to jobseekers prior to redundancy, when they are newly unemployed, and at the six and 12-month points of their claim.
My right hon. Friend rightly describes what has been put in place when people are unemployed. Would it not make sense to support people while they are in the workplace? Perhaps we ought to introduce something similar to the ProAct scheme. In that way we will be subsidising people to keep their jobs, rather than retraining them at the jobcentre afterwards.
Thanks to the extra £5 billion that we are spending, one of the areas of investment has been in the rapid response service, which goes into workplaces and works with those immediately facing redundancy, before they start their claim for jobseeker’s allowance, reskilling them so that they can go straight into a different sort of job. In respect of ProAct and whether we should have some kind of wage subsidy scheme, in England we have chosen not to go down that road because of other schemes that are in place. We have heard some debate today about its effectiveness or otherwise in Wales.
Can the Minister tell me why, when in 1997 youth unemployment in the Vale of York and across the country was going down dramatically, we now have record levels of youth unemployment in the Vale of York, as well as those 18 to 24-year-olds not in employment or training?
This may come as a surprise to the hon. Lady, but there has been a global recession. Thanks to that, unemployment has risen, which normally happens during recessions. It has happened during every previous recession, but the measures that have been taken—the £5 billion that we have invested—have lessened the impact of unemployment. We have done considerably better during the present recession than in previous ones.
Will my right hon. Friend urge our right hon. Friend the Chancellor not to cut public spending in the areas of public services and construction in particular, which are labour intensive and should make a considerable contribution to future employment?
Naturally, we are deep in discussions with my right hon. Friend the Chancellor of the Exchequer, but it is beyond my pay grade to comment at this point on the outcome of those discussions.
Private Pension Schemes
My predecessors and I have frequently met representatives of occupational pension campaign groups and trade unions, and I will continue to do so.
The Minister will know that I represent a number of constituents who are in occupational pension schemes that have failed. That has caused substantial concern and grief. Can she confirm that the financial assistance scheme will pay out the 90 per cent. as promised, without conditions? Can she also confirm that there will be full protection for widows and partners of deceased members of schemes?
I am aware that the hon. Gentleman represents areas where there are pensioners in several schemes that have entered the financial assistance scheme because he has been in correspondence with me about that, and I have been more than happy to correspond with him in reply. I can confirm the promise that we issued when we introduced the financial assistance scheme: that members would get 90 per cent. of expected pension, subject to the cap, revalued from the date of wind-up. This is not the pension that they could have expected to retire on if they had continued paying all the way to retirement, but the rights that they had accrued to date.
Disability Living Allowance/Attendance Allowance
I refer the hon. Gentleman to the reply that I gave earlier to the hon. Members for Harwich (Mr. Carswell) and for Southend, West (Mr. Amess)
The Minister did, indeed, reply to Question 4, and his response centred on the rising elderly population and on the escalating costs. He rested his case on false accusations of scaremongering, but I have with me a number of letters from real people, showing the vulnerability that they feel in the light of the threatened withdrawal of attendance allowance and disability living allowance. Why do the Government so blatantly discriminate against the over-65s on disability living allowance?
The arrangements for disability living allowance have been in place for many years, and they precede this Government’s entry into office, as I am sure the hon. Gentleman is aware, and as I am sure he will tell the people who have written to him. We need to set out a new care system. People want a system that ends the postcode lottery: they want a system whereby, if they move from one town to another, they do not have to battle to receive such services. In my earlier reply, I said that an existent pensioner claimant who is in receipt of attendance allowance or disability living allowance will get the same cash total under the new system. In order to reassure the people who have written to him, I hope that the hon. Gentleman will tell them that, and not repeat the scaremongering that we have heard from those on the Opposition Front Bench.
Today, the Secretary of State for Health and I announced a number of publications on mental health conditions and employment. Because of the devastating impact that mental health can have on people and their families, we know that it also costs the economy between £30 billion and £40 billion in lost production, sick pay, NHS treatment and unemployment. We want to do more not only to help people—and their families—who have mental health conditions, but to improve their employment chances, because that is good for the economy, as well as for such individuals and their families. Later this week, the Department will publish its back to work White Paper, with extra help for young people and others who are struggling to find work.
But does the Secretary of State recall the parable of the 10 wise and foolish virgins? Would it not have been wiser for the Government to have prevented the £3 billion worth of benefit fraud and overpayment each year, rather than to set up yet another taskforce, which is foolishly 12 years’ too late?
The hon. Lady will realise that the Government have done a huge amount of work to reduce fraud and overpayments. The progress that we have made has been hugely important, but we want to go further, so it is right that we look both throughout the government and in the private sector at how we can go further and build on the very considerable progress that has already been made.
A constituent of mine, who was successfully helped back into work by the new deal for lone parents, found herself within 3p of losing her carer’s allowance when the minimum wage went up in October. What work is the Department doing to synchronise minimum wage rises with the earnings threshold for carer’s allowance?
My hon. Friend makes an important point, and we are looking at what more can be done to help carers who are often very keen to work, even if they are able to do so for only a limited number of hours, so that they can combine such work with their caring responsibilities. That is one of the issues that we have looked at as part of the back to work White Paper—how we do more to support carers and parents who need more flexible work. I am happy to talk further to my hon. Friend about that issue and the concerns of her constituent.
May I tell the Secretary of State of a constituent who came to see me on Saturday morning? His partner died on 8 September, and he is having tremendous problems getting the child benefit and tax credits that should be paid over to him. He is in desperate straits, and so are his children—obviously suffering the terrible loss of their mother. If I give the Secretary of State’s office the details, will she ensure that the situation is sorted out by Christmas?
I can say that I will look into this immediately. If the right hon. Gentleman gives me the details today, I will get my office on to it straight away. It is important that people are provided with rapid support at a very difficult time. We are trying to work right across government so that, particularly in cases of bereavement, it is possible for people to tell not only our Department but any other area of government, just once, about what has happened so that all areas of government concerned can work together to provide that support rapidly. I am very sorry to hear of the hon. Gentleman’s constituent’s case.
I am very encouraged to hear the stories of how successful Charlton Athletic is being in engaging with young people in my hon. Friend’s constituency. Last week, I was at Stamford Bridge to take part in the launch of the premier league Into Work initiative, which is trying to do similar things. It might be worth Charlton’s linking up with the premier league and Richard Scudamore on that work.
I am happy to discuss funding with my hon. Friend to see whether there is any more that we can do.
The hon. Gentleman knows that we have a Green Paper, on which we are consulting, to provide—[Interruption.] To answer the sedentary question, the problem is that we have an ageing population with increasing demands, and we need to find solutions in order to meet those demands. We have a Green Paper, which we are consulting on, and we are listening carefully to what people have to say. We need to ensure that those who are most vulnerable—those in the greatest need—[Interruption] If the right hon. Member for Maidenhead (Mrs. May) would listen, I repeat that those in the greatest need require support and care, but all she is doing is scaremongering about elderly people in a vulnerable situation. We will come forward with a national care service that will be popular and will meet the needs of future generations, whereas the Conservatives have a blank sheet of paper and can offer nothing other than—
As the hon. Gentleman says, all they can offer is rubbish.
My hon. Friend knows that the future jobs fund is creating jobs in the Dumfries and Galloway council area in gardening, community development and customer services. I take on board his comments in welcoming it. As for how it squares with the policy of the Conservative party centrally, it does not. The Conservatives opposed the investment, and the borrowing that financed it, which has been spent on the future jobs fund. Without that investment put in by this Labour Government, my hon. Friend would not have those 91 jobs in his constituency.
The hon. Gentleman will be aware that as a result of the support that we have put in, particularly for those who are at risk of losing their mortgages, the number of repossessions has in fact been considerably lower than people expected at the beginning of the recession. That has helped a lot of families who had lost their jobs and were at risk of losing their homes to stay in their homes and to get additional support, whether from their local council, from the Government, or from their mortgage company. That has been helpful, and it means that we have not been turning our backs on people as the hon. Gentleman’s party did in the early ’90s.
I thank my hon. Friend for his question and for his commitment to working with people with autism and all disabilities. We seek to provide more opportunities to get into work, and disabled people have seen employment levels rise by about 10 per cent. in recent years, assisted by Access to Work, for which we are doubling the resources to about £138 million, helping about 34,000 people. However, we do need to do more to help people with autism, and I will be pleased to meet him and representatives of the NAS to discuss how we might make Access to Work more flexible and tailor-make it for people such as he refers to.
As I said in answer to an earlier question, the number of people being paid exceptionally high levels of local housing allowance, which I agree are not acceptable, is very small indeed. We will bring forward proposals to tackle the problem in our consultation document on housing benefit, but the hon. Gentleman sheds no light whatever on the matter by suggesting that it is somehow to do with immigration.
On 1 November 2008, the Child Maintenance and Enforcement Commission took over the Child Support Agency, which had a woeful record of using its enforcement powers. Can the Minister tell me, if not today then later, how many driving licences were removed in each of the past five years? Was that power ever used?
I am sorry, but I cannot give my hon. Friend that information immediately. I will have to write to him. As he knows, that is an additional power that we are using to get more non-paying, non-resident parents to pay the maintenance that they owe their children.
I am grateful to the hon. Gentleman for his question. He will appreciate the competing demands in any benefit form. On one hand we must get the right information, and on the other we want to ensure that there is no fraud and mitigate against appeals, which we want to reduce. We have recently revised the DLA form for children, which has been welcomed by a number of children’s organisations. We keep all benefits under review and work in partnership with a range of organisations that advise us, but I am sure that the hon. Gentleman and his constituent understand those competing demands.
In a few moments we will hear more about smarter government. The Department is leading the Government’s “Tell us once” programme, which reduces the number of times individuals have to contact Government to tell them about changes that have affected them. How is it going?
The “Tell us once” initiative has been very effective, bringing together a number of agencies. For example, there has been some excellent work on bereavement in particular, especially children’s bereavement, by St. Guy’s and St. Thomas’s hospital and Lambeth council. We want that successful initiative, which reduces bureaucracy and eases people’s pain, to be expanded, and I hope that my hon. Friend will be satisfied with the responses on it that come forward.
Will the Secretary of State be able to offer any Christmas cheer to those of my pensioner constituents who are victims of Equitable Life?
The hon. Gentleman will know that Judge Chadwick is currently reviewing the circumstances of many people who were affected by Equitable Life, and that there are a lot of problems for a lot of pensioners who have been badly affected. The Government have said that additional support should be given, and we are waiting for Judge Chadwick’s response.
NHS IT Programme
(Urgent Question): To ask the Secretary of State for Health what plans he has for the future of the NHS IT programme, and if he will make a statement.
I want to begin by challenging the myth put around by the hon. Gentleman that the NHS IT programme has been a waste. The programme has changed the way in which the Government pay for IT by creating a contract whereby we pay for what we get from suppliers only when it is fully delivered. Indeed, we have been praised by the National Audit Office for creating such a contract.
The national programme comprises a number of key elements that are already essential to the delivery of front-line services. For instance, digital X-rays and scans, which facilitate faster safer care, are in place in 100 per cent. of hospital trusts; electronic prescriptions are now the norm in general practitioner systems; choose and book—the electronic booking service—provides choice and convenience for patients; GP2GP—the electronic transfer of health records between GP practices—will in time support our policy of abolishing practice boundaries, giving patients more choice; and we also have the summary care record, whereby key information from the patient’s GP record, including current prescriptions and reactions to medicines, can be made readily available.
To put it simply, the programme is a key part of delivering modern, safe, joined-up health care. It is supporting the ongoing reform of the NHS by giving choice and convenience to patients. The NHS could not function without it. However, in the current climate it is right to look again at efficiencies and value for money on all big projects, and at the Chancellor of the Exchequer’s request—and that is what the Minister of State, Department of Health, my right hon. and learned Friend the Member for North Warwickshire (Mr. O'Brien) and I have been doing across my Department.
As part of that, I have looked closely at options for savings on the NHS IT system; it was to those that the Chancellor referred yesterday. The details of those discussions with the IT companies are commercially sensitive and ongoing, but I can give the House this update. My aim in conducting this exercise has been to ensure that the elements of the IT programme that can deliver most benefit to patients and front-line staff are taken forward, while cancelling certain additions to the system where it makes sense to do so.
Let me be absolutely clear: we have no intention whatsoever of cancelling the programme overall, not least because it is already making the NHS safer, more efficient and more convenient for patients. However, we are discussing with our suppliers potential reductions to the scope of the systems and the cost savings that could be generated. In addition, we are looking seriously into the internal savings that can be made from the costs of running the programme. In the light of that work, I can confirm to the House that we are working towards achieving a reduction of £600 million in the lifetime costs of the programme.
That means that we will now pare back the programme to the core elements that have been identified as critical by clinicians. Our aim is to give trusts more flexibility and choice of IT systems, within a framework provided by existing contracts, to keep the benefits of a national approach. Specifically, that could include the IT systems that clinicians have told us are most important to them, such as electronic prescribing; enabling local innovation to take place by linking national systems with those provided by local service providers; and allowing the NHS to design IT systems to fit its local needs.
The programme has already provided benefits, and we believe that this approach will accelerate the delivery of benefits to front-line services and patients across the NHS.
Oh dear, Mr. Speaker. Rarely have we seen a more abject example of the Government’s incompetence. They took central control of NHS IT— £7.5 billion in central contracts and £5 billion in associated costs on top of that. Seven years on, they are over budget and under-delivered. The electronic patient record is four years late at the very best—if it will ever happen. Everyone told them that big IT projects had to be user led, but that one was not. We told them that the system should be decentralised, with local procurement and patient control over health records, but they did not listen. Now the Chancellor of the Exchequer says it has to stop. The Secretary of State is clearly not in charge. The Government got it wrong and the Treasury is now belatedly putting a stop to the continuing disaster.
Let me ask the Secretary of State some questions. Will he now stop the centralised care record system and allow local procurement of care record systems to national standards? Will he allow general practitioners and hospital trusts to be purchasers of their own IT hardware and software from open sources of supply? Will he now be open about the contractual situation with the three local service providers, and about whether, as we suspect, it would now be possible to abandon the existing contracts without penalties—in either direction—because the costs of fulfilling the contracts to the companies exceed the value of the contracts to them? That could deliver up to £4 billion, unspent under those contracts, for support for front-line IT and other services in the NHS.
Will the Secretary of State now have the grace to acknowledge the Government’s failure, the billions of pounds spent without delivery, the spiralling opportunity costs of delays, the confusion and frustrations over IT and choose and book, but—worst of all—the resulting lack of IT innovation in our hospitals, when it has the potential to be of such benefit to patients in managing their care and minimising errors in treatment? Will the Secretary of State just admit that they got it hopelessly wrong?
Let me begin with a phrase that the hon. Gentleman used towards the end of his contribution, about the “lack of IT innovation” in hospitals. I do not know how many he has visited recently, but I do not understand how he can make such a comment on the Floor of the House. The step change in the quality of images available to clinicians is evident to anybody who looks at the NHS today, and because people all around the hospital can view clear images, that has been a real benefit for patient safety across the NHS. I simply do not believe that there has been no innovation or improvement in services. Indeed, clinicians—not Ministers—have today spoken in favour of the changes brought about by the national programme for IT across the NHS—[Interruption.]
Mr. O’Brien, you have developed a bad habit of chuntering away from a sedentary position on the Opposition Front Bench, in evident disapproval of the answer from the Minister. The question has been asked: the answer must be heard.
Before I was so rudely interrupted, I was saying that it is clinicians who have come out today to say that they value the improvements that the national programme for IT has brought. The hon. Gentleman would do well to listen to those voices before he comes here and makes sweeping statements suggesting that that programme has brought no benefit to patients.
The hon. Gentleman said that the programme was over budget and under-delivered. In my statement I mentioned the views of the National Audit Office, and I hope that he will acknowledge that the programme has been praised by the NAO. Its 2006 report said:
“The Office of Government Commerce considered there to be many good features in the procurement process for wider application to government IT procurement. These included elements of contract innovation, which it has built on to develop its good practice guidance.”
It is simply not true to say that this programme is flawed and has not delivered benefits: it has delivered considerable benefits to the NHS and has improved the way in which the NHS contracts for IT. We get what we pay for, and the NHS has learned the lessons of IT failures in the past.
The hon. Gentleman said that the programme was over budget and under-delivered: it is not, and never has been, over budget. The last NAO report confirmed that the cost of the original contracts had not changed and that the overall programme costs, including NHS costs and the costs of additional items such as payment by results and the 18 weeks, are substantially unchanged from the figure of £12.4 billion in the earlier NAO report.
The hon. Gentleman asked about the care records system. That will be a matter for local choice—[Hon. Members: “Ah!”] I said in my statement that we wanted to create a system in which acute hospitals had more choice and flexibility in relation to their IT requirements within a national system. He seems to reject the benefits of a national system across the NHS, but we do not. We believe that there are significant benefits from a national health service having a programme of IT that can link up clinicians across the system. We further believe that it is safer for patients if their records can be accessed across the system.
Let me finish with a comment on the hon. Gentleman’s plans for IT in the NHS.
Order. I do not think that we need to go into that. I know that the Secretary of State has been provoked by quite a lot of sedentary chuntering, which I have just deprecated, but may I urge him to be economical in his replies? I am keen to get Back Benchers in as well.
