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Commons Chamber

Volume 525: debated on Thursday 24 March 2011

House of Commons

Thursday 24 March 2011

The House met at half-past Ten o’clock

Prayers

[Mr Speaker in the Chair]

Oral Answers to Questions

Energy and Climate Change

The Secretary of State was asked—

Solar Power

Analysis undertaken by the Department for Energy and Climate Change in February 2010 estimated that the feed-in tariff scheme would lead to the deployment of about 700,000 domestic solar photovoltaic installations by 2020. In the light of the reforms to the schemes and the falling costs, I believe that we can do significantly better than that.

In view of the need for certainty in Government policy, what representations has the Minister received from the investment community since the announcement of the review of the fast-track tariff in relation to solar power?

The investors who were looking to invest in larger schemes are disappointed; that is coming through as part of the consultation. This was a difficult decision, and I can assure my hon. Friend that it was not taken lightly. We are, however, absolutely convinced that it was the right thing to do. We inherited from the previous Government a complete mess of a scheme with no proper financial controls or economic modelling, but we have now taken measures that mean we will avoid the boom and bust that we have seen in other countries across Europe. We are providing a platform for long-term growth.

The decision on the feed-in tariff regime has caused great consternation in north Wales—so much so that the managing director of Kingspan, a company in my constituency, has written to me to say:

“DECC has potentially destroyed a renewables sector that is only some 11 months old and taken with it the jobs and growth opportunity that it would have provided for the UK economy in general and North Wales in particular.”

In the light of that comment from the managing director of a manufacturing company, will the Minister meet me, my hon. Friend the Member for Wrexham (Ian Lucas) and others to discuss this bad decision?

I profoundly disagree with the right hon. Gentleman. We have not cut the budget for the feed-in tariff scheme. We have put in place proper financial controls to ensure that there is money in the system through to 2014. I would be happy to meet him to discuss this matter further, but he must remember that the tariff changes apply only to systems larger than 50 kW, which is equivalent to the size of two tennis courts, and not to domestic housing.

Will my hon. Friend consider the letter has been sent to the Secretary of State from the Wadebridge Renewable Energy Network—the WREN group—in my constituency about community-based projects that might be bigger than the new threshold?

Community-based projects that are larger than 50 kW—about the size of two tennis courts—and up to 150 kW, which is significantly larger, will still get a tariff comparable to that paid in Germany. We should be competitive with Europe, and the pressure should be on manufacturers to reduce the cost of their products rather than to provide bonuses. We hope that many community projects, particularly those around the 100 kW size, will still be able to go ahead, but the pressure must be on manufacturers to bring down their prices.

The Minister has single-handedly destroyed the confidence of the solar sector and the wider renewables sector at a stroke, and personally shredded the Government’s green credentials. The Renewable Energy Association says that the industry has been “strangled at birth”. Sharp’s in Wrexham states that this was

“terrible news—effectively destroying the solar sector”.

The Solar Trade Association calls the decision “a total disaster”, and the Micro-Power Council says:

“The 50 kW plus sector may well wither on the vine: many jobs will go and businesses will see demand dry up.”

Is it not just sheer blind arrogance for the Minister to suggest that all those bodies are wrong and that only he is right?

The fact is that we inherited a complete pig’s ear of a scheme from the previous Government. The hon. Gentleman and the hon. Member for Hackney South and Shoreditch (Meg Hillier) voted against the scheme in 2008, yet they are now the heroes of the feed-in tariff. We have put in proper financial controls and the investment that will guarantee the system for the long term. I would have thought that, having driven the country into the ground, Opposition Members would be more financially prudent, but behold, on the Opposition Front Bench—

Order. Order. Let me just make it clear that when I say “Order”, the hon. Gentleman resumes his seat. It is as simple and unmistakable as that.

Thank you, Mr Speaker. I can understand why the Minister is getting so agitated. I have only one more thing to add. Does he at least agree with this eminent expert on the importance of projects of up to 5 GW, who says:

“The idea behind it is to allow the inclusion of non-commercial scale projects, such as those that will be installed by homeowners, small businesses, local authorities, community groups, farmers and others. That would help out hospitals and schools that want to facilitate greater use of renewables and ensure low emissions as part of our 2020 targets.”—[Official Report, 18 November 2008; Vol. 483, c. 144.]

Those are the words of the Minister of State, Department of Energy and Climate Change, the hon. Member for Wealden (Charles Hendry), then the shadow Minister. Why is he wrong on this as well, and why is the Minister of State the fount of all knowledge?

Not for the first time, the hon. Gentleman has his numbers wrong: it is not 5 GW, but 5 MW—and 5 MW is still the equivalent of heating 1,500 homes. The fact of the matter is that the scheme we inherited from the previous Government—[Interruption] If the hon. Gentleman calms down, he will have the answer. Given the scheme we inherited, we had some choices to make: we supported either people in their homes, small businesses and communities or very large-scale schemes. We decided to support home owners and consumers; the hon. Gentleman can support big single investors. As I say, it is a clear choice.

Carbon Capture and Storage

2. What steps he is taking to provide funding for further carbon capture and storage demonstration projects. (48539)

We remain committed to providing public investment for four carbon capture and storage projects and last year announced up to £1 billion for the capital costs of the first project. Decisions on the provision of funding for further projects will be subject to receiving suitable proposals from industry and considerations on value for money and affordability. As the Chancellor announced yesterday, the funding will be provided from general taxation.

I thank the Minister for that response. Last week, I met young research scientists from the university of Nottingham who were undertaking exciting research into carbon capture and storage. Without detail and clarity on future projects, however, the UK could lose the opportunity to be a world leader in this vital technology, so what is the timetable and the guaranteed funding for demonstration projects 2, 3 and 4?

I would be delighted to meet the students the hon. Lady mentions because the skills in our universities form a very important part of the UK’s ambition to lead in this technology. We have made it clear up front that there is public funding for projects, with capital up front, and real progress was announced yesterday.

Does my hon. Friend agree that, in contrast to the Opposition’s array of red tape on funding, the coalition Government need to ensure that the funding for large, important projects such as CCS is as simple and straightforward as possible?

My hon. Friend is absolutely right, which is why the Chancellor made his announcement yesterday. This is a simpler way of getting the funding in; it provides the funding up front rather than it being based on output, and it is a significant step forward.

Given the abandonment of the levy and a reliance on Government money from general taxation, the words “blood out of a stone” come to mind, in view of my own experience with the Treasury. Will the Minister assure us that public spending will be made available in addition to what has already been announced to ensure the future of this technology, which is absolutely vital to our fight against global warming?

