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Annual Energy Statement

Volume 514: debated on Tuesday 27 July 2010

With permission, Mr Speaker, I wish to make a statement on energy policy. This statement and the departmental memorandum that I am placing in the Libraries of both Houses fulfil our commitment to present an annual energy statement to Parliament. In making this statement within three months of coming into office we are signalling the importance of this policy. We are setting out a clear strategy for creating the 21st-century energy system that this country urgently needs if we are to have affordable, secure and low-carbon energy in future.

We face short-term challenges as a result of the legacy inherited from the previous Government. We have the third lowest share of renewable energy of all 27 states in the European Union, which is the same ranking as in 1997. In the longer term, we must meet the challenges of a volatile oil market and increased energy imports. We are taking three big steps forward: we are creating a market for energy savings through the green deal; we are ensuring a properly functioning electricity market; and we will strengthen the carbon price.

Our actions must be informed by the best information about the future. That is why I am publishing our work on 2050 energy pathways, which has been worked up in consultation with industry, scientists, engineers and economists. We are making the data and analysis available and we are inviting comments over the summer. We want to start a grown-up debate about what a low-carbon future will look like and the best way of achieving it. These are possible pathways; we are not claiming to be able to see the future with certainty, but we cannot continue on the current pathway, which is high carbon and highly dependent on imports, with highly volatile prices.

Like the other industrial revolutions, the low-carbon revolution will be driven by entrepreneurs, the private sector, local communities, individuals, businesses, scientists and engineers—not by government. However, industry needs stable policy and functioning markets. The role of government is to provide the policy framework and to act as a catalyst for private sector investment. As the 2050 pathways work demonstrates, we need to apply those principles to the challenge of changing fundamentally the way we produce and consume energy.

The cheapest way of closing the gap between energy demand and supply is to cut energy use. We need to address the state of our buildings—we have some of the oldest housing stock in Europe. Our green deal will transform finance for improving the energy efficiency of Britain’s homes. It will get its legal underpinning from measures in the first-Session energy Bill. We are also accelerating the roll-out of smart meters, which provide consumers and suppliers with the information to take control of their energy management. Alongside this statement, the Government and Ofgem are publishing a prospectus for smart meters, which sets out how we will do this.

Openness is important to us, as it is to business and the public. Alongside this statement, I am also publishing analysis of the impact of energy and climate change policies on both household and business energy bills up to 2020, and I will continue to do so on an annual basis. At the moment, the UK economy is reliant on fossil fuels. As UK oil and gas production decline, this leaves us more exposed to volatile prices and increasing global competition for the resource. The challenge is to spur the capital investment required for new energy infrastructure. The volatility of fossil fuel prices and continuing uncertainty about the carbon price makes such investment high risk, pushing up costs and slowing development, so the first step is to support the carbon price.

In addition, I can announce that we are carrying out a comprehensive review of the electricity market and I will issue a consultation document in the autumn. This will include a review of the role of the independent regulator Ofgem. The Government will also put forward detailed proposals on the creation of a green investment bank. The coalition agreement is clear that new nuclear can go ahead so long as there is no public subsidy. The Government are committed to removing any unnecessary obstacles to investment in new nuclear power. In the memorandum, I have outlined some clear actions to aid this. As a result, I believe that new nuclear will play a part in meeting our energy needs. In the heating sector, I can confirm our strong commitment to action on renewable heat. The Government are considering responses to the renewable heat incentive consultation and will set out detailed options following the spending review.

The UK is blessed with a wealth of renewable energy resources, both onshore and offshore. We are committed to overcoming the real challenges in harnessing those resources. We will implement the connect-and-manage regime, and I am today giving the go-ahead to a transitional regime for offshore wind farms. Both those measures will help to speed up the connection of new generation to the grid. We remain committed to developing generation from marine energy, biomass and anaerobic digestion. Biomass investors that were promised help under the renewables obligation will continue to benefit.