The Secretary of State was provoked into whistling in the dark by claiming that the programme had been a success. He quoted the NAO report, but did not the Public Accounts Committee conclude in January that the programme was, among other things, “very disappointing,” and
“not providing value for money,”
that estimates of costs were “unreliable”, and that the system had “little clinical functionality”, as well as reporting
“understandable concerns about data security”?
That does not sound to me like a system that is going well. Is this not the classic case of an IT programme that is too big, too expensive, too late and insufficiently planned? By building the system from the top down, the Government have smothered the option of local schemes with interoperability, which would, I agree, have been a better solution.
Do the enormous compensation counter-claims by suppliers of which we read represent a contingent liability against the NHS? If so, does that mean that they will be paid at the expense of front-line services? The Government’s dithering over cancellations of quite large elements of the scheme has resulted in eye-wateringly large amounts of money being sunk in a scheme that has produced nothing like the benefits claimed for it, but which has, I am afraid, used a great deal of NHS money for very little result.
The hon. Gentleman also seems to have misunderstood the very nature of the contract. It was an innovative contract that meant that the NHS paid only once it received the system and the system had been passed over and was operational. That was a step forward in how the NHS paid for IT systems.
The hon. Gentleman quoted the NAO at me, but the NAO recognised the improvement in contracting that came with the system. If he is saying that it is not right, in the current climate, for me to take a look at the system and see whether we can make savings, then quite honestly I disagree with him. It is right that we should look at the system again in the current climate and, where we can, make savings.
Let us be absolutely clear: we are being led by clinicians on this issue. They are saying to us that they value the improvements in patient safety and the reduction in errors that have come with the national IT programme. The British Medical Association issued a statement today to that effect, and I think that I would prefer to listen to the BMA than to the hon. Gentleman.
We can make savings and pare the system down to the core elements that have been identified as important by the clinical community. If I may, let me give the hon. Gentleman a specific example of those changes. We have made a big investment in GP systems. GP systems are working well across the country and have high levels of satisfaction. GPs are happy with them and they are internationally recognised. Recognising that, we have agreed that we will not now go ahead with the replacement of further enhancements to that system, because people are happy with it. It is working well, and technology makes it possible for those parts of the system to talk to other parts.
We are looking at the system again in a new financial context, but the technology also makes possible other developments that were not available to us when the programme began. It is right that we should always re-examine the system in the context of current developments.
In rejecting the siren voices from those on the Opposition Benches, who clearly know very little about computer systems, may I ask my right hon. Friend to undertake some research into the productivity gains that some of the systems have produced? As a customer of the health service over a number of years and from discussions with consultants, I can say that it is unambiguously clear that massive improvements have been made. However, they need to be studied and published, so that people understand properly the value of that incredibly sensible investment.
I could not agree more with my hon. Friend. For instance, the widespread use of the choose and book system in general practice makes it much easier for GPs to have direct access to referrals in secondary care. I would argue that that cuts out significant amounts of time in the referral process. It is also better for patients, because they can see in their GP surgery, and have explained to them, the options open to them in booking a secondary appointment. I agree entirely with my hon. Friend: there are huge productivity gains to be had for the NHS and it is right that we press on with the system.
I am left gasping by this woeful performance. The Secretary of State talked about GPs doing well, but GP Systems of Choice was the reason why they were doing well—and that system came before the national programme. It is also no accident that he referred to digital scanning. That was added to the programme in September 2004, and it is an example of something that worked; it had nothing to do with central patient records. I could go on about this for ages, but you would not let me, Mr. Speaker. Can the Secretary of State explain how the NHS could not operate without the system, as he says, while at the same time the Chancellor of the Exchequer says that it is of no value to the front line? Which is it?
I said clearly that there are elements of the scheme that can now be pared back. I also made it clear that one of those elements was the enhancement to the GP system, which is unnecessary because GPs are happy with how the system is working now. If the hon. Gentleman is saying that there have been no benefits for hospitals from the PAC—picture archiving and communications—system, I do not agree with him. There have been significant benefits for patient safety and the reduction of errors. The strong support from clinicians for the system that they now have refutes what the hon. Gentleman has just said.
In conducting the review, will the Secretary of State also look at the business service authority’s plans to outsource its IT infrastructure? In doing that, it has ignored the views of the work force about where the greatest savings could be made.
My hon. Friend raises a separate issue, and I promise to come back to him with a detailed reply. It is important in the coming period for the NHS to make savings from back-office functions. That is the right thing to do in the current climate, so that we can put every possible support into the NHS front line. I will give my hon. Friend a detailed answer on shared business services.
The history of this Government’s involvement in major IT projects has been woeful, as was confirmed by the latest Public Accounts Committee report. For future reference, will the Secretary of State explain why this major IT programme was imposed from the top, rather than being user led?
It was both. There was a clear drive to improve IT across the NHS, and I make no apology for that. To support the reform in the NHS that this Government wanted to see, we needed a better IT system that reflected a national health service, and could be interoperable across the huge NHS system. Choose and book has facilitated the policy of giving patients choice, and I have mentioned the GP2GP system in which whole patient records can be transferred electronically. That will soon support the abolition of practice boundaries, so that people can have a full choice of GP. We are supporting reform in the national health service, but we have listened at all times to the voices of the clinicians. That is why they have come out today and strongly supported the system.
A quarter of all prescriptions go to pharmacies electronically; I think that that involves about 155 million prescriptions. How will my Friend’s statement today affect the future of the electronic prescription service?
My hon. Friend is right to focus on the potential benefit of electronic prescribing. In my view, it could be further developed. He cites a figure for electronic transfer between GP surgeries and pharmacies, and I think that there is scope for further progress so that we could move to a paperless system for prescriptions. I will give him an update in due course, but this is an important area that is working. As I said in my statement, where the system is working, we will press on and ensure that we derive full benefits for the NHS front line.
If there is any further delay in the summary care record, will the Secretary of State look at the work being done by Coventry university and the City university, London? They are producing a most exciting, cheap, simple, personalised smartcard with an extendable memory stick, which could solve most of the problems of the summary care record.
I can give the hon. Gentleman an assurance that I will take a look at that particular system. As I said to the hon. Member for Somerton and Frome (Mr. Heath) a few moments ago, as we hear of good practice around the system and as developments in technology make it possible for new developments to be considered, it is always right for us to reflect on them to see whether we can improve the system. Knowing the hon. Gentleman as I do, I suspect that that initiative has the strong endorsement of clinicians and has been led by clinicians, so I give him the assurance that I will take a further look at it.
Of the NHS IT programme, the Secretary of State said earlier today in the House that the Government would “only pay once it has been received and is operational”. As a measure of the proportion of the NHS IT programme that is operational, will the Secretary of State tell the House what percentage of the cost has been paid by the NHS so far?
I have a precise figure, but it is not in front of me right now. I can tell my hon. Friend, from memory, that I believe that about 40 to 50 per cent. has been paid out so far. While the overall contract value has not changed, with this contract we pay only as we receive the benefits. I will come back to my hon. Friend with the precise figures. As of today, however, we are making clear our intention to make £600 million savings from the overall contract value, which will be achieved by paring back elements of the system that we do not believe are any longer necessary.
Will the Secretary of State please say what the effects of the proposed cuts will be on the interoperability of the English and Welsh NHS IT systems? This has already been a cause of concern to, among others, the BMA in Wales.
I am afraid that I will have to reply later to the hon. Gentleman about whether the changes that we are announcing today will have any impact on hospital administration in Wales, but I give him an assurance that I will come back to him on that subject.
We all listened with interest to the Secretary of State’s excuses, and with some disbelief to his comments. However, can he advise us whether the taxpayer is likely to face any contractual penalties after his statement today?
We have relationships with the commercial sector here, and as I said in my statement, some are commercially sensitive. We want to deliver a successful system, while also recognising that the companies involved have contractual commitments. We are working through those issues; that is why I gave a broad update on the discussions. I am sure that the hon. Gentleman would accept that I cannot go into much more detail. Let me make one further point: this is about delivering a system that is affordable, but also does a good job. We are not going to do it on the cheap, as the hon. Member for South Cambridgeshire (Mr. Lansley) suggests. I fear that the proposal to hand over the job to Google or Microsoft, or whoever else the Opposition have in mind, would simply not do a secure job for the NHS. If the hon. Gentleman wanted to do things on the cheap, I think that he would pay the price later.
It is absolutely unbelievable that the Secretary of State can come to this House without knowledge of the contingent liability to the NHS resulting from the cancellation of the contracts. Will he please say now what the contingent liability is, and stop dodging the question?
That is not what I said; perhaps the hon. Gentleman was not listening or paying attention. We have a contractual commitment and, as I said to his hon. Friend the Member for Bexleyheath and Crayford (Mr. Evennett) a moment ago, the discussions are commercially sensitive. I am afraid that I am not going to go into those details on the Floor of the House today, although if I can provide the hon. Gentleman with any further details through correspondence, I will do so.
With permission, Mr. Speaker, I would like to make a statement on “Putting the Frontline First: smarter government”, a Command Paper that I am presenting to Parliament today.
This Government are very proud of Britain’s public services and Britain’s public servants: our doctors and nurses, who treat 1 million people every 36 hours; our police teams, who have brought down crime by a third; the teachers and support staff in our schools, who have helped record numbers of young people get record exam results this year; our job centre staff, who have helped 2 million people move off unemployment since last November; and, of course, our armed forces, serving with such distinction in Afghanistan and around the world.
We always knew that with the right backing, Britain’s public servants could transform the quality and standards of public service in this country, and over the last decade they have—not by some happy accident, but by the work of careful design and determined investment. NHS investment has doubled, education investment is up by 60 per cent. and investment in public order and safety is up by 50 per cent. All that was achieved while over-delivering by 20 per cent. on our Gershon review savings of £26.5 billion in the three years to 2008.
Thanks to that effort, we have reached a point at which the investment gap that we inherited in 1997 has been fixed. We have not only reached but exceeded international averages for spending on education and health. We are at a turning point. In the decade ahead we can capitalise on the great strengths that we have created, and set out a new way of driving standards in public services up, while we drive the deficit down.
I am laying before the House today a Command Paper showing how the Government will set about that task in the years to come. It draws together more than 12 months’ work from literally thousands of people across public life, the private sector, charities and voluntary groups. I particularly thank Sir Michael Bichard, Sir Tim Berners-Lee and Nigel Shadbolt, Martha Lane-Fox, our efficiency advisers Gerry Grimstone, Lord Carter of Coles, Martin Read and Martin Jay, and those from across the third sector who have advanced the relationship between Government and civic society.
Today’s Command Paper summarises what we have learned from that work, but our starting point is a relentless focus on standards. We are ambitious for Britain’s future: we know that we can do well in the years to come. However, we know that if Britain’s families are to do well in the future, they will need first-class public services to support them. We will make first-class standards in public services not a privilege for the few but the right of all, by setting out—in health, education, policing and, in time, social care—new entitlements to high-quality public services, backed where appropriate by the force of law.
To help citizens to hold local services to account, we will revolutionise the free availability of comparative information on police efficiency, hospital costs, and Government and local authority spending. We will ensure that services, where they can, fit in with the demands of modern life by putting more services online, and we will redouble our efforts to persuade more people to use the internet. Today I can announce the provision of a further £30 million with the aim of getting 1 million more people online by 2012. We will free public data created using taxpayers’ money, including Ordnance Survey mapping and boundary information. We will make it easier for civic society to contribute to public life by pressing ahead with a new social investment bank, and by testing social impact bonds.
Our second principle will be to free up the front line to innovate and collaborate by cutting back on ring-fenced budgets and national targets. I am therefore setting out today 10 steps that I, with the Secretary of State for Communities and Local Government, have drawn up to provide local councils with a range of trading, joint-venture and regulatory flexibilities. I believe that if we set in place strong rights to high standards and free up the front line to innovate, we can cut overhead costs at the centre.
We are already on track to deliver £30 billion of savings between 2008 and 2011, but today I am setting out steps to save £12 billion more, and in the pre-Budget report we will set out further difficult choices that will have to be made if we are to halve our deficit over four years.
First, we will reduce the costs of the senior civil service. I am announcing today that we will reduce senior civil service costs by 20 per cent. by 2012-13, and seek to move 10 per cent. of civil service posts that are currently in London and the south-east to other parts of the country in the medium term.
Secondly, Bill Cockburn, chair of the Senior Salaries Pay Review Body, will review senior pay across the whole of the public sector, reporting to Government in time for next year’s Budget. In the meantime, I will personally review all proposals for salary offers above £150,000 set by Government.
Thirdly, we are publishing today plans drawn up by all Secretaries of State to increase the administrative efficiency for which they are accountable in human resources, IT, collaborative procurement and asset management. I am also publishing benchmarking information for all central Government Departments and major agencies, showing exactly where we will focus to deliver £9 billion of efficiency savings over the next few years. I am also today setting a goal of saving £1.3 billion by putting services online, halving the consultancy bill and reducing our marketing spend by a quarter.
Fourthly, I am announcing today the first results of a comprehensive review of arm’s-length bodies, which will report by the time of the 2010 Budget. We will save £500 million a year from changes introduced by the review, and as an interim step we will abolish or rationalise 123 arm’s-length bodies, subject to the necessary consultation and legislation.
Finally, I believe that, as part of this new future, the Government must either sell or transfer to different owners the things they no longer need to own. I am therefore publishing today an asset portfolio listing the state-owned assets that Government can commercialise over the medium term. It includes options for the future sale of the Tote, the student loan book, the Dartford crossing and the high-speed rail link, and potential alternative forms of ownership of British Waterways agreed by myself and the Secretary of State for Environment, Food and Rural Affairs. Our policy will also include a new approach for testing where publicly owned assets should be transferred for use by the third sector.
The Government believe this country is both richer and fairer for the strength of our public services. We will never compromise on high standards, but neither will we ever compromise in our search for value for money. Today’s Command Paper sets a new path for the future that draws on the strengths created through a decade’s work, and I commend it to the House.
I am grateful to the Chief Secretary for letting me have a copy of his statement in advance—not that it, or the Prime Minister’s speech this morning, tells us anything much that we have not heard before. The paper is a series of reheated announcements that underline Labour’s failure over 12 years to get to grips with public service reform and to cut the waste and inefficiency that have been allowed to multiply.
We were told that all services would be available online, but Tony Blair pledged in 2000 that all services would be available online by 2005, and they were not. The Government tell us they will roll out a “tell us once” service for births and deaths, but they have already told us about “tell us once” three times. There is also the reannouncement of the sale of the Tote: that is a 1997 manifesto commitment that has been reannounced several times since, most recently about six weeks ago at that Dispatch Box. The story is the same for crime mapping, ring-fencing, NHS tariffs, e-auctions, and so on and so on. In addition to the reheated announcements, there is the usual sprinkling of stolen policies: the quango cull that the Leader of the Opposition announced in July this year, and the high-level sign-off for top public sector salaries.
There are also the pledges to undo some of the damage the Government themselves have done during their 12 years in office. The Prime Minister said in this morning’s speech that the Government will cut marketing and communications spend by 25 per cent.—after more than quadrupling it since 1997. Since 2000, they have poured billions of pounds of taxpayers’ money into unreformed public services, borrowing and spending like it was Monopoly money, and talking about efficiency but never delivering it.
That has happened not because the Government do not understand—the Prime Minister said in a speech to the Institute of Directors in 2001:
“The efficiency we seek in the private sector we demand in the public sector…Government at every level—national, regional and local—must raise its game.”
It is also not because they did not have good advice—tens of thousands of man-hours spent on reviews and report writing have identified tens of billions of pounds-worth of potential efficiencies. But the Government have not been able to translate that into real cashable savings. Gershon identified £21.5 billion-worth of savings, and while the Chief Secretary has just claimed some fantasy figure for delivered Gershon savings, the National Audit Office says the Government only delivered £3.5 billion in real, hard cashable saving. That is less than 0.1 per cent. of total public spending over the period in question.
Today, Sir Peter Gershon has joined our public services advisory board, along with Mr. Bernard Gray, the author of the defence procurement report whose conclusions were so damning that the Prime Minister tried to suppress it, and Dr. Martin Read, whom the Chief Secretary has just mentioned and who chaired the Government operational efficiency review. They will advise us as we develop our agenda for a truly radical, bottom-up reform of public service delivery, based on the principles of transparency, alignment of incentives, freedoms to innovate and support for change. They will help us to deliver a genuine culture change in Government and public services by ensuring that efficiency gain and productivity improvement become a central part of the day-to-day business of our public sector, not some alien imposition visited upon it whenever an election is approaching.
The truth is that our front-line public services can be protected for future generations only by genuine reforms—reforms that will close the productivity gap and ensure that those services are affordable for future generations. For 12 years, Labour has demonstrated that it can talk about efficiency but it cannot deliver. The Government’s record speaks for itself. Between 1997 and 2007, according to the Office for National Statistics, public sector productivity fell by 3.4 per cent. while private service sector productivity grew by more than 20 per cent. That is a measure of the scale of Labour’s failure on public sector efficiency. When the Government have failed so comprehensively for 12 years, why should anybody believe that they will succeed with this mishmash of reheated announcements and stolen clothes in the dying months of their rule?
The Government are ducking the hard questions. The Chancellor is talking about reducing spending while the Prime Minister is making new spending pledges at his party conference and the Schools Secretary and the Transport Secretary are telling us that their budgets will not be cut. Will the Chief Secretary confirm today that there will not be a departmental spending review before the Budget in the spring? Is that what the Chancellor of the Exchequer was telling us yesterday?