The right hon. Gentleman has tremendous knowledge in these areas, so he will also be aware of the European scheme NER300, to which the United Kingdom has submitted nine projects out of a total of 22 across Europe. That provides capital up-front funding. What the Chancellor announced yesterday removes the tremendous complexity from the levy and provides a much more straightforward scheme to drive this technology forward.

Energy Supplies

3. What recent steps he has taken to ensure security of energy supplies in response to the political situation in the middle east. (48540)

The UK has diverse sources of oil and gas, including our own substantial North sea production. Political unrest in the middle east has not led to any oil or gas shortages so far. My Department has been in close contact with the International Energy Agency and International Energy Forum partners, and Organisation of Petroleum Exporting Countries members. Saudi Arabia has said it will make up any shortfall through increased oil production. The IEA has confirmed its readiness to use emergency stocks, if required.

I thank the Secretary of State for his reply. Microgeneration is a key part of our future energy security. What impact does my right hon. Friend expect his Department’s decisions on feed-in tariffs to have on the number of home owners able to generate their own electricity?

I expect the decisions we are taking on feed-in tariffs to ensure a steady and sustained growth in the industry, which will protect householders, who are completely unaffected by the review, in respect of any amount below 50 kW. As the Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for Bexhill and Battle (Gregory Barker) pointed out, that amounts to two tennis courts and it is absolutely unaffected. We therefore expect that the number of households generating their own electricity will rise.

The Secretary of State surely knows that solar is a very important part of future energy security in our country. The recent decision to backtrack on solar means that community groups that were going to make a real contribution now feel deserted. Their banks have deserted them, so this sort of solar initiative will no longer go ahead.

I am glad that the hon. Gentleman has taken up this issue. Let me be clear that the decisions we took were designed to ensure sustainable and strong growth in the solar industry. That is absolutely key. We are precisely trying to avoid boom and bust in this sector. If it had gone on growing, the large-scale plants would have gobbled up all the money available for small-scale plants. That would have meant slamming on the brakes, after which there would have been a much greater threat to the industry. We are going to have sustainable growth, which is as it should be.

May I put it to the Minister that in the current dangerous and complex circumstances the most important key to the preservation of oil supplies is that Bahrain should remain in friendly hands, and that from the British point of view it is strategically far more important than Libya?

The hon. Gentleman has made an interesting and important point. Bahrain is a long-standing friend of this country. We have watched with interest over the years as it has increasingly experimented with becoming a more open society, and it is very regrettable that that process is where it is. I note what my hon. Friend has said, and we are watching the situation closely.

Oil Prices

I have received a number of representations on the effect of high oil prices on consumers. The Government are aware of the significant impacts that they are having. That is why the Chancellor has announced a £1.9 billion package to ease the burden on motorists, and why I have asked the Office of Fair Trading to investigate the domestic oil market.

How does my hon. Friend expect renewable energy in particular to help off-grid customers who have previously had no alternative to traditional supplies such as heating oil?

My hon. Friend has raised an extremely important point. One of the purposes of our world-leading renewable heat incentive is to encourage businesses and, subsequently, homes to install renewable energy equipment. That is an important way of helping people who currently rely on off-grid mechanisms such as oil and gas.

I hope that my hon. Friend was as pleased as I was when the Chancellor announced in his Budget statement the scrapping of the fuel duty escalator and the introduction of a fuel duty stabiliser. Does he agree that that will go at least some way towards helping my hard-pressed constituents and fellow drivers in Lincoln and throughout the country, who before the general election were faced with an escalator that involved seven fuel duty increases?

I am delighted to join my hon. Friend in his pleasure at yesterday’s announcement, and the relief that it will bring his constituents and many others throughout the country. Scrapping the escalator imposed by the previous Administration was a significant change of policy, and all our constituents will be grateful for the steps the Chancellor has taken.

Given the significant number of households in Pendle and the 3.6 million in the United Kingdom as a whole that are off the gas grid, how soon does my hon. Friend expect the OFT’s investigation to be concluded?

That is another important point. I have asked the OFT to complete the work quickly. I want to have its report by the autumn, so that we can learn any necessary lessons and make any necessary changes before next winter in order to protect customers who are off the grid.

I join my hon. Friends in commending the Chancellor of the Exchequer’s announcement yesterday. Many of my constituents will be very, very pleased about it. However, will the Department, during its investigation of the market, look into the discrepancies between pump prices across the country? I do not understand why the prices in my constituency are among the highest, and I am not sure that my constituents do either.

The investigation relates chiefly to the domestic oil and gas market, but if there is evidence of unfair and anti-competitive practices in relation to fuel prices on forecourts, I hope that my hon. Friend will write to the OFT, and I should be grateful if she copied me into the correspondence so that I can see the evidence for myself.

Seventy per cent. of households in Northern Ireland depend on domestic heating oil. What discussions has the Minister had with the Northern Ireland Minister of Enterprise, Trade and Investment about possible regulation of the home heating oil industry and the exorbitant prices that households are now being charged?

That too is an important point. The fact that Northern Ireland is significantly more exposed than other parts of the United Kingdom in this regard was one of the driving forces behind our request for the OFT investigation. We will work with the devolved Administrations in any way we can to ensure that any particular examples of difficulties in different parts of the country are taken into account.

About a year ago, the then Secretary of State and I were fortunate enough to be taken up on to the roof of Redland Park united reformed church in Bristol by Rev. Douglas Burnett to look at the solar panels installed there, which had made a huge difference to the church’s fuel bills—it was not having to pay for fuel at all, and was making money selling electricity back to the grid. Is it not therefore ridiculous that under the new feed-in tariffs other churches in Bristol will not be able to follow suit?

As my fellow Minister of State has made clear, the previous Government got their estimates wrong. They assumed there would be no large-scale solar developments in this country by 2013, but there have been a significant number of large-scale applications. That would have blown the budget and made it more difficult to deliver for domestic installations, and we are therefore right to review this process.

What assessment have the Government made of the effect of speculative commodity indices activity on wholesale commodity prices, and what steps are they taking to restrain such activity by banks here and international funds?

There is varying evidence on the effect. There is certainly some evidence that it has pushed up prices, but there is also evidence that hedging can help consumers. We have had discussions with countries, including Saudi Arabia, and it is willing to increase oil production to deal with any market shortages that might arise. I am satisfied from those discussions that demand can be met by increased supply, so shortages should not be a factor in pushing up prices.

Nuclear Safety

5. What recent assessment he has made of the adequacy of the nuclear safety regime in the UK; and if he will make a statement. (48542)

8. What recent assessment he has made of the adequacy of the nuclear safety regime in the UK; and if he will make a statement. (48545)

11. What recent assessment he has made of the adequacy of the nuclear safety regime in the UK; and if he will make a statement. (48548)

The International Atomic Energy Agency integrated regulatory review service—IRRS—recently noted that the UK has a mature and transparent regulatory system, an advanced review process, and highly trained, expert and experienced nuclear inspectors. Nevertheless, we take the recent unprecedented events in Japan extremely seriously, and I have asked the chief nuclear inspector, Dr Mike Weightman, to provide a report to the Government on the implications and the lessons to be learned for the UK nuclear industry.