We also need incentives for small-scale and community action. We are consulting on a new microgeneration strategy, and I am today laying an order to allow local authorities to sell renewable electricity to the grid.

Fossil fuels can also have their place in a low-carbon future, provided that we can capture and store most of their carbon emissions. We will introduce an emissions performance standard and we intend to launch a formal call for future carbon capture and storage demonstration projects by the end of the year.

This is a bold vision. We will not be able to deliver it without a 21st-century network that can support 21st-century infrastructure. The statement sets out practical measures that we are taking to improve network access and begin the building of a truly smart grid. However, the vision needs to be grounded in reality. The low-carbon economy must happen, but it will not happen tomorrow. There are potentially 20 billion barrels of oil equivalent remaining in the UK continental shelf, but we must maximise economic production while applying effective environmental and safety regulations. We are doubling the inspections of offshore oil and gas rigs, and we will undertake a full review of the oil and gas environmental regime.

We must also be mindful of our inherited responsibilities. My Department is responsible for managing the country’s nuclear legacy. I am committed to ensuring that those essential duties are carried out with the utmost care and consideration for public safety.

The UK does not stand alone. The Government will work together with our international partners in efforts to promote action on climate change and energy security across the world. We are working hard to put Europe at the front of the race for low-carbon technology. This will help to refresh the appetite for action across the world after the disappointment of Copenhagen.

In conclusion, the statement is about planning ahead and providing clarity and confidence in the policy framework. That is why I am also publishing today my Department’s structural reform plan to show how we are carrying out our priorities. Once we have completed the spending review, we will publish a full business plan. At last we can have an energy policy with real direction and purpose, and a Government who are willing to take the bold steps necessary. I commend the statement to the House.

I thank the Secretary of State for early sight of his statement and the associated documents. There are some things in the statement that I welcome: the continuation of our work on the 2050 pathways and scenarios; the role of local authorities; and what he said about smart metering, although I think that he has adopted our timetable for the roll-out of smart meters despite the great rhetoric before the election about a faster timetable.

The problem with the statement, however, is that the Secretary of State did not tell us that, on a whole range of issues, he is going backwards not forwards compared with the actions of the previous Government. The truth is that the Government have gone from the rhetoric without substance of opposition to rhetoric without substance in government. Let me take the issues in turn and ask him some questions.

Contrary to what the Secretary of State says, we had a clear plan on the long-term transition to the low-carbon economy that Britain needs—it was the low-carbon transition plan that was published in summer 2009. That plan was widely applauded by industry, employers and green organisations. The problem, however, is that he is unpicking parts of that plan. If he wants a higher renewables target, will he explain why he is abandoning the measures that we put in place to meet the existing renewables targets? He has given in to Conservative nimbyism by abolishing local and regional targets for renewables.

It is absolutely unclear from the documents that the right hon. Gentleman has presented to the House how he will meet the higher targets. We do not even know what they will be. On onshore wind, his own Minister, Lord Marland, in another place, says:

“It is our determination there should be no dramatic increase in this”.—[Official Report, House of Lords, 5 July 2010; Vol. 720, c. 5.]

How will the right hon. Gentleman meet his renewable targets without a dramatic increase in onshore wind? If he does not agree with Lord Marland, he had better get a grip on his own Department.

The right hon. Gentleman is going backwards on wind power and on the incentives to use renewable heat in our homes. We were set to be the first country in the world in April 2011 to have a renewable heat incentive in place. All that he has done in the statement today is to postpone any decision on this until after the spending review. Will he explain why has he done so and what the timetable will be for the renewable heat incentive?

On nuclear, the right hon. Gentleman has finally said something positive, but I do not think that anyone will really believe that his heart is in it. Let me test him out. We said in our national policy statement that we believed that new nuclear should be free to contribute as much as 25 GW towards new capacity. Does he agree with that?