As the Chief Secretary has adopted a raft of our policy proposals, let us see whether he will match some of our pledges. Will he, for example, match our pledge to cut by one third the administrative cost of Whitehall bureaucracy and quangos during the lifetime of the next Parliament, saving £3 billion a year for the front line? Will he cap the biggest Whitehall pensions, as we have pledged to do, so that the taxpayer will not contribute any further to pensions that are already worth £50,000 or more? Will he give some clear purpose to these efficiency savings by matching our pledge to deliver real-terms spending increases year on year to the national health service, protecting our most important public service?
The Prime Minister said in his speech this morning that
“there will be no hiding place for Ministers or civil servants who fail to drive increasing efficiencies”.
Let me tell him that there is no hiding place for a Prime Minister who has not only failed to deliver value for money in public spending, but been the roadblock to real reform for a decade. Today’s offering is too little and, for the Prime Minister and his Government, it is too late.
May I say for future reference that the response from the Opposition Front-Bench spokesman was longer than the statement itself, and we really do not want that to happen again?
I shall be brief in my reply, Mr. Speaker. That was an extraordinary response. The hon. Member for Runnymede and Weybridge (Mr. Hammond) claims that there has been no reform in public services. Crime down by a third is reform. He says that there is no reform, but exam results are 50 per cent. better for our young people. That is real reform. He says that there is no public service reform, but getting people in to hospital in four and half weeks instead of 18 months is real reform that the public care about.
The hon. Gentleman prayed in aid the NAO. The truth is that when the NAO considered the Gershon savings, it said:
“Projects across the Programme are making”
“improvements to the efficiency of public services.”
It went on to say that all of the £26.5 billion savings met the most robust category in its conclusions. The hon. Gentleman went on to talk about productivity and tried to pray in aid some contributions from the ONS. Of course, the ONS said:
“These are experimental statistics and work continues to develop the measures.”
I know that there is a taste for experimentation among some people on the hon. Gentleman’s team. I hope, however, that it does not extend to the selective use of statistics.
The hon. Gentleman talks about our matching his plan to save £3 billion from Whitehall. We are saying that we will save £12 billion, not only from Whitehall but from the wider public sector, over the next three to four years. Of course, there are a few proposals that I have examined in drawing up these efficiency plans today. I could, for example, have set out proposals to scrap ID cards, which I was told by some quarters would save £2 billion. In fact, on closer inspection, it turns out that that would save no more than £50 million to £100 million. I was told that abolishing regional development agencies would save “a huge amount.” It turns out on closer inspection that it would save merely £180 million. I was told that capping public service pensions at £50,000 would save hundreds of millions of pounds. In fact, it turns out that it would save but a small fraction of that. I was told that taking child credits away from families who earn more than £150,000 would save £400 million a year, but it turns out that it would save only £45 million a year. I was told that bringing forward changes to the retirement age could save £13 billion a year, but it would make no impact whatever on the deficit in the next Parliament.
The truth is that every one of those proposals was put forward by the Conservatives, but it turns out that none of them was worth the paper it was written on. No wonder the hon. Member for Runnymede and Weybridge has had to hire a group of Government advisers to answer an SOS—stand up our savings—from the shadow Chancellor, and no wonder he told us this morning that the front line would suffer under the Conservatives, because he has nothing else to pay for the £10 billion-worth of tax cuts that he has promised to people who are rich enough not to need them.
Much of the statement is uncontroversial and, indeed, blindingly obvious. Let me start with the efficiency savings. Is not there a basic problem with announced efficiency savings in Government? If they knew that there was inefficiency, why had not they dealt with it already? To what extent is this new?
Let me pick up on a particular item to clarify what the Government are doing. They say that they are cutting the consultancy budget by 50 per cent., but 50 per cent. of how much? What is their consultancy budget? There are estimates that it could be in the order of £20 billion. We discovered on Friday that they are paying more than £100 million a year for consultants who are advising on the bail-out of the banks alone, so what is the consultancy budget that is now being cut by half?
The Chief Secretary said that he is personally going to vet pay of more than £150,000 a year. He is going to be a very busy man. How many people in the public sector are paid more than £150,000 a year, whose salary he will vet personally? Are we talking about GPs and dentists, heads of quangos and the dozens of people in the BBC who are paid more than the Prime Minister? Whom does he mean and how many of them are there? Are we talking about hundreds or thousands of people?
The Chief Secretary also suggested that he will save lots of money by reducing the number of targets for, and the amount of, monitoring of local government. That is admirable, but I understand that the Government currently spend £1 billion to £1.5 billion on various audit bodies, notably the Audit Commission, in overseeing local government. How much of that budget will be saved and how many officials who are employed in overseeing local government will no longer be required? If he is genuine about restoring autonomy to local government, why does not he consider ideas such as giving them significantly greater freedom over the business rate system?
Let me make a specific point. The Chief Secretary says that the Government are to give away, free of charge, data from the Met Office and the Ordnance Survey. That sounds straightforward, but those organisations survive by selling data, so if they have to give their data away for free, how will they function as organisations, especially now that the Government plan to privatise them? How can the Government privatise organisations that do not have any income?
I am grateful for the hon. Gentleman’s welcome for at least some of these measures. I think that there is a direction of travel in some of the reforms that Liberal Democrat Members will welcome, not least the move towards greater freedom and flexibility for local authorities. When he has had time to study the report in some depth, I think that he will welcome some of the flexibilities that we have talked about. On Wednesday, my right hon. Friend the Chancellor will announce further measures, which attempt to bring a degree more freedom from the regime of inspection and performance setting that has helped to drive up service standards over the past 10 years. We will be able to retire some of that regime in the years to come, and there will be significant savings as a result. It is right that many of the relevant reductions in targets should wait until the next comprehensive spending review, so that the plans that are drawn up reflect the resources that are provided.
The hon. Gentleman asked some specific questions that I will try to answer. First, he asked about consultancy bills. My goal is to save about £512 million from the consultancy bill by 2011-12, by reducing it by 50 per cent. He asked about pay, and I reiterate that we have asked Bill Cockburn, the chair of the Senior Salaries Review Body, to draw up proposals on how to bring greater transparency to the system of setting senior sector pay and how to make sure that value-for-money bodies such as the Audit Commission and others are given a greater role in scrutinising those offers. The simple answer is that I believe that too many people are paid more than £150,000, and my goal is to exert downward pressure. That is partly why I say that we should cut the costs of, for example, the senior civil service by 20 per cent. in the next couple of years.
On data, we must get the balance right. Organisations such as Ordnance Survey can make a great deal of money by supporting specialist engineering and mapping companies with high-quality data. Ordnance Survey runs one of the best—if not the best—mapping services in the world. When there are opportunities to make available information such as low-resolution maps or boundary data, the public should be able to get hold of it free of charge.
Does the Chief Secretary agree that some of the biggest public expenditure is on late intervention and is the cost of failure—of prisons, magistrates courts, welfare benefits and so on? Does he therefore accept my welcome to the green shoots in the Green Paper, including the social investment wholesale bank—perhaps we can tidy up the names—and the social impact bonds? Those constitute early intervention and are cheaper and much more efficient because they ensure that society benefits from the consequences of success, rather than suffering those of failure.
May I put on the record my personal thanks to my hon. Friend for his work in not only championing new approaches to early intervention, but bringing pressure to bear on finding innovative forms of social finance? Social impact bonds appear in today’s Command Paper partly because of his work in lobbying for such change. In my authority of Birmingham, we have found that investment in early years can produce savings later in life. I think that Birmingham city council found that for every pound invested in early years, something like £4 could be saved in the criminal justice system later. Sometimes, different agencies from those responsible for early intervention reap the rewards of such intervention. Social impact bonds are a new way of bringing some of the incentives back into line. It is therefore right to test them out.
The Prime Minister said this morning that in health, schools, policing and social services, there had been
“excessive salaries and unjustified bonuses”.
Why were they allowed?
The hon. Gentleman knows that in the British administration a great deal of flexibility is given to, for example, local authorities. That is why it is right to look hard now at not only what constitutes the right level of pay for senior executives in different parts of the public sector, but the legislative changes that may be required to enable Ministers, when necessary, to exert downward pressure. I do not think that such legislative power is currently available in some parts of our public life, such as universities, further education colleges or local councils, but we have asked Bill Cockburn and his advisers to tell us a little more about that.
I am delighted that my right hon. Friend is looking to scrap or rationalise 123 quangos for starters—not before time. One chief executive of a quango told me that he was on £1,000 a day. That is disgraceful when there are public sector workers at the bottom who are paid £10,000 a year. We need to protect them and keep them in work to keep the economy going, and we need to ensure that we get rid of some of the fat cats.
There are obviously some complicated parts of public administration in this country. For example, the health service is a big and important organisation, which spends somewhere north of £90 billion a year. We want first-class people running such organisations. However, in such times, it is incumbent on senior leaders in public life to show leadership on pay. The Government have therefore said to the pay review bodies that we expect a pay freeze for the senior civil service, and pay awards of no more than zero to 1 per cent. for civil servants more generally.
The Chief Secretary has talked about reducing senior civil service costs by 20 per cent. by 2012-13. What has he planned for redundancy costs? Will redundancy be voluntary or involuntary?
Obviously, we hope to achieve most of our cost savings through voluntary redundancy, natural wastage and so on, but I certainly cannot stand here today and rule out the possibility of compulsory redundancy. The hon. Lady will know that we introduced reforms last week to the compensation arrangements available to civil servants, which are projected to save something like half a billion pounds over the next couple of years.
The Chief Secretary will remember—and you will, too, Mr. Speaker—that about six weeks ago, I asked him about this crackpot proposal to privatise the Thurrock-Dartford crossing. I asked how it was going to be done and what his brief said, and he held up a blank sheet of paper. He will understand why I am irritated. What is the answer to my question of six weeks ago, and how is he going to do it, bearing in mind that tolling is only allowed under the European directive as a mechanism against congestion? It is not a cash register for the Treasury. How does he propose to sell this and offer the purchaser some return? I just do not understand it; it is crackpot—daft.
I am grateful to my hon. Friend for that question.
What is the answer?
The answer is that there is no European or other legal impediment to the proposal that we have introduced for the future of the Dartford crossing. My hon. Friend will know that it remains within the Government’s power to regulate tolls on the crossing.
Will the Chief Secretary do me a very great favour? Will he read an account of Britain after 12 years of Labour rule written in plain, simple English, shorn of the jargon with which his statement was laden? It is “Bog-Standard Britain” by Mr. Quentin Letts.
Sometimes I am forced to read the words of Quentin Letts, but I tend to avoid it when I can.
Will my right hon. Friend reflect on the exchange that took place earlier today about disability living allowance, and look at this as an opportunity to re-examine business processes and why we do things in a particular way? There are lots of areas in which we can make significant productivity gains by making delivery more customer-focused. DLA is a classic example, but the relationship between, for example the Department for Work and Pensions and housing benefit is another, and there are many others in which a more customer-focused approach would benefit not only the customer but the Treasury, too.
My hon. Friend is right and, as I said, I am particularly grateful to Sir Michael Bichard and public servants across 65 local authorities and a number of constabularies and primary care trusts who are looking at how we can bring together the administrative services run by central and local government to eradicate exactly the kind of inefficiency to which my hon. Friend points. We will have more to say about how we take those findings forward in the Budget next year.
I thank the Minister, both for the statement and for giving us early sight of it. Some of the measures are sensible, not least the ending of ring-fencing for council budgets. The Scottish Government have already done that. At its heart, though, this is £12 billion of additional cuts, some beginning next year, over and above the 10 years of austerity promised by Lord Mandelson. Given that even the CBI has argued that additional fiscal tightening should not take place until 2011-12, lest it risk a fragile recovery, what steps has the Minister taken to ensure that the cuts in the document do not lead to the weakening of recovery from recession?
If we want to grow our economy in the years to come, we have to make sure that we have strong public services in this country that stand behind families who want to get on in life. The hon. Gentleman knows that if we want to raise standards in public services at the same time as halving our deficit, we must make sure that our economy grows and that we make the right decisions on public spending and on tax. That is a presentation that my right hon. Friend the Chancellor will make to the House on Wednesday, but the hon. Gentleman will surely admit that if we want to raise standards and investment in front-line services, it is right to look for inefficiencies that we can cut at the centre of government, and today’s plan sets out a way to do that.
I am very pleased that my right hon. Friend has decided to keep standards at the top of his agenda and to axe many of the targets and inspectorates that maintain those standards, but can he elaborate on how he expects consumers of monopoly suppliers who know no other standards to raise those standards? What role does he see for professional external scrutinisers in maintaining or raising standards?
There are two ways in which we can exert greater popular pressure to push up standards in front-line services. The first thing that we can do is set out a range of guarantees to high-quality public services. That means, for example, the right to see a cancer specialist within two weeks if a specialist is worried that a patient has cancer, the right to a good local police team and the right to one-to-one tuition for a child who is falling behind at school. With those rights in place, it is much easier to judge whether public services are delivering for consumers. That is why, in today’s Command Paper, we have set out steps to free up the kind of comparative information that allows people to see how services in their area are doing compared with others, and whether they are performing in a more efficient way than others.
Neither in the statement nor in the earlier urgent question has the Minister made it clear how much he will save on the NHS supercomputer. The NAO says that the Government have spent £3.6 billion already. Can he confirm that that figure from the NAO is accurate?
I would need to check the date of the figure that was published by the NAO. The basic point is that, at a time when we are trying to drive standards up and the deficit down, in some parts of Government we will have to make difficult decisions about whether programmes that are in place are contributing enough to front-line care or whether they can be put off. There will often be difficult decisions. The decisions that we have set out in the Command Paper are difficult but doable.
Will not the smarter state end up looking very stupid if we outsource, sell off or transfer to the private sector and then are ripped off down the line? Are there any functions from which the Government intend to withdraw entirely? Does my right hon. Friend worry, as I do, about the morale of those working in a public sector that is constantly denigrated and told that it is useless?
I do not have quite the same apoplectic vision of public service reform as my hon. Friend. Sometimes there are efficiencies to be had through outsourcing certain services, particularly in finance, IT and so on. I make no apology for that. The prospectus that we set out this afternoon will be enthusiastically received by front-line public servants, not least because of its promise of greater freedom to innovate and do things in a different way locally.
I do not know whether the Chief Secretary has been watching too much of “Bargain Hunt”, but it is clear that the Government are keen on selling off the family silver. His listed a raft of things that would be sold off, but he did not mention Urenco. Will that still be sold off?
We will certainly explore options for commercialising our stakeholding in Urenco, yes.
I welcome my right hon. Friend’s statement, but I urge him to go a little further in respect of quangos. He suggests saving only £500 million by abolishing or rationalising 123 of them. May I ask him to give me an early Christmas present—less quango for Marris?
I think I can promise that. The final report from the review of arm’s length bodies will be published at the Budget next year. The 123 arm’s length bodies that I set out this afternoon are merely an interim step.
Point of Order
On a point of order, Mr. Speaker. During his remarks in response to me earlier, the Chief Secretary referred to the Opposition hiring certain former Government advisers to advise them. Would the right hon. Gentleman like to take this opportunity to make it clear that he understands that no money is changing hands in any of these transactions, and that anyone who has made the decision to advise the Opposition has done so because he believes that that is in the best interests of this country?
The Chief Secretary may offer a brief reply if he wishes, but he is not under any obligation.
I am happy to offer the clarification that that is my understanding. I spoke to Dr. Read last night and he made that point to me very clearly.
I am grateful.
I beg to move, That the Bill be now read a Second time.
Today is an appropriate day to discuss the Energy Bill—at the opening of the Copenhagen conference and before the ministerial meetings that will take place in its second week. Those talks are an essential part of the context of the Bill that we are debating, and in the past two weeks we have seen signs of progress from China, India and the United States. They have all put targets on the table, and we are determined to use our influence to get the best agreement that we can, consistent with the science. We are determined also to show the maximum ambition in our own plans, and that explains the Bill that we have brought before the House.
Given recent events, I should also like to say that we are here to debate a Bill that is driven in large part by the science of climate change. It is important to take this opportunity to restate briefly the case on the science, because it underlies today’s debate. The science is not from politicians, but from scientists: the Intergovernmental Panel on Climate Change, whose work is based on 4,000 experts; the national academies of science of the G8 developed countries and the five leading developing countries; and, here at home, the Met Office, the Natural Environment Research Council and the Royal Society. All those organisations are clear that the science is unambiguous—that climate change is real and man-made.
Of course the science is not static, but we must not somehow suggest that robust and near universally accepted science is merely of equal validity to the views of a very small minority of people, many of whom are not scientists. Importantly, one chain of e-mails does not undo decades of climate science, and particular responsibility lies with Members of this House and, indeed, of the other place not to seek to sow doubt or to replace the view of the science with their prejudices.
Does the Minister share my concern that the media—some of the tabloid press, in particular—choose deliberately to misrepresent the science just to sell a few more papers?
I actually think that, by and large, members of the press, including the tabloid press, have during this year embraced the idea of climate change and the need to tackle it. However, the hon. Gentleman makes an important point: in this process, we rely partly on the press to make clear the burden of evidence and views and where they lie, and, indeed, the balance of views and where they lie. Anything that the press can do to help us to make that case is very important, because we are debating difficult decisions—and nobody should be under any illusion that they are not difficult. If people come away with the impression that the science is somehow not settled, or that there is an easy way out, we will face difficulties.