I thank the Secretary of State for that answer, but I must tell him that a number of residents of Hastings and Rye have written to me, and although they share heartfelt sympathy for the people of Japan, as they live next to Dungeness they now have additional concerns. They want to know what action can be taken to ensure that our country’s nuclear facilities are made even more safe.

Let me reassure the hon. Lady first and foremost that there are very substantial differences between our situation and that in Japan. We refused to authorise the boiling-water reactor type used in Japan when that was proposed for use in the UK. Secondly, we do not, of course, live in an earthquake zone. The strength of the most severe earthquake in the UK was a mere fraction of the strength of that in Japan—the recent Japan earthquake was stronger than the 1931 Dogger Bank earthquake by, I think, a factor of 60,000—and nor do we have the associated tsunamis. We are not complacent, however, and we are looking into this. We do have extreme weather events, and Dr Weightman has asked all our existing nuclear sites to check that they can withstand the extreme weather events that we experience.

With the advent of the electric car, there will clearly be a requirement for much more baseload overnight so that people can recharge their electric cars, which means the case for nuclear power advances quite rapidly. What we need in this country is safe nuclear power. What consideration has the Secretary of State given to ensuring it is produced quickly and safely?

As my hon. Friend knows, the coalition Government’s plans clearly envisage an important role for nuclear. We aim to bring the first new nuclear on stream for 2018. It is our view that new nuclear can play an important part, and unless Dr Weightman’s report gives us any particular reason to reassess that, I see no reason why that should not remain our view.

There are undoubtedly lessons to learn from the tragedy unfolding in Japan, and I am pleased that my right hon. Friend says we will learn them. Nevertheless, does he agree that the only realistic way we can meet the expected huge increase in domestic demand for energy is through the domestic production of nuclear power?

As I have just said, our plans clearly envisage an important role for new nuclear. When people visit the departmental website, they can access an interesting pathways model called “My2050”, which allows them to see the effort that would have to be made if we did not have nuclear. We would have to make enormously greater efforts on both renewables and carbon capture and storage. That is physically possible, but the costs would be very substantial.

The nuclear industry is in serious trouble as a result of what has happened in Japan, we are running out of supplies of North sea oil and fighting all over the place in the middle east is massively increasing the price of oil, so is it not time for king coal again?

The hon. Gentleman makes a good point. The entire departmental strategy on energy is to have diverse supplies; it is not to put all our eggs in one basket, be it coal, nuclear or renewables. The reality is that coal will have a role to play in a low-carbon future, as will other diverse supplies.

It is right to review the implications of UK civil nuclear power in the light of what happened in Japan. Does the Secretary of State agree that it is also right to explain that strategic site assessments and generic nuclear installation designs have been approved by this House and by the Government, and that we need not only to make it clear to the public that safety is paramount, but to make it clear to business that it is right to invest in nuclear?

I assure the hon. Gentleman that I have made it clear in every statement I have been asked to make on this issue that safety is absolutely paramount. That is precisely why I want Dr Mike Weightman to examine all the lessons from Japan, and for us to base any debate on the facts and the evidence, and not on knee-jerk reactions. There have been knee-jerk reactions in other countries, but that is not the right basis for British policy.

It is fascinating hearing the Secretary of State dance around on this issue. I welcome his remarks as far as they go—clearly safety is paramount in nuclear power—but he has made some comments over the past few days and has today failed to be emphatic about the Government’s position on nuclear. Will he make it clear? He has used words—[Interruption.] I can hear chuntering from those on the Government Front Bench. He has used words such as “we envisage a role”; he has pointed again to a study of a future without nuclear on his departmental website; and he has talked in The Observer about an

“80% reduction in emissions…without new nuclear”

if we invest more in renewables. Those are red herring statements. Will he be emphatic and make it clear to investors what the Government’s position is on new nuclear? Will he tell us clearly: is he backing new nuclear?

I do not think investors are under any illusions about the position. At the Nuclear Development Forum, I said very clearly that we continue with the plans as set out in the coalition agreement, and that we envisage a role for new nuclear and want to see new nuclear come on, but that we have to put an emphasis on safety. That is why we commissioned Dr Mike Weightman’s report. I do not anticipate that it will lead to enormous changes, but we will have to wait to see its results and base the debate on the facts.

Emissions Reductions

6. What recent discussions he has had with his EU counterparts on the setting of an EU-wide 30% carbon dioxide emissions reduction target by 2020. (48543)

I have had numerous discussions with my EU colleagues in recent months on the importance of the EU low-carbon transition, including the role of an EU-wide 30% target. In response to the publication of the Commission’s 2050 low-carbon road map on 8 March, I wrote an open letter jointly with my ministerial colleagues from Denmark, Greece, Germany, Portugal, Spain and Sweden urging an open debate on a 30% target. I continue to use opportunities such as the discussion of the road map at the forthcoming informal Environment Council meeting to make the case for an early move to a 30% target.

I thank the Secretary of State for his reply. Does he agree that the Chancellor’s Budget statement yesterday confirming the capitalisation, timing and role of the green investment bank will do much to inspire confidence in Britain’s ability to achieve its own emissions targets by 2020?

I entirely agree with my hon. Friend. One of the most important announcements made yesterday was the one on the green investment bank and the fact that we have trebled the amount of capital found for its capitalisation during this spending round. We will try to do our bit on asset sales, but if they cannot be found, they will be guaranteed by the Treasury. In addition, the fact that the bank can begin to borrow and lend before the large amount of energy investment in offshore wind is crucial.

I welcome the Secretary of State’s comments about working with other European countries to seek a reduction in carbon emissions. Will he explain, then, why his Government have just announced a unilateral carbon floor that is making steel companies, such as Tata in my constituency, extremely jittery and is making them consider pulling out from investing here to invest in other countries in Europe? We will simply be uncompetitive, even with our European partners.

The reasons for the carbon price floor were set out clearly by the Chancellor. We need to send out clear signals to investors about the transition to the low-carbon economy. This measure will do that, and it will also, operating within the power sector, ensure that we use low-carbon sources of electricity through the whole process and the transition rather than merely using high-carbon ones. It is an important part of our transition to a low-carbon economy.