On a green economic future for Britain, I am afraid that his statement goes backwards too, most shamefully with the decision on Sheffield Forgemasters. A written answer has been smuggled out by the Secretary of State for Business, Innovation and Skills this morning trying to explain how it is possible that the Prime Minister, the Deputy Prime Minister and others said in this House that Sheffield Forgemasters had refused to dilute the loan when that was not the case.

Will the Secretary of State for Energy and Climate Change explain once and for all, because it has not been explained before, why, given that it was a loan, given that the money was set aside, given that there was value for money as judged by the independent panel that looks at these issues, he cancelled that loan? Why has he taken the £1 billion away from the green investment bank? We set aside resources from the sale of High Speed 1 towards the green investment bank and he has taken that money away. So the right hon. Gentleman is going backwards, too, on the question of our industrial future.

Finally, on fairness, we all accept the huge challenge of fuel poverty amid the green transition. Will the right hon. Gentleman explain why, in the documents that he publishes today, he no longer says that he will necessarily be going ahead with the compulsory social tariffs that will give cut-price energy for the most vulnerable? Again, it is put off until after the spending review, and again it is subject to review. Does he agree that it is vital? The Liberal Democrats’ position before the election was to do more to help the most vulnerable, including through compulsory social tariffs.

The truth about this Government is that they promised that they would be the greenest Government ever. Any fair-minded person looking at this statement will conclude that they are a huge disappointment—to industry and to the country. In our first debate, the right hon. Gentleman said:

“One thing that the Government are going to do is to under-promise and over-deliver”.—[Official Report, 27 May 2010; Vol. 510, c. 317.]

On today’s evidence, he got it the wrong way round.

I am grateful to the right hon. Gentleman for his response. Let me make it clear that we have set out in this annual energy statement a clear route map with a framework that will deliver the low-carbon economy that I believe we both want. That is something that will be seen in the test of results rather than in the test of rhetoric.

If one looks at wind power, for example, I cannot accept that the Government should take lectures from the Opposition on renewable energy. The reality is that we have the third worst record of all 27 European Union member states. I know that the right hon. Gentleman, in the latter years of the last Government, improved the policy settings, to which I pay tribute, but the reality is that, taken as a whole, the record of 13 years of Labour rule on this agenda is truly shocking. For us to take office after 13 years of Labour Government, when they have made no progress whatsoever in improving our rankings on renewable energy compared with all 27 members of the EU, is extraordinary.

The right hon. Gentleman knows very well that, on the renewable heat incentive and, indeed, on Sheffield Forgemasters and the fuel poverty commitment, we are inevitably subject to the spending review for the very simple reason that his colleague, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), said extremely pithily when he left the Treasury, “There is no money left.” Although I have enormous respect for the green credentials of the right hon. Member for Doncaster North (Edward Miliband), I do not think that he does the cause of progressive politics or green politics any good by pretending that there is a bottomless bucket of money that we can dip our hands into and throw at problems.

The right hon. Gentleman did not say anything about the constraints that, if elected, the Labour party as he very well knows would have laboured under exactly as we do. He certainly talks the talk, but we are delivering. We will introduce a carbon price floor; he did not. We will introduce an emissions performance standard; he did not. We will introduce a green deal to tackle energy saving in every household, including fuel-poor households; and he did not. That should be a matter of shame to Labour Members.

Order. A very large number of right hon. and hon. Members wish to take part in this statement, but there is another statement to follow and then a ten-minute rule Bill, followed by the Backbench Business Committee debate to which nearly 50 Members have applied to contribute, so what I require both in questions and in answers is brevity.

As my right hon. Friend knows, the energy-intensive industries in my constituency, such as ceramics and aluminium, which have already achieved great efficiencies over the past 10 years, are very concerned about the impact of the new carbon trading rules that are due to be introduced in a couple of years. Will he assure us that the rules will not result in production and jobs simply moving overseas to jurisdictions that do not take carbon emissions as seriously as we do in this country?

Both the Department and the European Commission have looked closely at those competitiveness issues, and we feel confident that a range of measures, such as free allocation when it comes to the emissions trading scheme, can deal with those problems. We should remember that there are substantial transport costs, which provide some protection, and I believe that the industries concerned have a healthy future.