Does my right hon. Friend accept that the validity of the arguments and the scientific case for the existence of climate change is completely undermined by people such as Lord Lawson and the Conservative MEP Richard Helmer; and, that the Conservatives must do more to ensure that they align themselves with our policies and the policies that the British public want?
The truth is that we need as much of a consensus as we can get on these issues—from all parts of the House. That is very important, and that is why I emphasise the importance of us all showing responsibility, rather than setting ourselves up as scientists and somehow substituting for the views of the science. It is important that politicians act on the basis of the science, and that is what we seek to do.
The right hon. Gentleman talks about acting on the evidence of the science, but he knows that in the case of Heathrow airport, involving an important decision that will affect the environment, the only costed emissions were those of outgoing flights, not of incoming ones. How can he be serious about taking good decisions if his own Department does not get its maths right?
The hon. Lady has a long history of campaigning on this issue. I agree with her about the need to make decisions such as that on the third runway at Heathrow in the proper context. That is why we are the first Government in the world to say that we will stabilise aviation emissions at 2050 levels. Indeed, there will soon be a report from the independent Committee on Climate Change on that precise point.
The Select Committee on Science and Technology was in absolutely no doubt about the validity and strength of the case that climate change is happening and that it is the result of man’s activity since the industrial revolution. Even if some of the science can be questioned, the consequences for the planet and mankind are so dire that the precautionary principle should be observed, and I congratulate the Government on taking that line.
The hon. Gentleman is completely right. The precautionary principle was emphasised by the hon. Member for Bexhill and Battle (Gregory Barker) in a debate that we had a few weeks ago. It is right that we should follow the precautionary principle in this process; in a way, that is an important part of the argument. However, in emphasising the precautionary principle we must not give a sense—I know that the hon. Member for Castle Point (Bob Spink) is not doing this—that the science is not settled and that we would be better off being cautious. The science is clear and overwhelming, and the precautionary principle adds extra weight to that.
Whether one believes that emissions of carbon dioxide into the atmosphere produce climate change is a big argument, but does my right hon. Friend agree that there are two other important reasons why we should not be burning fossil fuels? First, we are acidifying the sea almost beyond the point of no return. Secondly—I speak passionately as a chemist—producing energy from carbon fuels is a very inefficient process, and we need those carbon fuels as larders of chemicals for the generations of the future, so it is a sin to burn them.
My hon. Friend speaks with great knowledge; indeed, much greater than mine. My chemistry is probably as bad as my brother’s physics in terms of his performance at school. My hon. Friend is completely right about that point and about ocean acidification, which is a serious issue that lots of oceanographers and others are very concerned about.
The Energy Secretary is clear that he is persuaded by the science and that the scientific evidence is overwhelming, which is the view of those on the Liberal Democrat Benches and on the Conservative Front Bench. Can he confirm that the logic of that is that the UK Government, this week and next, on their own and with the European Union, will go for the toughest, strongest, clearest binding agreement so that we can not only follow the precautionary principle but remember that we are going in to bat for a world where countries such as Bangladesh and the Maldives have the chance of a future, not just countries such as ours which caused the bulk of the problem in the first place?
I think I can say yes to that intervention. I agree with the hon. Gentleman that we need the toughest and most ambitious agreement possible and the shortest track to a legally binding treaty.
The right hon. Gentleman gave his maiden speech just after I gave mine; I congratulate him on his epic rise to fame on the Front Benches.
Taking up the issue of fossil fuels, we now know that nuclear capacity is running out and that we are running out of oil and gas. What have this Government done for the past 10 years? It is as though the Secretary of State is the boy scout who has turned up late for camp and finally realised that he was responsible for lighting the fire, so everybody will get very cold and angry. Have we not just had a wasted decade?
If we are talking about responsibility, I have to say that the alarmism that Opposition Front Benchers have engaged in on these issues is of no help at all. The answer to the hon. Gentleman is that we have very clear plans, as I will explain, on renewables, where we are now the leader in offshore wind, on nuclear power—opposed tooth and nail by the Opposition, whose leader said that it was a last resort—and on clean coal.
I very much agree with what the Secretary of State has said, but even if we get an agreement at Copenhagen, there is still the problem of having to explain to people what the figures actually mean. If we are talking about 80 per cent. reductions, that will mean massive changes in our economy. I am not convinced that the people of this country really understand what it means as yet.
I agree with the hon. Gentleman that, as I said at the weekend, there is a mountain to climb and a huge amount to do to explain to people the scale of the changes that we are making, such as 10,000 wind turbines between now and 2020, more nuclear power stations and the clean coal technology that I have talked about—and that is just in the energy sector. Those are big changes, and I will not pretend that they are not.
The central response to the challenge of the science must be for the Government to understand their role in making the low-carbon transition happen. The truth underlying the Bill is that markets left to their own devices do not put a price on carbon emissions and will not bring forward the investment and industrial policy that we need, nor will they provide the right energy mix for the future. Our low-carbon transition plan, which was published in the summer and widely welcomed, sets out sector by sector what needs to change to meet our commitment to a 34 per cent. reduction by 2020. I believe that we are the first country in the world to do that. It builds on the fact, which Opposition Members often forget, that we are one of the few countries to have met and exceeded our Kyoto targets, with greenhouse gas emissions 21 per cent. below 1990 levels.
Previous legislation, including the Climate Change Act 2008, provides us with many of the powers that we need. In the Bill, which is relatively short because of the length of the Session, we provide for legislation on three particular matters that are central to the task that we face. First, to clean up our energy supplies, it legislates for a levy to provide unprecedented investment in clean coal. Secondly, to improve the deal for consumers, it strengthens the power of the regulator and ensures that it must be proactive for the consumer. Thirdly, to deliver fairness, we are introducing compulsory cut-price energy for the most vulnerable customers.
Does my right hon. Friend agree that carbon capture and storage is important for the UK, because it will give flexibility to the energy mix, but even more important for the world? Exporting post-combustion technology will allow the bolt-on application that will help to reduce carbon dioxide throughout the world and help us to reach the 2050 targets?
My hon. Friend is absolutely right. We have said that there will be up to four carbon capture and storage projects, up to two of which will be post-combustion and up to two pre-combustion. That is not just for domestic reasons but for the international reasons that he mentions.
My hon. Friend’s comments take me to one of the central purposes of the Bill, which is to provide for a levy for clean coal technology. In total, the new levy will provide up to £9.5 billion over the coming two decades. It is fair to say that in a world of tight resources, it must be right to provide a dedicated stream of funding for clean coal and CCS. It is the largest single investment in CCS by any country in the world, including the United States. Let me be clear about the timetable, which has been raised with us: if the measure is passed, the new levy will come into force in 2011. Next year, before its introduction, we will launch a competition for the up to three additional projects that will benefit from it, alongside the current competition. We need to move quickly on CCS, that is what we will do, in support of our central aim to demonstrate CCS and make it ready for widespread deployment by 2020.
The importance of that is that it is right not just for our environment but for our economy. As many hon. Members know, the CCS industry could provide Britain with up to 60,000 jobs by 2030. Furthermore, CCS can be good for our long-term energy security, as my hon. Friend has pointed out on a number of occasions, because it will give us greater diversity in our energy sources. As we develop it and make it viable, there will be future steps to ensure that it can be applied to gas-fired power stations as well.
The Secretary of State mentions consumers, so is there not now a compelling case for him to use his powers to refer the big six energy companies and the relationship between consumers and wholesale prices to the Competition Commission—that is supported by Consumer Focus, the statutory consumer body—given that the commission alone has the powers to break down barriers to entry to the market and that the enhanced powers for Ofgem in the Bill will not come fully into effect until 2011?
My hon. Friend has thought deeply about this issue and we have discussed it. The Competition Commission remains a potential last resort, which I still consider it to be. Let me explain why. For a Competition Commission inquiry, we are looking at one to two years, and further remedies will take longer. The commission looked into the liquefied petroleum gas market, but it was five years between the initial investigation and the final remedies being introduced—not that I hold the commission responsible for that.
However, the intent behind my hon. Friend’s question is right in the sense that we have cause for concern, including about what Ofgem has shown today, but the Government need to think about a policy response, and we have work going on around the road map for low carbon that will be published in the spring. It is better to look at policy options—Ofgem will indeed have a report out early in the new year—rather than at a lengthy Competition Commission investigation.
The Secretary of State mentioned in passing that CCS would be rolled out to gas-fired power stations as well. Nothing in the Bill does that, so how will that step be taken?
I think the urgency is to make coal carbon capture work—CCS for gas is farther down the road. We know that coal-fired power stations have approximately double the emissions of gas-fired power stations. The North sea industry, for which the hon. Gentleman campaigns vigorously, can play a crucial role in that area of CCS—indeed, I enjoyed a recent visit to Aberdeen.
That takes me to the second part of my remarks, which is about the consumer. I welcome the fact that in the past year, we have seen an improvement in certain areas; for example, for prepayment retail customers, which has long been campaigned for by hon. Members. A year ago, people on prepayment meters paid £41 more for their energy than standard credit customers; today, that differential has been effectively eliminated.
However, there is a lot further to go, as I said in reply to my hon. Friend the Member for Selby (Mr. Grogan), and the Bill provides for three important changes in regulation. Central to the Bill is reforming the duties of Ofgem. It is wrong to think that competition alone can protect the consumer, so the Bill makes it clear that Ofgem must use all the measures at its disposal, not just competition. It is wrong that generating companies can unfairly exploit market power to overcharge consumers, so we are responding to a request—such a request was turned down some years ago by the Competition Commission—to provide Ofgem with new sanctions against market power exploitation in the generation market. It is also wrong that companies can escape penalty if abuse is not discovered for more than a year. To ensure that the enforcement regime provides an effective deterrent, the Bill extends the time limit within which Ofgem can impose penalties for licence breaches from 12 months to five years. That suite of new powers significantly strengthens the powers of the regulator to ensure that the costs of energy are fairer.
As the Secretary of State is going to change Ofgem’s powers and duties, has he considered doing so in relation to new grid transmission lines? He will be aware of a new proposal by National Grid for a high-voltage line across the Somerset levels. Only two options have been proposed, but a sub-marine option up the Bristol channel was excluded even before consultation began. If he is considering making changes, will he put additional obligations on National Grid to consider other options for that type of environmental project?
The right hon. Gentleman raises a local issue that is of some importance, but I confess that I do not know the details. On the question of grid access, which is a significant and wider problem, he will perhaps be aware that I exercise powers—under the last Energy Bill we had, in the summer—to set the terms of grid access, which has been a perennial problem in relation to renewables. We pledge that that process will be completed by the summer of 2010, and we are on track to do that. On the local issue, he may wish to write to me or one of my colleagues and we will look into it.
The Secretary of State is right to say that there are some important issues connected with being fair to consumers given some of the monopolistic powers of the energy generators. Why has he rejected the suggestion of a legal requirement for gas storage, as is the case in other European countries? Some people believe that that allows those countries’ markets to behave in a fairer way towards consumers, whereas our market, which has such a limited supply of gas storage, has enabled some of the suppliers to behave poorly.
We do need more gas storage, and the hon. Lady, as a member of the Select Committee, has expertise in these matters. The reason we are worried about the proposal that she recommends—we will shortly respond to the recommendations of the Wicks review, which looked at some of these issues—is the danger that it could take the pressure off the companies in terms of what they need to do to build more gas storage. If we substitute our judgment in these matters for their judgment about what is necessary, the danger is that we increase costs to consumers and inhibit future plans for gas storage.
The third issue is the question of vulnerable consumers, which is very important to hon. Members. As well as strengthening general powers of regulation, the Energy Bill will do more for vulnerable consumers. We need to help those most in need through higher incomes, energy efficiency and prices. That is why we have introduced and increased the winter fuel payment and brought in higher cold weather payments. Since 2002, 6 million homes have received loft or cavity wall insulation, and we are on the way to loft and cavity wall insulation for all houses where it can work by 2015. But we need to go further. Today we are announcing pay-as-you-save pilots in five parts of the country to test out a comprehensive, whole-house approach to energy efficiency, supported by finance, as is necessary to make it happen. This is on the way to whole-house refurbishment, beyond loft and cavity wall improvements, for 7 million homes by 2020 and for all by 2030. This will help save money for consumers.
But we also need action on tariffs. The current voluntary agreement on social assistance with energy companies has already helped more than 1 million customer accounts. However, the powers in the Bill will mean that rather than a voluntary agreement, there is a compulsory money-off energy deal for vulnerable customers. We will increase the total amount of help, up from the level of £150 million in the final year of the current voluntary agreement. We want the new system to ensure that older, poorer pensioners in particular receive assistance with their energy bills and we will set out more detailed plans in the coming weeks.
How will that scheme be paid for? Will it be the taxpayer who ultimately pays or will the companies be expected to use some of their profits to pay for it?
As for many of these levies, the cost will be spread across other bill payers. Alongside that, we need the tough regulation that I am talking about, which bears down on prices as much as possible. It is right that we take action to help the most vulnerable consumers in our society, and a voluntary agreement is inadequate in the current circumstances. We will have more to say about that in the coming weeks.
I have been generous in giving way, but I will give way to the Chair of the Select Committee.
I welcome the announcement about mandatory social tariffs. The Secretary of State said that the poorest pensioners will benefit, but will he look at the case of people with long-term chronic illnesses and, in particular, the campaign run by Macmillan for people with cancer?
My hon. Friend asks about the debate that my hon. Friend the Minister of State is looking forward to in Committee about the groups that should be helped by the social tariffs. There are lots of strong cases to be made, but the point is that there is a balance to be struck. Because the costs are spread across all consumers, as I said in response to an earlier intervention, we need to strike the right balance between the groups that are helped and how targeted the measures are.
My hon. Friend the Member for Sherwood (Paddy Tipping) referred to the sectors that are not covered by the social tariff. My right hon. Friend said that the issue would be debated in Committee, but would he like to comment now on the fact that although approximately 4 million-plus consumers are not on the gas network, but are instead dependent on liquefied petroleum gas and heating oil, they do not qualify for any social tariff? That is a genuine issue.
That is something that many hon. Members have campaigned on. I refer to my earlier answer. There was a Competition Commission inquiry into that issue which lasted five years and was designed to bring some relief. That is a warning to us all as we advocate a Competition Commission response to other energy issues. We are looking at measures to help those groups of consumers through Warm Front and other schemes, although I recognise the case that my hon. Friend makes.
As I approach the end of my speech, let me say, as I always say on these occasions, that we want as much of an all-party consensus as possible. Unfortunately, we have no clarity about where those on the Conservative Opposition Front Bench stand on the measures. When we debated the Gracious Speech, I posed five questions to the hon. Member for Tunbridge Wells (Greg Clark), including about the Bill, but I am afraid that he gave satisfactory answers to none of them. However, I am a fair-minded person and I believe in second chances, even for members of the Conservative party—indeed, he was not always a member of the Conservative party, so perhaps he deserves a special offer.
Today the hon. Gentleman gets the chance of a resit on the questions that I asked him previously. I shall narrow those questions down, but if he is to show that the Conservative party offers more than greenwash on such matters, he must show that he can answer some basic questions. First, does he support the CCS levy that we have put forward? We say that it will provide unprecedented investment in clean coal. He says that he will use money that is already accounted for in the Government’s tax and spending plans. He says that revenues from the EU emissions trading scheme can get him 5 GW of new coal, but, as we might expect, that is a policy about image and not substance, and it would damage our ability to tackle climate change.
Secondly, the hon. Gentleman needs to answer the question that was posed brilliantly by my hon. Friend the Member for Islington, South and Finsbury (Emily Thornberry) last time about his £150 billion scheme for energy efficiency. He says that it will cost no public money, whereas his hon. Friend, the hon. Member for Wealden (Charles Hendry) has said—[Interruption.] I know that the Opposition do not like to hear about their own policies, but they should be able to answer some basic questions. The hon. Gentleman said:
“The policy should be carried out and supported by loan guarantees from the Government, to ensure that the energy companies can do it. That is how the task is done elsewhere.”—[Official Report, Third Delegated Legislation Committee, 13 July 2009; c. 9.]
It would be good to hear today how those loan guarantees will be paid for, because the hon. Gentleman’s colleague has said that loan guarantees are required.
Thirdly, there is the wider question of Europe, which I also posed last time. Frankly, again we see the Opposition hanging round with the wrong crowd in Europe.
Read out the list then.
I can read out the list if the hon. Gentleman—[Interruption.] He says that he is getting bored with it, but it is very relevant because action in Europe is essential to the Bill and to tackling climate change, yet the majority of the Conservative party’s European partners voted against the motion that was put forward in last week’s Copenhagen debate.
On the subject of supporting European initiatives on energy, do the Government support the European super-grid yet?
We do support the European super- grid, which we think is an important idea.
We deserve answers from the Opposition today, not just the usual hot air. They need to come forward with some genuine policies rather than just image. Tackling climate change, protecting our energy security and protecting consumers all require significant change. The Energy Bill is key to making those changes and it deserves the support of all Members. I commend it to the House.