Green Deal

The green deal will be a real game changer, but the Government fully recognise that the deal might need to provide additional drivers if we are to achieve the full scale of our ambitions to retrofit more than 14 million homes by 2020. We are working closely with a range of stakeholders to identify additional triggers that will steer customers towards the green deal and in the Energy Bill we are seeking powers to require changes to poorly insulated private rented accommodation.

What measures will the Minister use to assess the effectiveness of the green deal, particularly in the light of the fact that he is not linking it to the UK’s carbon reduction targets?

The green deal is one of a number of tools, but clearly its effectiveness will be tested by the number of homes we manage to insulate and bring up to a decent standard. We have said that our ambition is 14 million homes by 2020. Clearly, that is the huge target that we must meet if we are to meet our carbon budgets.

Many of the materials that will feature in the green deal to improve the heat efficiency of homes attract VAT at a rate of 5% but some, such as double glazing, still attract it at a rate of 20%. Does the Minister agree that it would encourage people into the green deal if all the materials were taxed at 5%? Will the Minister investigate to find out whether that can be achieved?

The hon. Gentleman makes a good point. Obviously, this policy is primarily led by the Treasury, but I did have a good discussion with Pilkington on exactly this matter only last week. We will continue to look at it.

I was very interested to hear the Minister’s response on the green deal. As yet, we have seen no targets in the Energy Bill and nothing to link it to the Climate Change Act 2008 so that it can create a tangible emission reduction. Yesterday, we heard the Chancellor talk up the green deal in the Budget, but not so loud was his announcement on page 117 of the plan for growth that the Government have scrapped the requirement for new homes to be truly zero carbon. Does the Minister agree with WWF, which said that this announcement of the destruction of the policy sweeps away

“years of work and ambition”?

What representations did he make to his colleagues in the Department for Communities and Local Government and the Treasury before the decision was made?

This is a DCLG lead, but there should be no doubt about our commitment to the transformation of the housing stock. We know that the Opposition are still addicted to targets, but the difference is that the Government are addicted to real progress and to transformational change. They can carry on creating new targets and we will get on with making real changes in real life.

Nuclear Power Stations

9. What recent discussions he has had with ministerial colleagues on the construction of new nuclear power stations. (48546)

I have had discussions with Cabinet and other colleagues in government on energy policy including new nuclear build. We take the recent unprecedented events in Japan extremely seriously and I am having continuing discussions on the subject of new nuclear power stations in the light of the ongoing situation.

Given that analysis released by Redpoint Energy shows that yesterday’s carbon price floor announcement will lead to a windfall profit for existing nuclear stations of £1.33 billion—let alone what it will mean for new stations—how does that sit with Ministers’ repeated pronouncements that there will be no public subsidy for nuclear?

The carbon price floor is designed to encourage low-carbon sources of energy and it is not in any way designed to attract particular support for one low-carbon source or another. One could equally argue that it is benefiting renewables. That is why it will lead to the switching effect that we find desirable, so that we rely more on low carbon than on high carbon. In addition, the hon. Gentleman will note that the Treasury is considering the impact on existing operators and will keep that under review.

This week, the former UK chief scientific adviser Sir David King has said that the real lesson from Japan was that

“nuclear power is even safer than we thought…by far the safest method of power generation”.

Will the Secretary of State be mindful of that advice and does he agree with that assessment?

I am mindful of it. That is an interesting argument which has been made in many quarters. It is absolutely crucial, comparing the debate in this country with those in other countries such as Germany, that we should base it on the facts and the evidence. That is precisely why I asked Dr Mike Weightman to produce a report—so that we can have a sensible and measured debate based on the facts and the evidence.

Could the Secretary of State say a little more about the assessment he has made of the potential rise in costs of the fleet of new nuclear following the Fukushima disaster? Will he comment in particular on the likelihood that the Japan accident will make it more difficult for private investors to raise capital to build the eight new reactors that are planned by the Government?

On the first point, it is too early to answer the hon. Lady until we have had the report from Dr Weightman and we can understand whether we need improvements in our regulatory regime and whether there are lessons to be learned. There are substantial differences between the Japanese situation and ours but I am determined that we should learn any lessons we can. On the second point, although I spent many years in financial markets I do not claim to know how they will react to particular events as they can often react in a rather faddish and fashionable manner. I think we will just have to wait and see.

Energy Efficiency

Reliable advice will form an important part of the new green deal framework to be introduced in 2012. Having a comprehensive assessment setting out energy efficiency measures that are likely to be suitable for each individual property along with the potential opportunities for microgeneration and renewable heat will be a crucial step in every green deal journey.

I have been doing energy surgeries with E.ON in Bolton West, where it has a large base, to advise constituents on ways in which they can cut energy, reduce bills and stay warm. Considerable concern has been raised about the complexity of tariffs and the difficulty, especially for the elderly, of finding the cheapest supply. What can the Government do to help?

This is something we are looking at. We have engaged with all the major energy suppliers to create far simpler tariffs. The hon. Lady is absolutely right and if she has something to add—it sounds as though she has—I would be very happy to meet her to harvest her ideas and make sure they are included in the new, improved tariff arrangements that we are bringing forward later this year.

One of the easiest ways of introducing immediate energy reduction is educating people to heat hot water only when they need it. What plans do the Government have to bring forward the Walker proposals in this regard?

There are no such current plans that I am aware of, but my hon. Friend is absolutely right. We would certainly be happy to consider whether there is a way of incorporating those proposals into our existing plans, because we need to do a great deal more.

Low-carbon Technologies

12. Whether he has made an assessment of the potential effects of the outcome of the 2011 Budget on the development of low-carbon technologies. (48549)

The Budget announced several new policies which will support the development of low-carbon technologies including £2 billion of additional capital for the green investment bank, a carbon floor price to provide a stronger, more stable signal to investment in low-carbon generation, and preferential company car tax treatment for low-carbon vehicles. All that is in addition to the creation of 21 enterprise zones and a £100-million boost for science that will further drive green growth.

The north-east has led the way with the development of low-carbon electric vehicles, as the Minister will know, and with the network of charging points. He will be aware that if those vehicles are to have mass-market appeal there needs to be a comprehensive network of charging points. What further action will the Government take to support a nationwide roll-out of such charging points?

We are working closely with our colleagues in the Department for Transport because—the hon. Lady is absolutely right—there needs to be a concerted, joined-up strategy if we are to realise the potential of electric vehicles. There will be more details on that, but I assure her that a lot of work is going on in Government and that the Departments are working effectively together.

The Treasury has resisted the establishment of a public investment bank since the 1930s, so I congratulate my hon. Friends on having achieved that, but it will not be effective until 2015. What can be done to speed up the implementation of the green investment bank?