I welcome the idea of an annual energy statement and, indeed, much of this statement’s content, particularly what I think is a step forward—the assertion that new nuclear will play a part in meeting our energy needs. Given the coalition’s differences as was—or perhaps as still—who has ministerial responsibility for driving forward the civil nuclear programme? Given my experience of working with three Secretaries of State, and given the complexities of the matter, I know that one needs a Secretary of State who is determined to drive the programme forward.

I have great respect for the right hon. Gentleman’s expertise in this area. We work very much as a team in the Department, and my hon. Friend the Member for Wealden (Charles Hendry), the energy Minister, and I have been working very closely with nuclear suppliers and attempting to meet some of their concerns about the regulatory framework. It was precisely because we had two different views, from the Conservative side and the Liberal Democrat side, that we dealt with the issue right at the beginning, with a coalition agreement that makes very clear what is going to happen.

On the point that the right hon. Member for Doncaster North made about whether we should commit to a particular target, I simply say that I do not believe that it is the job of government to micro-manage how we put in place a framework for, and facilitate, low-carbon energy. However, there is no doubt that the coalition agreement sets out that there is a place for new nuclear, and I believe that there will be investment in new nuclear to meet our energy needs in the future.

The Secretary of State will know, from his visit to north-east Scotland so soon after his appointment, just what skills have been developed in the sub-sea engineering field and the world-leading companies that are in my constituency. Does he recognise that those skills will be very much needed to drive forward further gas and oil production, the carbon sequestration projects in the North sea and existing marine renewable skills? Will he build on those skills to ensure that we have a British-based solution to the carbon problem?

I am very grateful to my hon. Friend for that question. Nobody who has visited his part of the world can fail to be impressed by the professionalism and expertise in the area. Interestingly, such skills not only exist in oil and gas exploration, where it started, but are extending right the way across the piece. For example, companies that were involved in building rigs for oil and gas exploration are now involved in building bases for wind turbines. I can assure my hon. Friend that we in the Department are very conscious of the extremely valuable resource that we have in north-east Scotland among all those energy sectors.

I note the right hon. Gentleman’s reference to the ambition of the green deal that he is going to bring forward shortly. However, the Minister of State, Department of Energy and Climate Change, the hon. Member for Bexhill and Battle (Gregory Barker) recently ruled out the inclusion of microgeneration in green deal offers for homes. Does the right hon. Gentleman accept that, therefore, the green deal will effectively prove to be a small mouse rather than a mighty change? Does he accept also that, based on securitisation, bodies such as Eaga already use the feed-in tariff to offer home improvements, including solar photovoltaic cells, at no up-front cost? Why cannot he do that in the green deal?

I think that the hon. Gentleman misunderstands the green deal, which is primarily about insulation. We are very happy for any green deal provider to offer microgeneration alongside insulation, and he should remember that an extraordinary level of incentives for microgeneration is available through the feed-in tariff, so we are by no means excluding it. We want to see it encouraged, and if green deal providers supply green deal insulation for households they will be able to offer microgeneration packages, too.

The hon. Gentleman should make an important distinction. The green deal, along with home energy insulation, needs to be in place in our existing housing stock right the way through to 2050. Whereas, with the best will in the world, if we look at boilers and other forms of microgeneration, we see that there is going to be a replacement process, because we have yet to produce boilers that can last right the way through to 2050, which would be quite a stretch. Inevitably, there are two different markets.

I very much welcome the Government’s strong commitment today to renewable heat. In my constituency we hope to host the first commercial deep geothermal energy plant in the UK, and we have the only UK manufacturer of ground-heat pumps, so the speed with which the Government can act on bringing in the renewable heat incentive is vital to my constituents. Will the Minister be so kind as to outline the time frame?