I have respect for the Secretary of State but I have to say that, with every speech that he makes, he sounds more like a member of the Opposition than a Secretary of State. He seems to be practising. The decisions on climate change and energy policy are so far reaching that the rest of the country looks to us to establish some common ground and speed things up, rather than make petty points. I will answer all the questions that he asked—I have no problem with that—but anyone looking at the Bill cannot help but be disappointed at this missed opportunity.
This is an anaemic Bill that lacks energy, even though it calls itself an Energy Bill. The Secretary of State has had a year in post in which to think about the issues and to reflect on and bring forward legislation. Who knows what will happen after the election? He might still be in post, he might be in a different post, or he might be in opposition. This was therefore perhaps his one and only opportunity to put on the statute book a Bill that could have lived up to the ideals that he no doubt shares, and that could have made a difference and provided a legacy of which he could be proud. The problems that we face are mountainous, and we deserve boldness in response.
I do not want to cast blame at this stage; there will be other occasions on which we can do that. The Secretary of State and I came into the House at the same time and, whatever his contribution might have been to our national economic success when he was chairman of the Council of Economic Advisers, he was not in charge of energy policy at the time, so we cannot hold him personally responsible for that.
We can, however, agree on what the problems are. There are five in particular. We are facing power cuts and an energy crunch by 2017—[Interruption.] The Secretary of State says that that is rubbish, but he wrote an article entitled “We must work together to keep the lights on”. Why would he write such a thing if he did not think that there was a risk of that happening?
My hon. Friend is correct. In that article, the Secretary of State said that we needed to work together to keep the lights on. Great! I agree, but where are the measures to do that in the Bill? There is not one single such measure.
As part of the evidence that my hon. Friend is putting forward to the Secretary of State, he might refer to that given to the Select Committee last week by Alistair Buchanan, the chief executive of Ofgem, who clearly described the worrying scenario of the lights going off in the middle of the next decade. He is the man in charge of this policy.
My hon. Friend is quite right. I am surprised that the Secretary of State has not taken that evidence into account. In fact, Mr. Buchanan went on to say:
“The headline fact is that Britain is the single most exposed country among the big players in Europe”.
That is what the Secretary of State’s regulator says. I thought that this problem was something on which we could agree, and that the Bill might contain measures to solve it, yet it contains none.
The second threat was mentioned earlier. The fact is that during the years ahead we will rely more and more on imported gas. For understandable reasons, North sea oil and gas supplies have peaked and are in decline. Other countries facing this situation have adequate storage capacity. The French have 120 days’ supply and the Germans have 99 days, yet we have only 15 days. Where is the proposal in the Bill to increase our level of gas storage?
My hon. Friend the Member for Bromsgrove (Miss Kirkbride) asked the Secretary of State a question on storage, and he gave a completely incoherent answer. He said that to advance the proposition that we should have the kind of storage on which other countries insist would somehow put off companies from investing. I do not understand what he meant by that. Perhaps the Minister of State will make a better job of explaining it when she winds up the debate.
Another problem is our pitiful progress on renewables. I know that the Secretary of State believes in renewables, as do I, and we want to accelerate progress. We agree that wind farms and other renewables projects tend to get bogged down in acrimonious planning disputes. He thinks that we should have more renewables projects, and so do I, but his approach is to go round the country shouting at people for opposing wind farms, like Lady Catherine de Bourgh visiting a disobedient relative to tick them off. But where is the policy in the Bill to provide incentives for local communities to take on such projects?
The hon. Gentleman correctly identifies the need for clarity in the planning system, and the need to speed up that system. Will he therefore support our proposals to do precisely that?
We share a view about the need to speed up the planning process, and we think that the powers of the Infrastructure Planning Commission are absolutely right. It is also right that what are essentially national matters are decided nationally through planning statements. We have two points of difference, and we would amend the proposals on the IPC. First, we think such decisions should be accountable; the final decision should be taken by a Secretary of State who is accountable to this House rather than by some unelected official. We think it is right that people should be able to hold someone to account, but under our proposals there would be the same time limits and the same secretariat to advise, and the same process would apply, so it would be at least as quick, if not quicker, than under the Government’s proposal.
Secondly, we think that the planning statements that are read out to the House—starting with the nuclear one, in which I know the hon. Member for Copeland (Mr. Reed) is as keenly interested as I am—are so important that they should be proofed against the inevitable legal challenges through judicial review that will be made against them. By subjecting them to a positive vote, the will of this House that the statements represent public policy will be expressed. If these statements are merely the utterances of a set of officials whose democratic legitimacy has not been established, that might be a problem that causes further delays. Therefore, we are at one with the hon. Gentleman in wanting these planning obstacles to be removed, and our amendments to the Government’s proposals will speed that up.
Does the hon. Gentleman not acknowledge that his Front-Bench colleague, the right hon. and learned Member for Rushcliffe (Mr. Clarke) opposes all onshore wind farms, which is rather typical of the Conservative position?
Once again, I had hoped that we would seek to achieve unity on these issues. [Interruption.] When my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) made that comment, he said that he was speaking in a personal capacity and fully respected the Front-Bench viewpoint. The party in government goes around the country telling people that they are immoral to raise even a qualm about a wind farm in their area, but it has no policy response to it. If the Secretary of State has any policy suggestions, why do they not appear in this Energy Bill? The Bill is designed to solve a problem that the hon. Member for Edinburgh, South (Nigel Griffiths) seems to think exists—but the Secretary of State has no solution. [Interruption.]
My hon. Friend certainly does not need helping out; I think that the Minister does. The Bill is very much a missed opportunity for planning. There is to be no obligation placed on large pieces of infrastructure—in my constituency, for example, 3.5 million square feet of roof space is not being used in any way, shape or form—to incorporate green initiatives, green energy or any form of biodiversity to help support it.
My hon. Friend is absolutely right. That is the point that I am making: this Bill is a colossal missed opportunity. If the Government think that there is a problem—we agree that there is—why do they not bring forward solutions? We have said that we need to cut people in to the benefits of renewable technologies, but nothing in the Bill addresses that.
I am astonished by the hon. Gentleman’s response to my hon. Friend the Member for Edinburgh, South (Nigel Griffiths). Since the hon. Gentleman aspires to be in government, how does he think a potential Government might function when the shadow Business Secretary, who is supposed to be an ally when it comes to wind farms, says:
“My view is that those few wild and open… spaces that we have left in Britain should not be used for wind turbines”?
Will that strengthen or weaken a potential Government when it comes to delivering on the renewables agenda?
The right hon. Gentleman is speaking from his experience of the type of mind control that goes on in the Labour Government. We Conservatives are perfectly relaxed to have discussions about these things, knowing that we have strong policies that will make a difference. It is one reason why the country is getting a bit fed up with the government by pager that we get from Labour.
I will give way to the hon. Gentleman, but then make some progress.
I am now thoroughly confused about the Conservative Front-Bench position on wind farms. Would the hon. Gentleman have supported the private Member’s Bill recently promoted by his hon. Friend the Member for Mid-Worcestershire (Peter Luff), which sought to drive a coach and horses through wind power in this country? What is the Conservative position on such initiatives?
As the hon. Gentleman well knows, private Members’ Bills are not taken up by those on the Front Bench, but my hon. Friend the Member for Mid-Worcestershire (Peter Luff) made an interesting point, and if it is relevant, I am sure that it can be taken up in the discussions on renewable energy that the Minister will be promoting.
The Bill contains no strategy to deal with fuel poverty, one of the most pressing issues facing the country. Yes, it gives Ministers reserve powers to intervene, but where is the commitment to the only sustainable way in which to reduce fuel poverty—improved home energy efficiency? That is completely absent from the Bill, although it is surely beyond politics and is something that we should get on with. When people’s fuel bills are £1,200 a year and more, and they can save money and carbon dioxide and create jobs by improving insulation, how can a serious Energy Bill possibly be completely silent on the issue? It beggars belief.
At a time when we need £200 billion of investment in new generating capacity, we know that that investment is not being made. That is partly because people are so uncertain about the policy environment, including the price of carbon, which has been low and very volatile. Where are the measures in the Bill providing for a more stable carbon pricing regime?
There is a better way. This was the moment at which the whole House could have united—as we did when we discussed the Climate Change Bill—in devising an ambitious, progressive solution to a crisis that commands all our attention. The Bill, however, contains nothing to close the energy gap, nothing to secure our gas supplies, nothing to accelerate renewables, nothing to improve energy efficiency at home, and nothing to address the price of carbon. What a disappointment it is. I am sorry if the Secretary of State has been distracted, whether by writing the manifesto or by the silly dividing-line nonsense that he tried earlier, when he should have been applying himself to turning his policy thoughts into proposals in the Bill.
Let me now deal with the Bill’s contents, slight though they are. Given the scale of the challenges, it is a pitiful Bill, and not even a Bill that produces any action today. In the case of each of its three components—carbon capture and storage, Ofgem, and social tariffs—it merely enables Ministers to take powers that they cannot begin to implement without new statutory instruments in a new Parliament, probably following further consultations. Where is the ambition and the urgency that we require from the Secretary of State? Of the 37 clauses in the Bill, 34 are enabling, consequential or technical; only three make actual changes to the way in which things work at present.
Let me give my response to the three measures that the Bill does contain. It seems that we do agree on the importance of carbon capture and storage, but not on its urgency. Britain is ideally placed to be in the vanguard of the deployment of carbon capture and storage. We have depleted gas wells and saline aquifers in the North sea. We have along our coastline some of the industries that can lead the world in this regard: processing industries and marine engineering businesses. We have some of the best research establishments in the world, and we should be leading the world. It is important that we do, because carbon capture and storage corresponds to the experience curve: the sooner we get on with it, the more we can establish a lead. There is no great scientific breakthrough for which people are waiting.
Given that the present Prime Minister announced plans to support carbon capture and storage in his 2006 Budget, why did the Government wait a further 18 months before launching a competition to deliver a single carbon capture and storage plan? It took until November 2007 for them to do that. More than two years have passed, and we still do not have a winner. Meanwhile, the chance for Britain to lead the world is slipping away. China, Australia, Canada, Germany, Norway and Belgium have all used that delay to overtake Britain.
The Bill proposes a new levy on electricity to pay for carbon capture and storage. The first question to be asked is why we have had to wait for a Bill that cannot possibly receive Royal Assent until 2010 to pay for a scheme that was first mooted in 2006. If it needs this levy, why was it not in the 2006, the 2007 or the 2008 Queen’s Speech? We believe that, when it came to payment, the first choice should have been the revenues from the European Union emissions trading scheme. The Secretary of State tells me that they have been spent, although they do not begin to accrue in this phase until 2012. If they have indeed been spent, there must be an assumption of the amount that they were going to raise. Let me ask the Secretary of State now what that estimate is, and where it appears in the Red Book. I am happy to give way to him. [Hon. Members: “No answer.”] This is typical Labour party economics: the money has been spent on something that is completely invisible and the Secretary of State cannot even find it in the Red Book. No wonder we are in the mess we are in.
I shall give way to the hon. Gentleman. Perhaps he can provide an explanation for the missing billions of pounds.
In time. Can the hon. Gentleman confirm whether a future Conservative Government would support a Government subsidy for CCS, and if so, up to what level—and would he also make the same benefits available to the nuclear industry? The answer to that question will be listened to very keenly by international and domestic investors in this country.
Of course we would support a subsidy for CCS; that is what we have been urging on the Government. The Secretary of State says he has spent the money, although he is unable to say how much he has spent or what it has been spent on. On nuclear, we have said that it is a mature technology, and should not be given a specific subsidy. I do not think there is any difference between us on that.
If the Secretary of State can convince us that the money has, indeed, been spent, it may be the case that the levy is what we will have to fall back on. I still do not think, however, that he can get away with saying that this money has been spent on something the Government cannot account for. [Interruption.] So far, it is impossible to tell what the impact of the levy will be, because, as the Secretary of State has just said from a sedentary position, he is merely proposing powers to charge a levy in the future.
If there were to be a levy, however, would that not offer the Secretary of State an opportunity to provide a clearer price for carbon, which is much needed? Why should suppliers of electricity from renewables, for example, have to pay a levy to support the capture of carbon when they do not generate any carbon dioxide in their production of electricity? Should not the “polluter pays” principle be followed, so that the levy is incurred in proportion to the CO2 emissions generated by each supplier? The Secretary of State might like to consider that, since he has clearly not designed his levy properly yet.
Why are the Government restricting themselves to the same approach that they took in respect of the climate change levy: a stealth tax, which did not do what was described on the tin, as it were, because it had nothing at all to do with climate change? If the Government are serious about forbidding CO2 emissions from new coal power stations, why do they not specify—as we have said we would—an emissions performance standard so that no coal-generating plant can be more polluting than the most efficient combined cycle gas turbine station? That must be a totem of their seriousness in this matter.
If we are to have investment in CCS, in the hope that it will work and be demonstrated successfully, why will the Government not ensure that the pipelines for the demonstration plants are built oversize so that they can be made use of by future CCS plants, rather than be fully exhausted from day one?
How much oversized should the pipelines be?
They should be adequate for the potential in their area. The Secretary of State has talked about having clusters for CCS. It is possible to make an assessment of how many such future plants might be able to make use of the pipelines. It is wrong to spend public money on building pipelines that will be adequate only for the demonstration plant and then to have to repeat installation if the process is successful. That is a bonkers approach; it is a waste of public money.
In Select Committee discussions it was said that, if this were a road, it would be either a B road or a motorway. They are hugely different. Has the hon. Gentleman costed his proposal?
I am delighted that the hon. Gentleman is asking me questions that presuppose that I will be in office. I am saying, assuming that this project works and looking to the future, that it will be rather ridiculous if the Public Accounts Committee holds an inquiry in several years and asks why on earth the Secretary of State consented to spending public money on building a pipeline network that was not adequate for the coal plants that he hoped would be able to access it in future. That is a waste. Will the Secretary of State make clear the criteria for the clusters of CCS that have been promised—but which are mysteriously absent from the Bill? Many parts of the country are keenly awaiting the answer to that.
In particular, with the devastating closure—[Interruption.] The Secretary of State should listen to this, because thousands of jobs are affected on Teesside. The people on Teesside, who have lost 1,700 jobs in the last week with the closure of the Corus plant, could benefit if Teesside became a CCS cluster. Can he or the Minister, in the winding-up speech, say anything about whether Teesside can count on being a contender for the cluster and when he will make the decision? I am disappointed that he does not find the situation on Teesside sufficiently meritorious for him even to listen to it. In the interests of giving the Bill and the levy mechanism proper scrutiny, will the Secretary of State commit to publishing in draft form the regulations that he proposes to make before the Bill goes into Committee?
The second part of the Bill creates a framework for obliging energy suppliers to provide social pricing for vulnerable customers.
I have listened very carefully to what the hon. Gentleman has said about the critical issue of CCS, and he has talked about urgency. What would a future Government do that is not being proposed by the Secretary of State? I am not clear about that and I am not clear at all whether or not he supports the levy.
Of course we will support the levy, if it indeed turns out that the funds from the emissions trading scheme have been exhausted. The detail of the levy requires scrutiny, which is why I have asked the Secretary of State to publish the regulations before the Bill goes into Committee so that we can ensure that there are no perverse consequences.
Has my hon. Friend noticed that the Bill is so slim and small that we have now lost interest in it almost in its entirety and have moved over to discussing Tory policy? That is all very well, but it is a waste of the time in which we are supposed to be focusing on the Bill. Does he agree that one thing that could have been included in the Bill, considering the threat that is now imposed on us, is what would happen if the lights went out? Should we not be considering an emergency plan in case we do not have power for Britain in the future?
My hon. Friend is quite right. This should have been a Bill that enjoyed cross-party support for keeping the lights on. The Secretary of State said that we need to work together to keep the lights on, but he seems to have shrunk from an important opportunity to do that.
When average bills for domestic fuel are £1,200, high energy prices are a desperate problem for many families struggling with the consequences of the recession—especially now. There is an unsatisfactory delay in the publication of the fuel poverty statistics. As the Secretary of State knows, the last available figures, which were published in October, are for 2007 and show that 4 million households spent more than 10 per cent. of their income on energy bills. Since then energy prices have risen still further—domestic gas prices have doubled since 2004—and unemployment has risen. To use the Government’s projections, it is thought that 6 million households—one family in every four—are in fuel poverty.
We desperately need a strategy to address fuel poverty, but the Bill does not provide one. Again, it does not even set out the Government’s plans; it merely hands over another batch of regulation-making powers to the Secretary of State to be used in the future. So, if the Bill is passed into law, only then will the Government come up with detailed proposals. No doubt Ministers will want to consult on them, too, before laying a draft order before Parliament. Not only is that the very opposite of the urgency that is so badly needed, but, in all likelihood, vulnerable households will be lucky if they see a benefit by next winter, let alone this winter.
A serious fuel poverty strategy, as everyone in the House knows, must be based on tackling the cause, not just the symptoms. Our housing stock is appallingly inefficient and yet the Government’s approach to energy efficiency, which saves everyone money, is to ration it. The Government’s approach is that we should ration energy efficiency improvements. The funding that is available through Warm Front, for example, is, as we discovered from the Under-Secretary, being cut by £15 million from the next financial year.
Earlier, the Secretary of State briefly skated over his pay-as-you-save scheme. That is not surprising, because it amounts to an exercise in piloting an approach in 500 homes—only 500 homes, when we have a problem on such a scale. This must be the biggest and most gaping hole in the strategy.