The Chancellor announced yesterday that the green investment bank will be up and ready for business in 2012 and will have £2 billion of additional capital. The key is that it will be able to raise funds from 2015 at scale, in the bond market for example, that will allow it to make a meaningful contribution to the billions of pounds that we will need to raise in the second half of the decade to finance the vital renewable energy infrastructure projects.

Is the Minister really happy that the green investment bank will deliver the necessary investment in green industries as quickly as possible?

Yes, I am. I would point out to the hon. Lady that Bob Wigley, who chaired the green investment bank commission, said yesterday:

“The Chancellor has found a pragmatic way of getting the bank up and running with a significant level of seed equity, allowing it to develop its activities without risk to fiscal prudence.”

That is absolutely spot on. We think that it will make a substantial difference not only in the next few years, but in the next couple of decades and beyond. This is a key time in the development of financial services.

The Opposition welcome the green investment bank, which is something we supported, but we have concerns. The other week we had Government green growth week—I forgive you, Mr Speaker, if you missed it—with a series of rehashed announcements. Yesterday’s announcement about the green investment bank worried me because there will be no real investment opportunity for four years. The Minister might be insulated from business, but I meet businesses all the time that need that investment now, so can he tell them when they can approach the bank to borrow money?

From 2012, when it opens for business. It is pretty clear. That is why the chairman of the green investment bank, who knows a lot more about business than Members on the Labour Front Bench, was very pleased with the announcement. The £3 billion is an awful lot more than Labour pledged in its manifesto.

Carbon Budget Report

The Climate Change Act 2008 requires the Government to set the fourth carbon budget level in law no later than 30 June 2011. I anticipate that a statutory instrument will be laid before the House after the Easer recess.

The carbon budget plan is still back-ended, calling for reductions of 4.7% compound after 2030 but only 3.2% before. That is credible so long as investment in research and development is strong at the front end. What more can the Minister do, working with colleagues in Government, to stimulate the development of low-carbon vans and heavy goods vehicles as well as power?

My hon. Friend is right: there is a whole range of measures, but transport is also key. The recent spending review announced that the Government have provided up to £400 million for measures to promote the uptake of ultra-low carbon vehicle technologies, including support for consumer incentives, the development of recharging infrastructure and a programme of research and development work, which we continue to add to.

The Committee on Climate Change recommended a tightening of the second and third carbon budgets in the light of the impact of the recession. Does the Minister agree that we must deliver on that recommendation and use the Committee’s report as a means of strengthening the UK’s global leadership in encouraging our international partners to tighten their emissions targets?

My hon. Friend is absolutely right. We must maintain our global leadership position, not only because it is important for tackling dangerous climate change, but because we want to grab market share in the new clean technology markets around the world, which are growing fast. We need to assert our leadership in the low-carbon markets, and to do so we need an ambitious policy to drive it at home.

When my hon. Friend heard Lord Adair Turner spell out his fourth five-year plan, was he, like me, reminded of the old Soviet planning system? I am sure that if anyone could have made the Soviet Gosplan system work it would have been him. Will my hon. Friend treat with great caution forecasts 15 years ahead for the costs to which we are committed, given that the Barclays and Accenture plan reckons that meeting current targets for 2020 will cost €3 trillion?

Clearly there is a huge investment agenda, and my right hon. Friend is right, but we see that as an opportunity as well as a cost. He will also know that the cost of doing nothing and standing by while climate change hits the world progressively through this century will be considerably greater than prudent early action.

Low-carbon Technologies

14. What recent discussions he has had with ministerial colleagues on attracting private sector investment into low-carbon technologies. (48551)

The Secretary of State regularly meets ministerial colleagues, and attracting private sector investment is one of many topics considered in their discussions on promoting a low-carbon economy and long-term green growth.

As the Secretary of State knows, many innovative clean-tech start-ups throughout the north-east are crying out for funding. Given that the green investment bank cannot borrow and £3 billion is not going to build us our green future, what will he do to ensure that more funding is available?

I think the hon. Lady misunderstands the role of the green investment bank. It is there to spur private sector growth and investment, which is ultimately going to deliver the green investment and green growth that we need. The bank, with £3 billion, which is considerably more than the Labour party proposed, is going to be a real engine for growth, but it is not the only show in town; there is a whole range of other policies that we need to promote a green enterprise recovery.

Following the Chancellor’s commitment to rebalance our economy, does my hon. Friend agree that Plymouth, with a very fine reputation for marine science and research, has a significant part to play in developing a green and low-carbon economy? Is he willing to come to Plymouth to see the very real work that the university and other authorities are doing within the city?

I gladly accept the invitation from my hon. Friend, who is a great champion of Plymouth. With its long maritime history, port facilities and engineering expertise, it is extremely well placed to benefit from that type of green growth, particularly in the marine area, and I look forward to seeing it at first hand.

Electricity Market Reform

16. What recent discussions he has had with representatives of energy-intensive industries on electricity market reform. (48553)

Concerted efforts are made by all Ministers and officials in the Department to engage stakeholders with an interest in electricity market reform, including representatives of energy-intensive industries.

It does not make much sense, either economically or environmentally, when the steel that will be used in the rush to a low-carbon economy is imported from Russia and Ukraine because of electricity market reform and regulatory differences. Tata Steel has a world-class pipe mill in my constituency, and it really wants to play a leading role in the supply chain for the national infrastructure. Will the Secretary of State listen to Tata’s concerns, level the playing field for UK firms and ensure that the competitiveness of firms in this country is not hindered?

We are very keen to listen to Tata’s concerns, and both myself and the Secretary of State for Business have been very aware of energy-intensive industries. It is important to recognise that the costs of a move to the low-carbon economy depend on what we think the costs of staying with the fossil fuel economy are, and judging by recent moves in the oil market we may find that that is a volatile source of supply—and a rather costly one.

Topical Questions

In addition to my normal departmental responsibilities, we have commissioned a report from the chief nuclear inspector on the implications of the situation in Japan and the lessons to be learned. We have launched the renewable heat incentive to provide long-term guaranteed financial support for renewable heat technologies, and the Energy Bill has now been introduced to the Commons from the Lords.

Can the Secretary of State clarify whether the carbon floor price that starts in 2013 will be £16 per tonne, as the Chancellor suggested yesterday, or £4.94 per tonne plus the European Union emissions trading scheme amount, as the accompanying Treasury document sets out? If the latter is the case, does the Secretary of State think that it will produce a considerable differential between electricity imported through interconnectors and electricity produced domestically, and what are his plans to deal with that?

The Chancellor is absolutely correct, because there is a carbon floor price, and it is designed to ensure that the price, which is composed of the emissions trading scheme and the carbon floor price, is as applied to electricity generators. He is very well aware, I know, of the potential implications of the carbon floor price for interconnection, and that has been taken into account in the Treasury’s decision.