My hon. Friend should be aware that all those decisions need to be taken in line with the spending review, but in the statement there is a very clear commitment to renewable heat, from which I hope that she can draw comfort. I have been in discussions with other MPs from Cornwall, and I am very aware of the potential for geothermal. My hon. Friend the energy Minister is planning a visit shortly to Cornwall, and I also hope to be able to see the progress that is being made in those important areas.

I very much welcome the Secretary of State’s commitment to look at the energy markets, but will he accept that the markets in both gas and electricity do not offer fair prices to the poorest people? In that context, will he commit to giving the power to Ofgem to ensure that it regulates the delivery of energy to the poorest people in our country?

The hon. Gentleman is quite right to point out that competition is an absolutely key part of ensuring that everybody gets fair prices, but so is social price support and the other steps that we can take to target energy-saving measures on, in particular, the poorest households. The green deal will very much include that element, because dealing with the cause of the problem will be infinitely preferable to having to deal merely with the symptoms.

I thank the Secretary of State very much for a clear sense of direction on energy security, which we have lacked for many years. What plans do he and his Department have to implement the marine energy park proposal that was in our manifesto before the election? My constituency, which includes the world’s largest offshore wind farm, would very much like to be part of that proposal to ensure that we can create a much more progressive renewables sector in Thanet.

My hon. Friend can rest assured that we have not forgotten about the marine parks proposal; indeed, we are taking it forward with consultation. We hope to make an announcement in due course.

The Secretary of State commented a lot about the importance of the private sector in his policy, but he did not show a real understanding about how the private sector operates in this area. He will recall that a few weeks ago he visited the Aberdeen Renewable Energy Group stand at the All-Energy conference in Aberdeen. The point was made to him strongly that the private sector was gearing up for the renewable heat initiative, which as I understand it was intended to come about, with all-party support, in 2011. There has, however, been silence on the issue and, given his statement today, I am sure that there will be concern about more than that. There will be concern that the whole affair has been shelved until after the economic statement later in the year and that there will be chaos in the private sector. There is real concern about the Government’s failure to implement what was anticipated.

The hon. Gentleman is quite right that it is absolutely essential that any private sector investment, which we aim to unlock, should have certainty and clarity. On the renewable heat incentive, the statement is clear about our commitment to renewable heat, which is absolutely essential if we are to meet our target. The hon. Gentleman has to appreciate that the country is facing an exceptionally severe fiscal crisis and that it is inevitable that we deal with these matters in the context of the spending review. However, people in the sector can take considerable comfort from my words today about renewable heat.

My right hon. Friend assures us that there will be no subsidy to the nuclear industry. Today, BP has announced that it expects to spend £20 billion on the clean-up following the Gulf of Mexico oil disaster. Will he raise the limit on the exposure of nuclear operators to catastrophes to an equally demanding level?

I am grateful to my hon. Friend for that question. One of the things that we are looking at in the context of making sure that there is no public subsidy for nuclear is the contingent liability regime and ensuring that there are no holes in it. In due course, we will be able to make a statement on that.

I welcome the Secretary of State’s acknowledgement, albeit somewhat grudgingly, of the role of the new nuclear industry in providing for our future energy needs. I seek reassurance from him that his party’s previous objection to nuclear was not a factor in the withdrawal of the loan from Sheffield Forgemasters. If he can give that reassurance, will he at last give us a transparent and coherent explanation of why funding for extremely welcome projects at Nissan and Ford were allowable when funding for Sheffield Forgemasters was not?

I can absolutely and categorically give the hon. Gentleman an assurance that whatever he imagines to be the prejudices or otherwise of me or my party have absolutely nothing to do with the decision on Sheffield Forgemasters, which was a matter of affordability. I merely draw his attention to the written ministerial statement from my right hon. Friend the Secretary of State for Business, Innovation and Skills. That clearly sets out the reasons that underlay the decision.

I welcome the Secretary of State’s statement on the low-carbon economy, particularly his commitment to offshore wind. In the beautiful Blackmore vale in my constituency we face yet another application to erect wind turbines. The only business case is the subsidy paid for those turbines; the wind blows barely 20% of the time. Will the Secretary of State confirm that it will still rest with the local planning authority to judge such applications on planning considerations?