As I understand it, the hon. Gentleman would make available a loan of £6,500 for every house to be insulated. That is a big programme with a big cost. What will the cost be, at a time when his colleagues are talking about reducing spending significantly, moving from a big-state approach—and this is it—to a small-state approach?
I am delighted that the hon. Gentleman has asked me that question, because it allows me to explain once more that not all investment is public investment. It is possible, especially when there are savings to be made, for people to bring about those savings and, given that the savings will exceed the costs, to pay for the scheme through those means. We will allow every household in the country up to £6,500 in approved energy efficiency insulations, and the system will be conditional on money being saved on their bills during the payback time. That is a win-win situation.
Let me refer the Secretary of State to his own words about his pay-as-you-save schemes. He is having pilots for 500 homes, but I do not know why if he does not think that they will work. He has said that the pilots
“will give households the opportunity to invest in energy efficiency…in their homes with no upfront cost. Householders will make repayments spread over a long enough period so that repayments are lower than their predicted energy bill savings, meaning financial and carbon savings are made from day one.”
That is his press release from today. I do not know whether he has read his own press release, but it mentions that the limit of his ambition is 500 homes.
The difference between me and the hon. Gentleman is that I recognise that this proposal will have a cost: we are providing £4 million to make those pilots possible. This comes back to image versus substance. He wants to claim that he can give £6,500 to every household in the country, costing up to £180 billion, and that it will cost no public money. That is clearly a con.
I regret allowing the right hon. Gentleman to deliver such a poor response. The difference between us is a lack of ambition. Every household in the country could benefit from energy efficiency improvements, but the limit of his ambition is to treat 500 homes. How can he introduce a Bill with such poor potential for success?
Let me address the third aspect of the Bill—the changes that it makes to the regulation of gas and electricity markets. We support in principle the clarification of Ofgem’s objective and the clear role that is being given to enhancing energy security and pursuing our low-carbon obligations. We also support the extension of the time limit in which Ofgem can impose penalties for breaches of licence conditions. However, we need to be clear about the respective roles of the Government and the regulator. Ministers should make policy decisions and the regulator should execute them. The changes are necessary in so far as they allow Ofgem to implement decisions that are made or promoted by Ministers on grounds such as energy security. However, in the past 12 years—and for the past 15 Energy Ministers—there has been a policy vacuum, the solution to which should not be to look to unelected bodies to proliferate policy. Instead, they should implement policy that has been determined by Ministers. I hope that that is what the Secretary of State has in mind with these changes.
Once again, the other two elements in this part of the Bill are simply enabling clauses, and they fail to grasp the urgency of the situation. A year ago, I told the Secretary of State that he should ask for an immediate Competition Commission investigation into the relationship between wholesale and retail energy prices. Initially, his response—I think it was last November, but he will correct me if I am wrong—was to summon the energy companies in to growl at them in some fierce way, but he has proved to be a paper tiger, because nothing has happened and he has done absolutely nothing to protect consumers’ interests. Ofgem has today published a report that says that
“customer bill increases have consistently outweighed cost increases”—
this is in relation to the wholesale price cost of gas—
since July 2008”.
So, since July 2008, customer bill increases have consistently outweighed cost increases. On present trends, Ofgem expects customers to be losing £17 a month by September 2010, which will make a lot of difference to people’s household bills. That should not come as a surprise to the Secretary of State because his own quango, Consumer Focus, told him last June that every household was then paying £74 a year too much. A swift, forensic investigation is needed to settle the matter once and for all. It is in no one’s interests—neither those of the energy companies nor those of consumers—to have such a point of contention.
The Secretary of State’s response to an intervention from the hon. Member for Selby (Mr. Grogan) on the matter was to say that he would examine the policy options in the spring. Meanwhile, we are approaching a winter in which, if we consider the figures from last winter, people will die because they feel unable to afford to keep the heating on to get them through. The matter has an urgency that I commend to the Secretary of State. I hope that he will think again rather than raising his eyes about a problem that is very real to our constituents.
Although we are, of course, content for the Bill to go into Committee, where we will try to strengthen it and remedy its deficiencies, it is a wasted opportunity. It could have taken urgent steps to keep the lights on, cut CO2 emissions and create jobs. It would then have had broad-based support.
First, the Bill should include a green deal to give all households the energy efficiency improvements they need. Secondly, it should have an emissions performance standard to require all newly built electricity generation to cut emissions. Thirdly, it should include a requirement for gas storage to get us through the winter. Fourthly, it should provide for reform of the climate change levy to make it distinguish between high and low-carbon sources of energy. Fifthly, it should contain measures to require energy companies to say exactly what would have been saved on a cheaper tariff had a customer had access to it, and how to switch to that tariff.
Sixthly, the Bill should have real incentives to allow communities that host wind farms to reap some of the rewards. Seventhly, it should provide for action to ensure that smart meters are fitted in every home, not by 2021—the Government’s plan—but by 2017 at the latest. Eighthly, it should require immediate deployment of carbon capture and storage, with a network of pipes big enough for future use, not just for the proposed demonstrations. Ninthly, it should require the national grid to extend its network out to sea to harness the offshore wind, wave and marine energy that is available there. Tenthly, it should include the opportunity for Parliament to vote on the planning statements to ensure that there can be no further hold-ups in our nuclear programme.
The Secretary of State and the House could have been proud of such a measure—a Bill to keep the lights on, cut CO2 and boost the economy. Had the Secretary of State possessed such boldness and ambition, he would attract the admiration of the House and the country. Instead, it will fall to a Conservative Government to take the decisive action that Britain needs.
It is perhaps a coincidence that Second Reading takes place on the opening day of the climate change conference in Copenhagen, which Lord Stern described as perhaps the most significant international conference since the end of the second world war. Britain will show leadership at the conference. There may well be difficulties, but I hope that, at the end, we will get some sort of political agreement that can be translated into action.
It is important to recognise that the Bill’s provisions link with the Copenhagen discussions. As has been said, the measure is modest, with 37 clauses and three subject areas. However, we all need to recognise the enormous challenge before us, and the big challenge of Copenhagen is to ensure that we move to having a robust and stable carbon price in future. Ofgem described the new investment required in the generating industry as being between £95 billion and £200 billion by 2020. It is interesting that Opposition Members have said nothing about nuclear power today. Is it still an option of last resort? Do they accept Zac Goldsmith’s comment that the Tory policy is “No to nuclear power”? Where do they stand on nuclear power in their priorities for the future?
I am delighted to have the opportunity to correct the hon. Gentleman. He will discover when he reads Hansard that I made it clear several times that we want to accelerate the deployment of nuclear power.
What is the position then? Is nuclear power still a sort of last resort, ranking behind renewables? What does the hon. Gentleman say to his errant colleague Mr. Goldsmith, who says that his position—and he has been an adviser to the Tory party—is a no to nuclear power.
The hon. Gentleman is using tactics typical of those on his Front Bench. Instead of discussing the issues of the day and taking responsibility, he has shifted the argument to the Opposition. His party has been in power for 10 years, during which our nuclear power capability has shrunk. It took 22 years to get a spark out of Dungeness, but we have reached the point where nuclear power facilities are closing faster than we can replace them. That took place on the hon. Gentleman’s watch; it was nothing to do with Tory policy.
We need new investment in generation capacity of £95 billion to £200 billion. Companies such as EDF want to know whether the policy framework will be secure into the future, because in a difficult capital market it is hard to see where those sums will come from. We must remember that of the big six players in the UK, four are truly international companies. It is far from clear that money will be invested in this country, so we must ensure that we have a set of policies that can encourage investment into the future. At the cornerstone of those policies is a robust and high carbon price.
May I tell my hon. Friend not to take any history lessons from the Opposition, because the reinvention of history that we are hearing today bears no resemblance to what has happened in the past 25 years, particularly in the nuclear industry? Does he agree that the Government’s policy of proceeding with the Planning Act 2008, the Climate Change Act 2008 and the Energy Bill is the right way forward, and that we should all get back to talking about what is important, which is the needs of the people of this country?
And the need of the people of this country is to keep the lights on. There is a potential energy difficulty in 2015-17, and it is clear to me that we must encourage investment to ensure that we can keep the lights on. One way to do that, which my hon. Friend has always championed, is to bring on new nuclear generation. The Opposition may not like it, but they are Johnny-come-latelys to nuclear. There are differences between those on their Front-Bench team about nuclear power. If we are to ensure that the first new nuclear plant is open by 2017, we must ensure that companies such as EDF are confident that their investment will last into the future.
My hon. Friend will know, because he is a keen student of such issues, that every major nuclear decision in this country has been made by a Labour Government—from Calder Hall onwards. He mentioned the Copenhagen conference, but does he, like the rest of the policy-making world, believe that it is much harder for the Secretary of State to strike a deal with Environment Secretaries from other countries, because when they look at Britain’s putative alternative Government they see that they increasingly consist of climate change deniers?
My hon. Friend makes the point. It is clear from the discussion in the Chamber, and from the policies announced by the right hon. and learned Member for Rushcliffe (Mr. Clarke) and by the right hon. Member for Haltemprice and Howden (David Davis), who used to be the shadow Home Secretary, that there are real difficulties about investment in the future. To put it simply, they just do not know what they are doing. As they say in my part of the country, they don’t know their arse from their elbow.
Order. I shall not ask the hon. Gentleman to withdraw those remarks, but perhaps he should choose his words a little more carefully.
I take your reproach, Mr. Deputy Speaker. Those words will be read down the coal pit in Welbeck in Edwinstowe, and the miners there will know what I am talking about, even if it offends some of the people in this Chamber.
My right hon. Friend the Secretary of State has been a champion in the process of preparing for Copenhagen, but I am not confident that the discussions will produce that high and stable carbon price for the future. He describes getting an agreement there as plan A. We need to consider plan B. There is an argument that if we want investment on such a scale, we need to ensure that we in the UK can underwrite the price of carbon—that there can be a ceiling on that price, to drive the investment forward. It is not a decision that we need to take this year, pre-Copenhagen or straight afterwards, but ultimately a decision will have to be made about how we can promote new investment. The obvious way is to maintain a robust carbon price into the future.
One way of bringing on new fossil fuel plant—new clean coal plant—is through a carbon capture and storage levy. That is in the Bill, and I welcome it, even though it is a little late. The rules of the competition seem to have changed over time, and the end date, even today, is not entirely clear, but four new projects here in the UK will be a tremendous development. I want my right hon. Friend to initiate that quickly. I want him to listen to the miners in Nottinghamshire, who know that although Harworth colliery is mothballed, it could be reopened and new reserves could be accessed. That is what UK Coal, the owners, would want to do, if £200 million were available.
That sort of money is pretty tough to raise on the capital markets just now. In recognition of that, there have been discussions with the European Investment Bank about a loan. The discussions have gone well. The sticking point appears to be that the EIB says that any coal that comes from Harworth should be burned cleanly. At present there is no power station in the UK that can provide that. I want to stick up for and protect mineworkers in Nottinghamshire and steelworkers in Middlesbrough and Redcar, because we owe it to them. They have given their lives and their health to keep us warm, so anything that my right hon. Friend can do with the EIB would be extremely helpful.
My right hon. Friend ought to pick up on two other points about carbon capture and storage. The first is that it is important not to let the market operate, but to take a strategic approach. E.ON’s development at Kingsnorth is long delayed, but were it to win the competition, there would be sense in talking to E.ON and the rival company, RWE, which has a power station just over the river at the Isle of Grain, to ensure that any demonstration plant at Kingsnorth was significant, with sufficient capacity to act as a cluster. We do not want stranded assets.
We should look at the work that Yorkshire Forward has been doing in the Yorkshire coalfield down the Humber valley and take a strategic approach to carbon capture and storage. In Committee we need to debate that and think it through extremely carefully.
We should be clear that the cost of the levy will fall on customers’ bills. One of the Government’s aims, in addition to security of supply and a reduction in carbon emissions, is affordable heat. As politicians we must recognise that there is increasing consumer resistance to rises in bills. The £2 billion cost of the levy will be passed on to customers. They are beginning to say, “But we’re paying the social tariffs.” About 1 per cent. of their bill is for social tariffs, and 9 per cent. is for environmental purposes, to deliver the ROC obligation. In future that could rise to 20 per cent. There will come a point when customers say, “Enough is enough,” and in the immediate short term we need to ensure that bills are detailed enough for customers to understand what they are paying for. Given the rising bills—the hon. Member for Tunbridge Wells (Greg Clark) quoted the figures—it is important that we look at social tariffs. Some companies, such as Centrica, have an excellent reputation and record, but we need to go further, which is why I support mandatory social tariffs.
I look forward to discussing in Committee who might benefit from such tariffs, because they should apply not only to elderly people, but to people who are in fuel poverty generally. Last winter, 5 million people experienced fuel poverty, including a group below pensionable age with long-term illnesses. We need to look carefully for ways in which we can help them, and we need to discuss mandatory social tariffs in a wider context.
The hon. Gentleman, in his intervention on the Secretary of State, specifically mentioned Macmillan, which has taken this issue forward. It provides a helpline to support people with cancer, and one of the commonest questions asked is, “How do we cope with our energy bills?” That is because when someone is being treated for cancer, not only do they often become more sensitive to a shortage of heat, but their income falls at the same time, because their employment is disrupted.
The hon. Gentleman has a long track record of following the subject of fuel poverty, and he is exactly right. I look forward to a more detailed discussion about how to tackle that problem.
As I have said, we need to set social tariffs in a wider context. The Warm Front budget is clearly under real pressure, and there needs to be a discussion about its future. The Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for Lewisham, Deptford (Joan Ruddock), who will wind up the debate, has made some very welcome changes to Warm Front, but I want us not only to roll out smart meters but to give people real practical assistance with energy issues such as efficiency and insulation. I want us to roll out smart meters at the same time as we give advice.
Members in all parts of the House agree that smart meters are important, but, from what I have seen of them on television over the past week or so, I think that they will be quite technically challenging for some members of our communities, particularly the elderly, the frail, people with sight problems and so on. We really have to provide education as well as the meter.
I am sure that that is right. Smart meters with a visual display will clearly be interesting for some people but a turn-off for others. Nevertheless, now that we have the technology to look at a minute-by-minute, second-by-second account of our energy use, it is clearly right that we structure the market to ensure that elderly people and those with visual handicaps know that they are getting the best deal.
I talked about a wider discussion, and I am keen to discuss the winter fuel allowance. Last year it cost £2.7 billion, and I am not entirely confident that we get the best out of it. Of those who received the allowance, it is estimated that only 12 per cent. were in fuel poverty. We need to make some tough choices about how best to use our resources, and as part of a debate about mandatory social tariffs, Warm Front and Eaga we need to discuss whether the winter fuel allowance is the best way forward.
The final part of the Bill deals with, and extends, the role of Ofgem. My respect for Ofgem has grown over the past 12 months, when, under pressure from Government, it has become much more proactive. I welcome its quarterly reports, in which it is interesting to follow the tracks and see the gross margins that have been made by all the energy companies. We must extend Ofgem’s role by giving it more investigatory powers and greater responsibilities, to ensure that customers benefit as soon as possible from those powers.
The case for going to the Competition Commission has been argued on both sides of the House today. However, let us be clear about this: it would probably take two years for that inquiry to come round, and during that period the big energy companies would not be investing. It is as simple as that. If people want £95 billion or £200 billion of investment, a Competition Commission inquiry would be completely the wrong way to go about getting it. It would stop that investment in its tracks, because companies such as E.ON and RWE would make decisions to invest elsewhere in the world, and we need that finance here.
The big issue for us at the moment is the renewal of our generating capacity by 2020. The Bill goes a small way towards achieving that, and I support it, although I am not entirely confident that it is supported throughout the House. I look forward to the debate in Committee, because it is a valuable, if modest, Bill, which could still be improved.
I am happy to follow the hon. Member for Sherwood (Paddy Tipping), the acting Chairman of the Select Committee on Energy and Climate Change, who speaks with a long-held interest in energy issues.
The hon. Gentleman ended where I begin: by contrasting the Bill before us with the great task that begins today across the North sea in Copenhagen. Earlier, I put it to the Secretary of State—he responded positively—that Copenhagen requires the United Kingdom and the European Union to be ambitious, bold and brave in reaching for the best possible permanent deal. That is obvious. We could also have had an ambitious energy Bill being debated in this country at the same time but, to repeat the word used by the hon. Member for Sherwood, this is a very modest Bill indeed.
Having been in the House throughout the period, my analysis is that, after nearly 13 years in government, Labour’s energy policy is perceived by many of my constituents and those of many colleagues as having left millions of the British public out in the cold. They feel worse off, not better off, as a result of the energy policies of the past 12 and a half years—and they are worse off. Energy is costing them more and the future is less certain. The number of people who spend more than 10p in the pound on their fuel bills has gone up, not down, and that situation is likely to get worse, not better, given the price increases in oil and gas that they know they are to expect. If the Government had been really bold and determined, they could have said, “This is the opportunity to try to put high fuel bills that people cannot afford behind us once and for all.”—in other words, to do the sort of social justice legislating that I thought Labour came to power to deliver. It is therefore sad that, on the first day of the Copenhagen conference, when people are calling for radical action abroad, we are not seeing extensive and radical proposals at home.