T2. The Government’s report, “The Plan for Growth”, published yesterday, states that the Secretary of State for Energy “will also place significant weight on the need to support the economic recovery in related”—planning—“consent regimes”. Can he confirm that the Government will now consider the benefits to the local economy of building a new power station at Dungeness as part of their consultation on new nuclear sites? (48564)

I am aware that my hon. Friend has an important constituency interest in this. He has been a great champion of the interests of his constituents in securing another new plant at Dungeness. I am reluctant completely to redraw the national planning statements, which have already been going out for consultation, but the interests of the national economy certainly need to be taken into account, and they will be.

T7. Yesterday’s announcement from the Chancellor about a supplementary charge for oil and gas producers places a question mark over investment decisions and the possible supply chain, and it might increase still further our reliance on imported oil and gas. Teesside is a major hub for offshore engineering, with many jobs reliant on it. Will the Minister guarantee that no jobs will be lost in Teesside, which is an unemployment hotspot, as a result of the Chancellor’s decision? (48569)

The Chancellor is keen to see new jobs in Teesside; that is precisely why he announced that one of the enterprise zones will be coming to the Tees valley. We have a great commitment to new jobs in Teesside and, indeed, the whole of the north-east. On the hon. Gentleman’s specific point, I anticipate, because of the rise in the oil price, that we will have a lot of resources available to operators in the North sea, and I would be surprised if there was not a continued increase in investment.

T3. In the past, park home residents in Winchester and Chandler’s Ford have expressed to me their grave disappointment that they have not been eligible for the Warm Front scheme. Like the omission of a specific park home option on the 2011 census form, this rather feeds the view of many park home residents that they are treated differently. Does the green deal offer them cause for hope, or at least some excitement? (48565)

Yes, it certainly does. I can confirm to my hon. Friend that in relation to funding energy efficiency improvements, the green deal should apply to park homes if they have an appropriate energy meter and qualify under the normal rules. Later this year, we will consult on the size and scope of the energy obligation, including the types of property and householders qualifying for support, and that will include park homes.

T8. With around 30,000 people dying of cold each winter, the introduction of smart meters and ever-increasing fuel bills, will the Minister meet me to discuss the promotion of cold meters, which sound the alarm when the temperature dips below safe levels? That is particularly important for elderly people. (48571)

Yes, I will certainly meet the hon. Lady to discuss that. It is not an idea that I have heard a lot about, but it sounds very sensible. The great thing about the green deal is that we want to encourage the introduction of new technologies that will help the consumer.

T4. Enfield has a welcome commitment to increase the supply of decentralised renewable and low-carbon energy. May I invite the Minister to come to Enfield to see for himself these innovative plans, particularly on capturing energy from waste, and to see that when it comes to supporting renewables, instead of chasing mega-business deals, small and local is often beautiful? (48566)

My hon. Friend is absolutely right; small and beautiful is our vision for a much more decentralised energy economy. I would be delighted to come to Enfield to see the real strides that people are making to achieve that.

Earlier we heard the Secretary of State boasting about his experience of financial markets. The rules of the Office for National Statistics about how to classify things are absolutely clear. It is more than 20 years since private finance initiatives were set up, so why has he been so incompetent in the way that he has structured the green investment bank, which has been classified in the public sector, giving the Treasury the excuse to delay its borrowing powers for four years?

The hon. Lady, as a former Treasury official, knows about this from the inside. I can assure her, however, that I was not boasting of my expertise in financial markets, but drawing attention to the fact that, although I had been in those markets for a considerable period, I was completely incapable of forecasting how they would react in these particular circumstances. I do not believe that we are going to have the problems with the green investment bank that she anticipates. It is clear that this is a historic moment. For the first time, the Treasury and the whole Government are agreeing to set up an institution that will be able to borrow, in its own right, just before the point at which it will need those resources. It will be able to borrow because the offshore wind investments will be there in the second half of the decade. As an ex-Treasury official, the hon. Lady well knows that given all those years in the 1930s when we became the only industrialised country not to set up a public development bank, this is an extraordinary achievement, and I hope that Labour Members recognise it as such.

T5. Does the Minister agree that offshore wind farms, such as the one that has been proposed for off the coast of Brighton, will not only help energy supplies and counter the effects of climate change, but boost the local economy? (48567)

My hon. Friend is absolutely right. Wind farms bring significant job opportunities. I have been to the port at Newhaven to talk about those opportunities. This will be an important part of our energy infrastructure going forward. Britain already leads the world in the deployment of offshore wind, and we intend to build on that and to secure supply chain jobs in Britain.

My question relates to the renewable heat initiative. I am sure that the Minister remembers the productive meeting that we had with Geothermal International, a small company in Coventry. Although the outcome on the commercial applications side has been very good, the continuing delays on the domestic side are holding back the industry. It is a very important industry in the small and medium-sized enterprises sector, which is being targeted by the Government. If he could hurry up with that, we would be able to make more progress.

I assure the hon. Gentleman that the domestic launch is not being delayed at all. The only difference is that at the same time as we launch the industrial scheme this year, we will launch the renewable heat premium. The premium will reach more consumers in the first year than the ordinary tariff under the original model was anticipated to reach. I assure him that the premium will add to the scheme, not detract from it.

T6. Recent announcements, including that on the premium, have been welcomed warmly by Worcester, Bosch Group, which employs more than 1,000 people in Worcester. It wants the domestic roll-out of the scheme to succeed, and feels that the key to that is winning over installers. Will the Minister update the House on his plans to engage with installers, and will he visit the training centre with me, where more than 10,000 installers are trained each year? (48568)

My hon. Friend is absolutely right that installation is key, particularly for such new, innovative technologies, which are not all as tried and tested as we would like. We are working closely with installers. My officials meet regularly with firms and liaise closely with the industry. I would be delighted to accept my hon. Friend’s invitation and see it for myself.

I have a range of energy-intensive industries in my constituency, including steel, glass, paper and the entire clay pipe manufacturing capacity of the UK. How can south Yorkshire develop its manufacturing capacity and encourage economic growth if the international competitiveness of its current engineering capacity is being undermined by the Government’s energy market reforms?

In answer to a previous question, I made it clear that we are listening to energy-intensive industries carefully, and using all the means that we can to ensure that we can offset any demonstrable effects. We have had those discussions in the context not just of the carbon floor price, but of the European Union’s emissions trading scheme. We will continue to watch this situation carefully because I want to see many new jobs in south Yorkshire and everywhere else in the country.