I can confirm to my hon. Friend that below 50 MW the decision is for the local planning authority. However, I urge him not to fall into the easy trap of assuming that the only reason for building onshore wind turbines is for subsidy. The recent study on costs that the Department has had from Mott MacDonald shows that there has been a dramatic reduction in the cost of onshore wind. The result is that it is competitive in a free market with other sources of energy.

Thirty per cent. of the UK’s energy supply will be going off stream between 2017 and 2025 as nuclear power stations are decommissioned. Is it good enough for the Secretary of State to say that the private sector may supply new nuclear facilities? Surely he has to come up with a plan now to replace that 30% of energy and tell the House where it is going to come from.

The hon. Gentleman and I have already had this debate, which is a bit like dancing on the head of a pin. The reality is that the Government’s job is to set a clear framework that will deliver the energy investment that we need to deal with the problem that the hon. Gentleman rightly raises. I believe that the statement is a first step towards doing that. We will have a clear amount of new energy infrastructure investment. I merely point out that it is really no part of the business of government to micro-manage decisions that should properly be left to the marketplace and the private sector.

I congratulate the Secretary of State on his announcement. However, I am concerned that there will be no public subsidies for the nuclear power industry. My constituency has two nuclear power stations that pump out 10% of the national grid. One is to be decommissioned in the next 10 years. Nuclear technology is a low-carbon fuel source, and the statement represents that. We should be looking into part-funding privatised nuclear power stations. Surely that is the way ahead.

I am grateful to my hon. Friend for his question. There is a clear economic reason for making a distinction between nuclear power and the other sources of energy on which we can rely in coming years. It is simply that there is a strong argument for encouraging an infant industry, at an early stage of development, from the public sector. We have seen that with onshore wind, whose cost has come down dramatically precisely because of the encouragement of the public sector. I am afraid that the same argument cannot be made for nuclear power, which has been around for a long time. It is not an infant industry, but an established and mature one and it can and should compete on that basis, along with all other comers.

The Secretary of State emphasised that the Government are working as a team. Which members of the team were involved in the decision on Sheffield Forgemasters?

As the hon. Lady will know, government is a collective business. Large numbers of people were involved in the decision on Sheffield Forgemasters. At the Department, we were certainly kept informed.

I welcome the statement, but does my right hon. Friend appreciate that 4,000 different tariffs cause understandable confusion among consumers? Under pressure, the previous Government promised that annual statements would include information on the cheapest tariffs so that consumers could more easily see whether they were paying too much for their energy. Are this Government going to continue with that promise? If so, has the Secretary of State considered including cheapest-tariff information on monthly bills? An annual statement discriminates against active switchers.

I am grateful to my hon. Friend for that question. He is absolutely right; one of the most powerful instruments in the toolbox is the unleashing of competition as effectively as possible. Competition is ineffective if there is not a clear commitment to information and understanding on the part of consumers. We will bring forward proposals in the energy Bill later this year to make sure that consumers are properly informed. We will take account of the time scale that my hon. Friend has proposed.

Is the Secretary of State aware that at this moment in time coal produces up to 35%—at times, 50%—of the electricity generated in the UK, yet the announcement this morning did not make a single reference to coal? Will he give a commitment to the continuation of the British deep mining coal industry?

The hon. Gentleman clearly was not listening to the part of the statement that dealt with carbon capture and storage. The future of the coal industry—and, potentially, of gas—is about carbon capture and storage. It is an exciting technology on which this country has led. We have done a lot of the interesting, pioneering science on it. That, above all, will be the commitment to the coal sector.

I warmly congratulate my right hon. Friend on his statement. Further to the question by the hon. Member for Manchester Central (Tony Lloyd), who is no longer in his place, what reassurance—indeed, guarantee—can the Secretary of State provide to the House that vulnerable households will be supported and not further impoverished as a result of the measures that will be rolled out following this statement of policy?