Over the past 12 and a half years, the response to variations in fuel costs has been a system that, although welcome when delivered, is very much one in which Labour makes people dependent on themselves. The winter fuel payment, which is a better system than the benefits system if people do not claim the benefits, has been given irregularly, spasmodically and unpredictably. There has not been a built-in subsidy for poor people, or a guaranteed, legislated-for provision so that people know they will be able to afford their bills. That is in the Bill—we are now seeing it for the first time ever—but it has taken 12 and a half years for a Labour Government to realise that without guarantees in law, people often end up paying much too high a price.
As we have heard, there are three issues before us. Many of us wish that there were many more and that this was legislation in which the Government nailed their colours to the mast of continuing to support and to develop support for the renewables sector, which is growing, but from a terribly lame and slow start. Of course, in some respects there is a difference between my colleagues and I and both the Government and the Conservatives. We do not think that the future lies in nuclear power, which is always expensive, always delivered late and always risky because of the fuel that we import and the failure to find ways to store, let alone to dispose of properly, the waste that is created. Nothing that has recently come to light suggests that nuclear power will become any more safe or secure in future, as the climate change crisis affects Britain and we get more floods, more storms and more risk of disruption, with the same things happening around the world. For this country, which is so well placed with our wind, wave and tidal power, renewables are a far safer and saner route forward, and that is the way we should go.
As I do with much Lib Dem policy, I am having a few problems understanding this. If the hon. Gentleman is against nuclear policy per se, why does he support the nuclear deterrent? From a safety perspective, he seems to have one rule for our service personnel working on nuclear submarines and another for the civilian population.
Those are entirely different arguments, as the hon. Gentleman well knows, having also been involved in this debate for a long time. I will not be distracted into a debate on defence, although I am happy to have it another time. The position we have always taken is that we have inherited a nuclear deterrent that, in the multilateral negotiations that are coming up next year, we should use to lever down the number of nuclear weapons in the world, with a world policy and a national policy of reducing dependence on things nuclear.
We believe that, having gone down the nuclear road in this country and seen that it is unsatisfactory—it was not at all successfully developed under past Tory Governments—it is completely the wrong road to go down under any prospective Government, whether Labour or Conservative, or with somebody else in the lead.
The hon. Gentleman talked about the security of fuel supply. As I recall, the main sources of nuclear fuel are Australia and Canada, which are surely much more secure places to get fuel from than the middle east or Russia.
Some of the sources of supply that we need for nuclear are not in those countries but elsewhere, and there are predictions that they may run out in the foreseeable future and that prices may become significantly higher. If the hon. Gentleman thinks that, in a world of uncertainty, transporting around the world things that are needed to create nuclear power is a safe and sensible thing to do, he can make that argument, but it is not finding much credence with the public, who, on all the opinion poll evidence, find the idea of renewables a much more satisfactory way forward than nuclear power.
Let me make a bit more progress. I do not want to get bogged down in nuclear, which is not in the Bill, nor should it be. We are not in favour of it, and we hope that in the end the Government realise that they should not support it either.
The first item in the Bill is carbon capture and storage. Ministers know that we support CCS technology, which is vital if we are to make coal our servant in the years to come and ensure that it does not produce the same problems for our planet in the future that it has in the past. It needs to be seen to be commercially viable, and one difficulty has been that we have been really slow off the mark. That is not the fault of the Secretary of State or the Minister of State, the hon. Member for Lewisham, Deptford (Joan Ruddock), but it was in 2006 that the Select Committee on Science and Technology said of carbon capture and storage:
“Multiple full scale demonstration projects using different types of capture technology and storage conditions are urgently needed.”
The first demonstration project was in 1996 in Norway. Why have we been waiting? What has caused the delay? Why, for 12 and a half years, when the technology has been developed elsewhere in the world, have we not sought to advance the CCS that we have always known we would need? We are now going to have to try to catch up, but with other countries much further ahead, it might be as easy for us to take the technology from them as to develop our own.
I would be interested to hear from the Secretary of State why the Government have not yet come clean on their response to the results of their consultation, which ended in September, on having a framework of emissions performance standards for the whole coal industry. He did not allude to that in his opening speech, so I hope that the Minister of State will do so in her response. In the debate in the summer on a Bill introduced by my right hon. Friend the Member for Ross, Skye and Lochaber (Mr. Kennedy), the Under-Secretary of State for Energy and Climate Change said that he supported the general direction of it, but it was a sort of St. Augustine’s reply—“But not yet.” He said:
“The Government’s position is that in our general policy direction, we are where every Member who has spoken has urged us to be. We have already commenced a consultation on the best way to get a detailed policy so that we can travel forward… I believe that consultation is a very good thing and an important component of getting policy right.”—[Official Report, 3 July 2009; Vol. 495, c. 636.]
The consultation has ended, and we are clear that there ought to be—[Interruption.] I know that the Government have responded, but we need to know what they will do now. It is generally accepted that the current carbon price is not the stable one that this country and the world need, and that it needs to stabilise at something much more like €50 or €60 a tonne than the present €14 a tonne.
Given the European Union directive on clean coal, which will come into force at the end of the next decade, we need a clear position on the future of coal in this country. There has to be a clear statement that there will be no new coal-fired power stations without carbon capture and storage working right from the beginning, not retrofitted later. Without that absolute parameter, the industry will not know where it stands, and Ministers know that we are likely to have new coal-fired, dirty coal power stations that will contribute to worsening the climate crisis rather than help to solve it.
Another question about the CCS levy has been asked a couple of times already. I assume that the Secretary of State—again, he was silent on the matter—does not expect the parts of the energy industry that do not release carbon into the atmosphere to contribute to the levy to fund CCS demonstration projects. I assume that under the regulations that he anticipates—like the hon. Member for Tunbridge Wells (Greg Clark), I believe that it would be helpful to see them in draft—the renewables sector will not have to contribute. It would be nonsense if the sector that does not contribute to the climate crisis and the emissions problem had to pay to develop the technology for making dirty coal clean.
One other point on the technology of carbon capture and storage has not so far been alluded to, and I would be grateful if the Minister of State mentioned it in her response. She has said before how important it is that we share the technology that we develop in this country with developing countries in other parts of the world. It is not just we in the rich west who will need CCS; it is eastern European countries such as Poland, as well as countries such as China. What will happen to the intellectual property of the technology that the prototype plants will produce? I hope that it will be shared and that we do not just develop it to be nationalistic. I understand that all the CCS interests are to be consortiums of companies, some British but mostly international, in locations up and down the east coast, so I hope it is clear that we will share the technology and intellectual property and ensure that we have the power to help the developing world and not just ourselves.
The second section of the Bill is probably the most immediately important to our constituents, because it is about how we deal with rising and, for many people, unaffordable fuel bills. The Government know how embarrassing their record on that is. Again, that is not because of this Secretary of State, but his Government should be embarrassed about the cost of fuel to the poor over the past 12 and a half years. They set a statutory target, which still exists in law, to eliminate fuel poverty in vulnerable households by 2010 and all households by 2016. I understand that 4.5 million or more households now spend more than 10p in the pound on their fuel bills, compared with 2 million or thereabouts only four years ago. We know that there are explanations for part of that and that there has been a massive failure to take up benefits and tax credits that could help to pay the bills. However, it is not just pensioners who are affected but single-parent families and those with long-term illness, who do not benefit from the winter fuel payment. The hon. Member for Sherwood alluded to that. The whole system has failed to ensure that the poor and the vulnerable are protected.
Another group affected, which is often spoken for by Liberal Democrat Members such as my hon. Friend the Member for West Aberdeenshire and Kincardine (Sir Robert Smith), is the large number of people who live off the gas grid. They may live near it, but they have not been protected at all by the system. They have had to buy their liquified petroleum gas or oil fuel and get it into the tank at the bottom of the garden, and nothing has protected them. There have been 12 and a half years in which some of the rural poor have not been assisted at all, along with many of the urban and suburban poor.
Ministers know that the Liberal Democrats are again going to criticise the fact that all the schemes for warm homes have been piecemeal, limited and inadequate responses. They have told us this year that only one in 80 homes in Britain is a warm home, so we need a scheme that encompasses everybody. The carbon emissions reduction target and Warm Front are inadequate. Age Concern tells me that it receives 5,000 complaints about Warm Front every year, and CERT does not have reducing fuel poverty as a key objective. I understand that Warm Front funding will be cut by half next year, from £350 million to about £176 million, because some of the money was brought forward. The size of the grant has been kept the same, but fewer and fewer people are benefitting. We have heard the example of the latest pilot scheme, which is for but a handful of people.
If Ministers had said that they wanted a scheme rolled out across Britain, led by Government and using local councils, to make every home a warm home within 10 years, as we have argued for, they would have had our support. [Interruption.] Of course it costs money, but there are ways of doing it and I have explained them in the House. The Government could underwrite a loan that was paid back over a maximum of 10 years. Of course there would have to be investment for that underwriting, but it would be worth it. It would save on CO2 emissions, produce warm homes, reduce winter deaths and insulate housing.
I would have liked the Government to display that sort of ambition, and I would have liked them to tackle the problem of those who pay far more than average for their fuel bills because they are not connected to the gas grid. The figures that I currently have are that the average bill of someone on mains gas is £568 a year, that of someone on domestic fuel oil more than £1,000 a year and that of someone on LPG more than £1,300 a year. There is no justification for that inequity in this country today.
There is plenty of evidence and Select Committees have put the argument for change on an all-party basis, but the problem is getting worse. We know that last year, gas bills year went up by 58 per cent. and that this year, when gas prices came down, bills decreased by only 6 per cent. Last year, electricity bills went up by 28 per cent., but when prices came down this year, they decreased by only 8 per cent. The reality is that the system has not properly regulated bills according to the wholesale prices paid by the utility companies that supply the product.
There have been opportunities in this place to legislate along these lines. My hon. Friend the Member for Somerton and Frome (Mr. Heath) introduced a Bill to deal with high fuel bills earlier this year, but the Minister resisted and talked it out, and did not let it proceed. The reality is that it is bit late now, in the last months of a Labour Government, to get a Bill through to paper over the cracks and to try to cover the embarrassment that they know they feel, in however limited a way. They have not delivered to their constituents, but far worse, they have not delivered to the public as a whole.
There is one very odd bit of the Bill that I hope the Minister can explain. Clause 14, “Schemes for reducing fuel poverty”, states:
“For the purposes of this Part, fuel poverty is reduced if… (a) the number of people living in fuel poverty is reduced, or…(b) the extent to which any person is living in fuel poverty is reduced”
and clause 14(4) appears to give the Secretary of State by regulation the opportunity to redefine fuel poverty. I should like clarification of that, because we have seen plenty of figures massaged over the years. I know the Government are embarrassed, and they know they are embarrassed, but we need to be clear. If the general understanding is that when we talk about fuel poverty, we are talking about people who pay more than 10 per cent. of their income for fuel, that should remain as the definition. Ministers, whether of this Government or the next, should not have a chance to change it and to pretend that the problem is less than it is.
On the regulation of the energy market, if this was a Bill to really get to grips with Ofgem and produce a regulator that regulated in the consumer interest, people would say, “Amen.” However, I sense the Bill will be not nearly as tough as that. The Secretary of State has spoken to Ofgem and told it that if it does not behave, there will be more draconian powers, but the Bill introduces only a modest change to its regulatory authority.
Of course, there is some good stuff. The provision to ensure that energy transmission costs, which could result in higher bills if companies argued that they had low capacity in the grid, cannot be a method of exploiting the consumer is a good thing, and we welcome it. It is also good that the time period for investigations will be extended. There have been lots of abuses. I have seen cases in the paper and I have spoken to people who have had repayments of more than £1,000 from npower, because there has been a fiddling of the tariff and a misrepresentation of the cost. Those cases were taken up and awards were made in favour of those people. What will happen to cases that are currently timed out, but in which there has been a clear breach? I am not asking for retrospective legislation, but what remedy is there for people who have a clear, justifiable complaint against utility companies that has not been met?
I am concerned that nothing in the Bill will make Ofgem more open to the consumer, accountable and transparent. Ministers know what Consumer Focus, Which? and others are asking for —that Ofgem meet in public and that it include representatives of the public. The regulatory body needs to be much more accountable if it is to have the confidence of the public.
There is now going to be, for the first time, an ability to change the rules on the method of payment and the Government will have the power to control such things. The current voluntary system to which, as I understand it, the energy companies have subscribed, means they do not currently charge more, for example, for prepayment meters. However, I am concerned that some of the companies have indicated, even this winter, that they may be willing to go back on the system and charge more. Scottish and Southern Energy, for example, has said that it intends to withdraw its offer of equalisation at the end of this winter.
The hon. Member for Sherwood led into my speech by saying that this is a modest Bill, which sadly it is. In Committee, we will seek to make it tougher. We will seek to make Ofgem’s powers tougher and the rights of the consumer greater and to ensure that the schemes for making our homes in Britain warmer and better insulated are much more extensive. We will also seek to ensure that the CCS proposals do not penalise the renewables sector, which has just been re-incentivised by increased support. We need that support to go on growing, and we must not be seen as punishing or hindering such development.
We hope that we will make the Bill stronger and tougher. The Secretary of State has promised to be bold when he goes to Copenhagen in the next couple of days. I hope he will be, but I also hope that he will leave a message for his ministerial colleagues who will be in Committee that if the last of the Labour Government’s Energy Bills is to be worth having, it needs to be much tougher, bolder and socially just.
Hon. Members have this afternoon said that the Bill is a modest one. It is indeed modest if one goes by the number of clauses or what it provides by way of new legislation in the light of what we know are the challenges ahead. However, when considering Bills, it is important to understand clearly what we need to legislate on at particular times. It is important to ask what has already happened legislatively and what is still required. It is also important to ask what the role of regulation is and what are the roles of future initiatives, which stem from powers given by the Bill and other legislation, in meeting the energy challenge ahead of us.
The reality is that the Bill builds on the Energy Act 2008 and a number of other items of legislation to make some progress on issues relating to the energy challenge. In any event, regulatory powers are already available and financial investments can and are being made. There is a strategy for ensuring that a new low-carbon energy economy properly protects those in fuel poverty, and for ensuring that the future base load of our energy supply, which will inevitably concern coal and gas in future, is properly developed as far as the low-carbon form of energy supply and CCS are concerned. The regulator has the base powers to regulate the energy market as it becomes much more sustainable. They may appear to be modest legislative achievements, but they underpin a much greater step forward.
What we have heard this afternoon concerns me. The Opposition claim that they will allow the Bill a Second Reading and make changes in Committee, but they would, were they to have their way, have a huge legislative programme. They make declaratory statements on everything under the sun as far as energy policy is concerned, including on a great deal of legislation that, unless they have been completely oblivious of what has been happening in the House, they would notice has already actually been passed.
For example, we know that as a result of the 2008 Act, a feed-in tariff for smaller-scale electricity generation will be introduced soon. We know that the year after that a renewable heat incentive will come in. Incidentally, that will be the first introduced by any Government anywhere in the world to ensure that renewable heat is part of a programme of moving towards low-carbon domestic and commercial energy for providing heat.
Having that legislation in place will help when it comes to the next stage in energy efficiency for households and domestic properties, because that will require not just passive insulation and energy efficiency measures but active measures such as the installation of small-scale or district generation in domestic properties. That can reduce the carbon footprint of a house radically over time. Therefore the future relates to regulation following from legislation that has already been passed, and the will to ensure that that happens actively in the future. The claim that an opportunity to pass legislation has been missed in those areas is to misunderstand how one makes progress with a renewable and sustainable energy policy. I do not claim that that is a deliberate misunderstanding, but a misunderstanding it is, nevertheless.
It concerns me when that misunderstanding is compounded by simplistic claims about how progress can be made on these issues. We have heard the suggestion —it was repeated this afternoon—that every household should be given £6,500, and that that will sort out the whole question of insulation and active energy generation concerns. As a result, it is suggested, we will have fully insulated and approaching zero-carbon households, but it is akin to the other short-lived policy we heard about a while ago, whereby everybody was to put £8,000 into the pot and they would then have their health and social care needs taken care of for the rest of their lives. That policy ran into similar mathematical difficulties.
The mathematics of the £6,500 policy—over and above requiring loan guarantees of some £160 billion to £170 billion to be injected into the economy if the guarantee is from the public purse—would require savings of £360 a year, if the loan is to be serviced and assuming that it would not be just given out to householders.
The hon. Gentleman is making one or two errors in interpreting our policy. The amount would be up to £6,500, because not every home would require the same level of cost-effective investment. Any private company that can save money on its electric bills by investment is doing so: the problem with individuals is that they cannot borrow the money in the same way as businesses. This scheme would enable them to draw down their future energy savings to invest in the energy efficiency of their homes. It seems a bit of a no-brainer to me.
I am delighted that the hon. Gentleman intervened at the moment that he did and in the way that he did because he has completely anticipated my next point. Despite the fact that the leader of his party insisted that every family in the country could spend £6,500 on their household energy efficiency—and the shadow Secretary of State for Energy and Climate Change emphasised that point in the House recently—the truth of the matter is that in practice it would be nothing like that sum. And if it were £6,500, it would be unsustainable to support, in terms of the investment required to underpin it. It is only because the sum would be nothing like £6,500—it would be more like £1,500 on average under the Conservatives’ blue-green energy proposals—that funding the policy even starts to become conceivable for most households. Indeed, the savings suggested for an expenditure of £1,500 are the full £360 that would be needed to underpin the £6,500 in terms of the interest that would be lost through granting that sum. It is claimed that those savings would result from measures such as the installation of low-energy light bulbs, cavity wall insulation and roof insulation, all of which have already been legislated for to a considerable extent, or are under way. By 2011, for example, low-energy light bulbs will be in place across the whole of the UK. The Conservative’s policy does not take seriously the real job that needs to be done, especially on fuel poverty, or the investment in efficient homes that it will be necessary to undertake.