T9. Earlier, the Secretary of State said that in the long term, the costs of unrestrained climate change will exceed the costs of doing something about it. Surely he is aware that the Stern report states that over the whole of this century, the costs of the programme that he is advocating exceed any benefits from reducing climate change, so that—[Interruption.] That is in the Stern report on page 167. Surely the Minister is aware of it. (48572)

Let me answer my right hon. Friend. This is not just a question of assessing the costs to the world in the long run if unrestrained climate change is allowed to proceed; it is also a question of energy security in this country and of the costs of the alternative. Given that the oil markets have gone from $60 a barrel two years ago to $80 a barrel last year, and are now at $115 a barrel, my right hon. Friend should be well aware that relying on fossil fuel markets could be extremely damaging to our economic health.

The Committee on Climate Change has recommended that the carbon intensity of electricity should be reduced from today’s 500 grams of CO2 per kWh to the highly challenging figure of 50 grams of CO2 per kWh by 2030. The Energy and Climate Change Committee suggests that the target should be about 100 grams of CO2 per kWh. Will the Minister or the Secretary of State explain how difficult it would be to achieve the recommendation of the Committee on Climate Change?

We are both keen to answer that because it is such a good question and we have such a good answer. We see a whole range of opportunities, and carbon capture and storage will be a fundamental one. It brings a real opportunity for coal to be part of the mix. We can look at the number of bids that we have had in—nine bids have come to Britain for the European scheme, out of 22 across the whole of Europe. Seven of those are for coal and two are for gas, which shows that there is a real opportunity for clean coal in the UK mix, which will be a world-beating achievement.

Given the Government’s commitment to both a low-carbon future and localism, do Ministers agree that everything should be done to encourage local carbon budgets, which can clearly play an important part in achieving our national targets?

I agree that local carbon budgets are important, which is one reason why we have continued with the pilots of databases that allow local authorities to know what their carbon emissions are and to continue to set targets. I do not want to impose those on local authorities, because they are a matter for localism, but it is right that they should have the information on which they can base informed decisions.

The vital ring-fenced support for the marine renewables deployment fund ends next week. With the green investment bank some way off, no news on the low-carbon innovation fund until the summer and nothing in the Budget, will the Minister clarify what backing the industry can expect, or does he prefer the jobs to go abroad?

Absolutely not. We have gripped this agenda, as the enthusiasm of the new marine programme energy board made clear when we met in Exeter. I can tell the hon. Lady that we will announce the allocation from the Department of Energy and Climate Change’s budget for supporting low-carbon technologies very shortly, and the results of the review of the renewables obligation that the Minister of State, my hon. Friend the Member for Wealden (Charles Hendry), brought forward will also be announced in due course.

On the idea that there is no public subsidy for new nuclear, the Government will of course effectively have to underwrite new nuclear in respect of events that we all hope will never happen. How is the carbon floor price not effectively a back-door subsidy for new nuclear?

My hon. Friend should be aware that we are not providing underwriting funds or soft loans. In the United States, for example, the Obama Administration are proceeding with $35 billion of soft loans for the nuclear industry, but we have explicitly said that new nuclear will be built here without public subsidy. We have also said that, as Lord Stern pointed out, climate change is the greatest market failure of all time. We have to offset that market failure with a clear signal to the markets, whether through the emissions trading scheme or the carbon floor price, that low carbon is here to stay and we must accelerate it.

Yesterday, in response to the Budget, Karl-Ulrich Köhler, chief executive officer of Tata Steel Europe, said that

“the introduction of the Carbon Floor Price…represents a potentially severe blow to the sustainability of UK steelmaking.”

Does the Secretary of State believe that the CFP announced yesterday is the type of state intervention that is good for British steel making on Teesside?

I have said in answer to previous questions that we will engage in ongoing discussions with energy-intensive users. We want them to use low-carbon electricity, and a number of them are doing that, including by moving to biomass. There are alternatives, and there is flexibility in, for example, the EU emissions trading scheme, which allows us to help.

What assessment has the Secretary of State made of the damage done to business confidence by his extraordinary U-turn on support for mid-sized solar installations, and of the 14,000 new jobs that were in the UK solar industry precisely because of that? How many of those jobs will be lost as a result of that extraordinary decision?

The hon. Lady has to be aware that sadly, in the world in which Ministers operate, we have to assess the alternatives. Had we not acted, the alternative would have been a much greater boom and bust and a much greater destruction of confidence. I am absolutely unhesitating in assuring her that solar industry confidence is substantially higher than it would have been if we had taken the action that she suggests.

European Summit

(Urgent Question): To ask the Chancellor of the Exchequer whether the decision described as the draft decision in the motion to approve the treaty change on the European financial stability mechanism without a referendum, which was passed by the House yesterday, is now under review.

I am grateful for this opportunity to make a statement to the House about Portugal and the European stability mechanism. I understand that hon. Members are concerned about the events that unfolded in Portugal, which has faced difficult challenges for some time.

Yesterday, the Portuguese Prime Minister resigned after Parliament rejected his austerity Budget. However, let us be clear: Portugal has made no request for assistance, and I hope that hon. Members will understand that it would be inappropriate for me to engage in any speculation about what may happen. It is not for me to say whether Portugal should ask for help, just as I would not tell it how to run any part of its economy. However, I assure the House that we will keep hon. Members informed of any developments.

Hon Members may wish to reflect on the fact that, as my right hon. Friend the Chancellor said yesterday, our deficit is larger than Portugal’s, but market rates in the UK are similar to those of Germany. That reinforces the fact that it is right to pursue the course that we set last year to tackle the deficit.

My hon. Friend the Member for Stone (Mr Cash) has also raised questions about the European stability mechanism. A strong and stable euro area is important for British business. Over 40% of our exports go to the euro area, but we are not a member of the monetary union, and it is not our responsibility to deal with the euro area’s problems. That is why we have welcomed the progress that has been made on the European stability mechanism. In the design of the ESM, we had to ensure that there was no transfer of powers from the UK to the EU. We would never have accepted that.

The treaty change applies only to euro area member states. There is no transfer of power or competence from the UK to Brussels. The ESM puts no obligation, legal or political, on the UK to contribute. That is why we have supported the agreement, which makes the euro area’s responsibilities absolutely clear. In 2013, the European stability mechanism will come into effect. Also in 2013, the European financial stability mechanism will come to an end, and the UK will not be part of it.

Several countries, including Germany, have strong views about how the ESM should be designed, but that cannot change the fundamental aspects of the mechanism, because the ESM will be developed under article 136 of the treaty and it can apply only to member states whose currency is the euro. The UK cannot join the ESM without joining the euro. As my hon. Friends know, that will not happen in the lifetime of this Parliament.

Furthermore, we have ensured that the recitals—the preamble—to the draft decision by the Heads of State and Government at the December Council meeting stated that article 122, which was used to create the temporary funding mechanism,

“will no longer be needed”

and “should not be used” to ensure financial stability for the euro area as a whole once the permanent mechanism is in place.