My hon. Friend will know that the forecasts that we are making for 2020 crucially depend, in terms of their impact on household bills, on what one thinks will happen to the price of oil and gas. If one thinks that it will basically be the same as today, there is a modest increase in the cost of policies compared with the alternative; if one takes the International Energy Agency’s view of a $100 price for a barrel of oil, for example, one sees that our policies are reducing the cost of electricity to households. However, it is absolutely crucial to ensure not only that the policy framework delivers overall lower costs but that poor households, in particular, will not bear the brunt. That is why we are looking at social price support and why, as I said to the hon. Member for Manchester Central (Tony Lloyd), it is absolutely crucial to target our energy efficiency measures on fuel-poor households so that we can deal with the cause, not merely with the symptoms.

I was grateful to hear the Secretary of State’s reconfirmation of the doubling of inspections of offshore oil and gas rigs. However, given that we have just seen testimony from the United States about Transocean oil rig managers ordering that a general alarm on the Gulf of Mexico oil rig that exploded be disabled, is it not time for the Secretary of State or the energy Minister to summon the Health and Safety Executive and Transocean to give further assurances about the safety of the 10 Transocean oil rigs that operate in UK waters?

The hon. Gentleman raises an important point that we are very aware of and have been devoting a lot of attention to in the Department. We had our own problems in this country with Piper Alpha at the end of the 1980s. In response to that, substantial changes were made in the regulatory regime which meant that there were no conflicts of interest of the sort that have existed in the American regime, and the US Administration are taking on board some of those lessons. We have tightened up the regime, which we want to be as effective as possible, and we will learn the lessons as they come out from the various inquiries into what happened with Deepwater Horizon. I assure the hon. Gentleman that we will also be in close discussions with our Norwegian counterparts; we are already doing so at an official level. Last week in the US, at the clean energy ministerial meeting, I had some interesting discussions with my Norwegian counterpart on learning the best lessons from what has gone on in the Gulf of Mexico to ensure that we have an absolutely state-of-the-art regulatory regime, as I assure the hon. Gentleman we will.

My right hon. Friend has made it clear that there is no public money for the mature nuclear energy markets, but I presume that that means nuclear fission, not nuclear fusion. May I encourage him to consider the latter technology? It has always been said that it is 20 years away, but we are now talking about a 2050 energy pathway, which will take us beyond 20 years. May I encourage public spending on this area such as that we have seen in Oxfordshire?

As my hon. Friend says, the technology has been held out as having enormous promise for many years. It would be absolutely marvellous, as I think everybody can agree, if we were able to move to new nuclear fusion, which has all sorts of fantastic advantages. I will await with interest the briefing from my excellent chief scientist on the practicalities of incorporating it within a 2050 pathways review.

The nuclear industry is worth an estimated £30 billion of investment over the next 10 years in the north-west of England alone. At the time of the announcement on Sheffield Forgemasters, that was part of a much wider strategy mainly based in the north-west, which included public money being spent on research, not least in the area that the hon. Member for Bournemouth East (Mr Ellwood) mentioned—for example, at the Dalton nuclear institute and the advanced manufacturing research centre. That is public money for investment. Is that money secure, or does the Secretary of State see it as a subsidy to the nuclear industry?

The hon. Gentleman really does not get it yet, and I am afraid that he shares that with a lot of his colleagues on the Labour Benches. The reality is that the fiscal constraints under which this Government are now labouring—I use that word advisedly—are such that we are having to look with extraordinary forensic acuteness at spending right across the board. The days when he and his colleagues were able to sign blank cheques and leave them like confetti across the country are over. If he has not yet woken up to that fact, he had better do so pretty soon, because the electorate will not take him seriously until he does.