The recent White Paper, which does take the issue seriously, proposed that all homes should have a whole-house package—to be achieved not by legislative means but through other measures—to include cost-effective energy saving measures plus renewable heat and electricity measures as appropriate by 2030, and all lofts and cavity walls to be insulated, where practicable, by 2015. It also included the development of new ways to provide financial support so that people could make more substantial energy saving and renewable energy improvements. Does it not appear sensible to work out how that can be done properly in order to pursue the policy, instead of magicking a sum of money out of thin air, which would be completely insupportable in the real world? Would it not make more sense to examine placing a charge on the district network operator for the supply to the household? Would it not make sense to consider how loans could come into the equation to overcome the capital costs of such energy-saving devices? Would it not make sense to consider the option of leasing, or to pilot some of these schemes so that what we say and what we can do are the same thing? In a future low-carbon energy economy, the savings will need to match up to the investment so that the householder will be in a win-win situation in terms of their energy bills as well as the security of a well-insulated, low-carbon house.
We need to be clear that whatever the oscillation in energy prices in the future, they will be high and will get higher. There is therefore a particular onus on us to bring forward serious and well-thought-out programmes to ensure that those people who are not able to afford their energy bills now—let alone future higher energy bills —are proofed against those bills for a long time to come.
We need to be looking at a quantum shift in our understanding of what an energy bill should consist of and what those in fuel poverty face in paying their fuel bills. For the future, I envisage that happening in much the same way that council tax is paid—everybody pays it, but there is a rebate for those in less fortunate financial circumstances—so that a number of people are thereby effectively excluded or only partially included in the process of paying energy bills. Having a requirement in the Bill that social tariffs be introduced by legislation in future, rather than by voluntary agreement, seems to be a move towards that idea. We are all in this together, in ensuring that we have a low-carbon energy economy, alongside what we know will be high prices for energy supplies, but at the same time ensuring that the effects of that high-cost energy economy are not brought to bear in a most cruel way on those who can least afford to finance such an energy economy.
Therefore, a fuel poverty strategy should combine several different factors, not all of which will exactly correlate with each other. It is not the case, for instance, that everybody who is in fuel poverty lives in a badly insulated house, although a good proportion do so. Therefore, a strategy that moves rapidly towards ensuring that the standard assessment procedure ratings—the SAP ratings—of houses across the country are raised substantially, in order to fuel-poverty proof those houses as far as possible, seems absolutely essential. However, it is also not the case that simply doing that will cause everybody who is now in fuel poverty not to be in fuel poverty. It is also not the case that everyone who is in fuel poverty stays in the same house. Therefore, a programme to ensure social tariffs, tariff reductions and affordable tariffs for those in fuel poverty—these might be related as, in effect, a gateway benefit, in respect of other indicators of the fact that a person in fuel poverty lives in a house that is not well insulated—would seem to be a way forward in ensuring, as far as possible, that fuel poverty becomes a thing of the past in our future energy economy.
We have to be honest and reflect on the indicators of fuel poverty. Although it is widely accepted that those who spend more than 10 per cent.—10p in a pound—on their energy bills are in fuel poverty, that definition rises or falls precisely with energy prices. Some 40,000 people will be in fuel poverty if fuel prices rise by 1 per cent., yet they will apparently come out of fuel poverty if fuel prices fall by 1 per cent., regardless of their objective circumstances before or after that price rise or fall. Therefore, attempting to secure a combination of factors in fighting fuel poverty, so that people are fuel-poverty proofed as far as possible, seems to be the right way forward. That will require a combination of legislation and regulation on a series of important fronts. It is therefore interesting to note that the code for sustainable buildings, which will ensure by 2016 that the building of new houses is carbon-neutral as far as possible, which will, among other things, help to increase the SAP rating of UK housing stock, is not based on legislation.
Does the hon. Gentleman agree with us that it is important to have consistent measures of fuel poverty, so that Governments of any colour cannot wriggle out of their responsibilities, and that therefore clause 14, to which my hon. Friend the Member for North Southwark and Bermondsey (Simon Hughes) drew our attention earlier and which appears to give the Secretary of State the power to change and flex the definition, is rather dangerous and ought to be removed?
There is a distinction between ensuring that the definition of fuel poverty works in the way that I have described and a clause in a Bill that enables a Government simply to declare that fuel poverty does not exist. As the hon. Gentleman says, it would be a bad outcome if a Government were able, by a legislative ruse, to declare that fuel poverty did not exist. However, as we all know that it does exist and as we have a definition in the Bill that is not to be removed, the question is how we ensure, through a combination of fuel-poverty proofing, social tariffs and reduced tariffs, and through how they cross over for people living in particular houses, that fuel poverty is combated rather more effectively than previously.
I want to say a few words about the future of our energy supply. As my hon. Friend the Member for Sherwood (Paddy Tipping) mentioned, the test of the success or otherwise of our whole strategy of moving towards a low-carbon fuel economy will be the extent to which we effectively replace the 40 or so per cent. of our existing electricity supply with a low-carbon electricity supply. Over the next 10 to 15 years, all but one of our nuclear power stations will go out of commission, as will all our coal-fired power stations, a number of gas-fired power stations and, as things stand, all our oil-fired power stations, through a combination of age, end of life, the European large combustion plant directive and associated activities. It is imperative that that process should take clear note of the need to ensure, first, that we have a base load capacity in our fuel economy and, secondly, that we do not require investors in new plant—let us be clear: by and large, the investors in any new plant will be the energy companies that currently supply our energy investment in the UK—to invest in plant that will become redundant or a stranded asset as soon as it is installed.
That will require two things to happen. First, we need to ensure that the capacity exists to invest in both coal and gas, while at the same time squaring the circle of that investment for a future low-carbon economy. Secondly, it is absolutely right that we should send out strong signals about carbon capture and storage for those new investments. It is also absolutely right, therefore, that we should put in place a legislative framework through this Bill to move ahead with carbon capture and storage, both pre-combustion and post-combustion, coupled with a serious tranche of new powers for the regulator to ensure that the energy market works in a more carefully regulated way.
One thing to emerge as a result of those changes is that in future we will live in a far more regulated energy economy. Indeed, it is right that we should do so, because we have serious targets to reach, a short time in which to reach them and a series of replacements that we need to make in our generating capacity to enable us to reach them, rather than standing against them. Therefore, a combination of this legislation and Ofgem being able to recast the market arrangements for the generation of electricity, so that it underpins new investment in a positive way, will be a good achievement of the Bill should it become law.
If we are to regulate positively to achieve our aims, it is important that we all face in the same direction, and that we do not place on the statute book legislation that resiles from those aims. I was therefore concerned to hear proposals from Conservative Members for legislation to prevent onshore wind energy from being put in place anywhere in the country if it is less than a specified distance from a house or dwelling. The aim of that proposal is not, as has been suggested by Opposition Front Benchers, to involve communities more in onshore wind development. It is simply to stop onshore wind farms being put in place.
Giving that kind of signal through legislation would prevent the investment in our energy supply that we need to replace our ageing equipment, and create uncertainty in the market. Our claim to be able to move forward on to a low-carbon economy would effectively be rugby tackled by legislation that would make that impossible to achieve. I am sorry that, when those on the Opposition Front Bench were given the opportunity to repudiate that approach today, they simply ducked the question and said that it was nothing to do with them. It is something to do with them.
We should place on record that we will put on the statute book legislation and regulations that will move us solidly in the direction of a low-carbon economy, to ensure that the people who are going to be paying their bills in such an economy are not so disadvantaged by what that economy is going to produce that they cannot take part in it. We should all face in the same direction on this, and we must make it clear that we do not support anything that goes against that. I hope that when the Opposition Front-Bench spokesman sums up their case on this Second Reading debate he will take the opportunity to repudiate that it is any part of their policy to stop the development of onshore wind farms by placing distance barriers in the way of such developments, thereby preventing them from going ahead.
It is a pleasure to follow the hon. Member for Southampton, Test (Dr. Whitehead), but I must begin by correcting him. He has spent the past 10 minutes talking about Tory policy, and I hope that that theme will not continue through the debate. I want to clarify the fact that my hon. Friend the Member for Tunbridge Wells (Greg Clark) put clearly into context the remarks about wind farms made by my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke).
It was, however, the comments made by the right hon. Member for Sherwood (Paddy Tipping)—[Interruption.] I have inadvertently promoted him. The hon. Member for Sherwood made a thoughtful speech, and he made two points that I hope those on both Front Benches will listen to. First, he talked about the rising cost of winter fuel allowances, which needs to be addressed. Is it right that we should pour so much money into heating houses, rather than making them capable of requiring less heat by insulating them? He also raised the possibility of power cuts in 2017—I see him nodding— which is a prospect that the Secretary of State refused to acknowledge even though he wrote about it not long ago.
We have gathered here today to debate the Second Reading of this Bill, but there is another gathering taking place in Copenhagen. That involves a significant grouping of international leaders who are hoping to move the debate on the 1997 Kyoto protocol forward. We must all wish that conference well, but also bear in mind that it took more than eight years for much of that protocol to become law. Our hopes are high that we shall see agreement on the targets for greenhouse gas emissions, on financial support for adaptation to climate change in developing countries and on the carbon trading scheme. I shall not hold my breath while waiting to see any of that put on the statute book, however, because of the slowness of planning and the delays involved in Government agreements. All that goes against the grain of what we have heard on both sides of the House about the urgency of dealing with climate change and the demise of this country’s natural resources.
I visited Cumbria last week. We do not know whether the flooding there was caused by climate change, but many of the images that we saw on television are still vivid in our minds. I want to place on record the fact that Cumbria is very much open for business. Yes, there have been problems in Cockermouth, but Lake Windermere is back to its normal levels, and the people there are calling for tourists to visit the area. When we debate climate change, we need to be careful not to label or identify places that have been affected and simply leave it at that. We can incur damage if we do not subsequently confirm that repairs have been made. The fighting spirit of the people in Cumbria has got it back to business as normal, and we owe them a debt of gratitude. We can show that gratitude by sending out the message that the Lake district is very much open for business.
I am delighted to be participating in this Second Reading debate, not only to underline my own views on climate change but to comment on the demise of our own natural resources. As I said in my interventions on the Secretary of State, I am very concerned about what has happened to those resources over the past decade. History will look back on that decade with concern that we did not do enough in time to make people aware that our resources were being so greatly reduced.
The risk of blackouts in the future is now a reality, yet we hear denials of that from those on the Government Front Bench. Instead, we get lists of initiatives. Some of them are very good: we have just heard about the longer-lasting light bulbs initiative, and that is fantastic. Unfortunately, however, it does not address the question of what we should do when the oil and gas run out. That is exactly what is happening. In addition, our nuclear power capability used to contribute 30 per cent. of the UK’s energy needs; the figure is now down to 12.5 per cent. and falling. We have had many discussions on the further use of coal, but it is now seen as too dirty to use on its own. Extra investment is required, as is further research, because the scale on which we could use carbon capture and storage has yet to be confirmed.
We have also had big debates about renewables. The subject was just raised by the hon. Member for Southampton, Test. I do not doubt that there have been problems over planning in Conservative councils and in others across the country. It is worth putting on record the fact that there are more Conservative councils than there are Labour and Liberal Democrat councils put together, so of course there will be more issues and question marks in relation to those matters. I would like to see more incentives provided by the Government so that councils, regardless of their colour, would be encouraged to look at renewables as opposed to other energy sources.
I do not think that that point has substantial weight. The same sort of attitudes were present before the major wave of new Conservative councils was elected two years or so ago. Often, in the more balanced councils—in terms of political control—it was the Conservative councils that led the opposition to energy initiatives of this kind, so I am not sure that the hon. Gentleman’s point is all that significant.
I did not quite understand that intervention.
The point is that today, we are where we are. If councils are not embracing the opportunity for renewables, we need to look at ways of incentivising them to do so. What is wrong is that despite 10 years of commitment by this Government, the contribution to Britain’s energy requirement made by renewables has gone from 1 per cent. to 1.3 per cent. That is not good enough, considering the pressure that we are under to find other ways of providing our energy. It is almost as if a pilot were to take off without knowing how much fuel was in the tanks and then started searching around for somewhere to land to refuel. That is not sensible planning for the future. That is my basic argument. What has happened in the last 10 years, as the oil and gas have been running out? The initiatives that we need to prepare ourselves for the future when the lights may be threatened, or indeed turned out, have not been forthcoming.
In Germany it is against the law to run out of fuel while driving a car on the motorway: one has to plan ahead. I wonder what the fine would be for a Government who were running towards empty, or if their tank ran out completely. It would probably be more than this Government could afford.
It is helpful to remind ourselves of our energy needs. It is fair to say that for many years we have been blessed with energy efficiency in this country, as we have had an ample supply. Our requirement is roughly around 60 GW, although it is likely to decline this year, simply because of the recession and the consequent reduction in requirements. Current capacity is 76 GW, so one might ask what all the fuss is about. According to the Government’s own statistics, our energy requirements are likely to increase by around 40 per cent. over the next 20 years.
Let us look at our resources more closely. We have known for years that North sea oil is on the decline. Surely the recent oil price spike at $147 a barrel would have set the alarm bells ringing to say that what we are doing is not sustainable. We clearly cannot carry on this way—and not only on account of the cost of the fuel, because it is simply running out. Labour has watched, like a rabbit caught in the headlights, as the North sea oil dials swing round towards empty.
The story with gas is not much different; about a third of our requirements are now imported. UK storage capacity has also changed little. That was pointed out a number of times to the Secretary of State, who gave the most waffly reply I have heard in this Chamber about the reasons why we cannot have a legal requirement, as France and Germany do, to keep a certain number of days’ supply of gas in storage in the UK. In France it is 125 days; in Germany it is 95 days; in the UK we average around 15, but last winter we went down to just four days’ capacity, coming very close indeed to running on empty.
The question has been raised—the hon. Member who raised it is no longer in his place—about an issue that the Front-Bench teams need to answer: rough storage, and who owns the gas itself. Germany owns a number of the companies that operate in the UK, but is it right that when they are running low on gas, they can remove gas from rough storage here in the UK and take it back to Germany to look after their own residents? The Government should provide an answer to that question.
The nuclear story provides another tale of woe. Again, 30 per cent. of energy needs were once being met, but we are now down to 12.5 per cent. The Magnox fleet is going to disappear almost completely over the next few years, as are pressurised water reactors. These cannot be replaced overnight. The Government are at last waking up, but they will turn around and say, “What are the Conservatives going to do?” That is not a powerful argument, when it is under their watch that the nuclear power capability has been reduced to the point at which we cannot replace those power stations, like for like, in time to meet the same energy requirements as before.
As I said in an earlier intervention, it took 22 years to get planning permission to build the Dungeness nuclear power plant. The processes have been speeded up, but the technology is no longer here in the UK. Virtually every nuclear power station is different—unique—as we have built one, learned from it and then moved on to build another one. That is not a good story. Much of the technology and the people have moved elsewhere, to places such as South Africa, Canada, the United States and France. We should be looking to international organisations to come over here to teach and train us so that we have the right nuclear capability to meet our needs in the future.
I thank the hon. Gentleman for his comments about Cumbria, but on the subject of the nuclear industry, I urge him please not to talk down the capability of the UK industry. Many of the points that he has made are not true. I know he is supportive, which I welcome, but let us stick to the facts.
I am sticking to the facts. I am on the all-party nuclear energy group, and we have made a number of visits across the globe. We meet British people—now slightly aged, I have to say—who worked in the British nuclear industry and have now moved away from it. I could mention the CANDU systems in Canada, the pebble-bed systems in South Africa, and other systems developed in France and Sweden, all of which benefited from British interest and British know-how, as they started off here in the UK.
The second absence from the Bill is any mention of nuclear fusion, and I suspect that not many Members are aware of what is going on in that connection. The Minister of State shakes her head, and if she were to intervene now, she would no doubt say, “Oh, that’s 20 years away.” Well, it will continue to be 20 years away, so long as we continue to fail to invest in it. Given that that is effectively nuclear power utopia, I cannot understand why we are not doing more to find something that would allow us to build only one more set of nuclear fission reactors before moving over to nuclear fusion. Nuclear fusion combines hydrogen, turning it into helium, creating water, so it is very safe: there is no radioactive material and there are no CO2 emissions, making it extremely clean. Yet we are doing nothing—no research, no discussion in the UK of how to move that debate forward. Scientists know that that power can be harnessed, but because it a long time in the future, the attitude is that it will not happen on our watch; I am afraid that that is not the right attitude.
As for coal, we have a supply, but as we have known for a long time, it is a big polluter. If we have known that for a long time, why are we only now coming to terms with the challenges, issues and benefits of carbon capture and storage? Again, it is all too late in the day.
The hon. Gentleman will remember the project to develop clean coal technology at Grimesthorpe—but it was closed by the last Tory Government.