I welcome my right hon. Friend’s statement and invite him to come to Suffolk Coastal or, as I rechristened it in my maiden speech, the green coast, where he will see a range of energy schemes such as those that he is proposing. However, in considering the subsidy that is given to the production of offshore energy, will he also consider how we get that energy onshore? One of the great ironies would be the production of all this very environmentally friendly energy but the blight of pylons right across areas of outstanding natural beauty and beautiful countryside.

My hon. Friend is right to raise that issue. We are indeed considering the transmission regime to ensure that we get the appropriate type. One of the big issues is that we essentially have a cost profile for the transmission regime that is based on an incentive to put mobile power stations as close as possible to their markets. That is absolutely fine when we are dealing with sources of energy that are mobile, but increasingly we are dealing with sources of energy that are not mobile. If we want to build wind turbines, we have to put them in areas where there is wind and where there is an economic basis for doing so. My hon. Friend’s point is a significant one for us in the Department, and we are addressing it.

The Secretary of State said a few minutes ago that his Department was kept informed about the decision on Sheffield Forgemasters. Were he and his ministerial colleagues consulted before the decision was made, and if so, what views did they put forward in that consultation?

We were consulted on Sheffield Forgemasters, although the matter relates to the budget of the Department for Business, Innovation and Skills. The reality is that advice between Ministers obviously remains confidential—[Hon. Members: “Ah!”]—as indeed I believe it was confidential under the last Government. However, I would be happy to ask the shadow Secretary of State to come to the Dispatch Box and explain all the occasions on which he disagreed with his colleagues.

The Secretary of State shows the same enthusiasm for new nuclear power as I do for the European Union, but I do not have to lead the charge for the European Union, whereas he does have to lead the charge for new nuclear. How does he square that circle?

I had absolutely no idea that the hon. Gentleman shared to such a degree my enthusiasm for the European Union.

The Secretary of State’s statement shows that he has quickly assimilated and merged with the Conservative view—the “market knows best” approach to environmentalism. However, will not the swingeing and unnecessarily quick cuts to some of this expenditure, particularly for local authorities, make a mockery of any carbon-reduction strategies or aspirations that he has?

The hon. Gentleman is not listening if he thinks that I am saying that the market always knows best. I am saying that the Government have a responsibility, in the national interest, to set a framework that will deliver a low-carbon economy and energy security in what is likely to be an increasingly volatile and difficult world. In that context, having put the incentives in place, it is up to the market to deliver. We need to ensure that those incentives are adequate, and I assure him that I believe in the need for that overall framework.

Electricity in the UK—this is a legacy from the past 15 years—costs about 30% more than in France, where it is supplied by cheap nuclear. Is it a policy objective for us to fix that, and if so, under what time frame does the Secretary of State think that that will happen?

As the hon. Gentleman knows, the French began their energy commitment to nuclear power in the wake of the first oil shock of 1973-74, so the subsequent period encompasses an awful lot of Governments of different persuasions. We are attempting to move as quickly as possible to a situation whereby we, too, can have highly affordable electricity that is relatively robust and resilient to the sort of shocks that we are likely to see across the world economy.

In his statement, the Secretary of State said that the Government were committed to removing any unnecessary obstacles to investment in new nuclear. I assume that that is a reference to Liberal Democrat policy. Does he still believe it is possible to deliver a low-carbon energy supply without nuclear? Is that his policy, or has he changed his mind, and will he be in a darkened room when we debate new nuclear in future?

The hon. Gentleman must know that I am a Minister in a coalition Government, who recognised right at the beginning of the negotiations that there were differences of views between the two parties. We were very clear, and the coalition agreement was very clear, about how we were reconciling them, and I am getting on with the job of delivering our agreement.

I was somewhat disappointed that although the Secretary of State made fleeting reference to marine energy, he had nothing to say about tidal power in particular and the potential to exploit it in the Severn estuary. Can he confirm his commitment to the Severn barrage feasibility study, and can anything be done to accelerate it so that we can have an answer sooner rather than later on whether it can go ahead?

The hon. Lady can rest assured that we are considering the Severn barrage feasibility study and will make an announcement in due course with our response.