Should there be any suggestion of amending the draft decision at the European Council, the Prime Minister could not legally agree to it without first coming back to the House for additional approval after a further debate. The House and the other place would have to ratify any change to the treaty.

I asked the question, first, because the existing European financial stability mechanism, to which we are potentially exposed in respect of Portugal, was described in the report of the European Scrutiny Committee, which I have the honour to chair, as “legally unsound”; and, secondly, because it involves the United Kingdom underwriting approximately €8 billion to eurozone countries until 2013.

The motion for a treaty change to create the new mechanism, which was passed yesterday, provides for amending article 136 of the European treaty without a referendum, but the amendment prescribes strict conditionality. What are those conditions? The motion that was passed yesterday now appears to be vitiated. Will the Government renegotiate the decision so that the European stability mechanism, if proceeded with at all, is agreed by the British Government with unanimity only if the legally unsound existing European financial stability mechanism, to which we are wrongly exposed, is repealed? The United Kingdom would thus not be required to contribute to the bail-out of other eurozone countries such as Portugal, which would amount to approximately €4 billion. That course of action is open to the Prime Minister in his negotiations at the summit today, and it would relieve the hard-pressed British taxpayer.

If my proposal were accepted, I feel sure that the Government would have an improved chance of obtaining the European Scrutiny Committee’s clearance for any new decision and the passage of any subsequent Bill required under the House’s procedures. Will my proposal be accepted?

My hon. Friend and I have debated this subject before, and my right hon. Friend the Minister for Europe opened a lengthy debate on it on 16 March. The Government are clear that the European stability mechanism is an important tool, but it is for the euro area to fund it. The ESM will lead to the extinction, as it were, of the EFSM. I do not feel it appropriate to engage in further speculation on events elsewhere.

Clearly, it would be troubling if the situation in Portugal reignited a round of eurozone bond market anxieties. The Opposition agree that it would be inappropriate either for us or the Government to engage in a running commentary on the likely impact of events in Portuguese politics or Portugal’s debt-financing capabilities. That is for the eurozone countries to resolve, and I would not expect the UK taxpayer to be drawn into the situation.

However, I have a number of specific questions for the Minister. For general information and the interest of the House, will he say a little more about the UK’s relationship with the Portuguese economy, including our trade relationships and UK banks’ interests in Portuguese bonds and so forth? Will the Minister update us on the Finance Ministers meeting that took place—I think—on Monday as a prelude to today’s EU summit? Originally, there were reports of an expectation that today’s summit would find its way towards resolving the permanent bail-out mechanism, yet we now hear that because of various disagreements, that will be kicked into the long grass again, until June. Does the Minister agree that it would be quite bad not to resolve that ongoing problem until the summer?

What are the Prime Minister and Chancellor doing to expedite negotiations and agreement on the permanent mechanism? Is it acceptable that the Prime Minister did not actually attend the meeting of 17 countries at the last summit at the beginning of the month, when we clearly have an interest in resolving those questions? Is it correct that the eurozone countries have invited the UK and other non-eurozone countries to have a say in debates on the new permanent mechanism? Quite honestly, we have an indirect interest in what happens, so it is surely in our interests to ensure that the eurozone countries resolve those questions quickly. It is not acceptable for the UK to absent itself at the critical moment, when it should be putting pressure on them to resolve those questions. Ultimately, we need stronger leadership from the Government to ensure that those matters are resolved in Europe and the eurozone. The longer they remain unresolved, the more likely it is that our interests will be affected.

The hon. Gentleman makes an important point. It is vital that there is stability in the eurozone and that agreement is reached on the ESM. My understanding is that the issues raised by the German Government and German Chancellor are not about the fundamental design of the mechanism, but about its detailed terms. We will discuss that at this weekend’s European Council, on which the Prime Minister will report to the House on Monday, as is customary.

The hon. Gentleman asked about the UK economy’s exposure to Portugal. Our exposure is relatively small—smaller than that of a number of other European countries. Our bilateral trade in 2010 was about £4 billion, so we do not have a significant exposure, although Portugal is of course an important trading partner.

Can we just have a reality check? There will be no stability in the euro area until at least some of the countries currently in it leave. There seems to be little doubt about that.

May I remind my hon. Friend that we have just had an austerity Budget—another one? In my constituency, people are talking about having to make NHS savings of £84 million over the current planning period. Can he imagine how absolutely furious British voters will be if it turns out that the British taxpayer must continue to contribute to the bail-out of euro countries even though we are not a member? Why does he not take the opportunity—before agreeing to the new stability mechanism—to get our European partners to agree that we shall be released from any obligation to the temporary stability mechanism for which we are currently liable?

My hon. Friend forgets that we have already agreed with our European partners that the European stability mechanism will replace the temporary structures that were put in place, and of course we should not forget that we are part of the EFSM as a consequence of decisions made by the previous Government, not this Government.

Obrigado, Mr Speaker.

The plain fact is that Portugal is our oldest ally. It is in trouble and we should help. When Margaret Thatcher brought the rebate back, she was questioned by a Eurosceptic on the Labour Benches who asked, “Why are you allowing more money to go from the British taxpayer to all these new countries?” She replied: “We should help Portugal”. We should do the same tonight. I hope that our Prime Minister will remember our longest, oldest friendship with any European country, and ignore the Eurosceptic waffle from those sitting behind the Front Bench.

I do not believe it is appropriate at this stage to engage in speculation about the Portuguese economy. There has been no request for a bail-out, and further comment would be unhelpful.

On the Portuguese potential bail-out, will the Minister agree to make a statement to the House before we are committed to any bail-out? What provision has been made in the Budget for such a bail-out?

My hon. Friend wishes me to respond to a hypothetical question, but I do not intend to do so today.

For clarity—and in the hope of getting at least one sensible answer out of this debate—will the Minister confirm that because we do not have a veto over the bail-out mechanism, if Portugal applied for a bail-out, we could be exposed to liabilities of up to €4 billion? We have no veto, which means that we would be forced to do it, irrespective of which Government negotiated the position. I would like a yes or no.

The hon. Lady, who is very knowledgeable and well-versed in these matters, knows exactly the terms on which the EFSM was established. However, I do not believe that it is helpful to speculate on hypothetical situations.

Portugal finds itself in this sorry state today because yesterday its Parliament failed to pass a budget that would have allowed foreign investors to continue investing in its sovereign bonds. Does my hon. Friend realise that had we not had a change of Government in our country 10 months ago, we could just as easily have found ourselves in a very similar situation?

My hon. Friend is absolutely right. Owing to decisions that this Government have taken to get our public finances back on the right track, it is not sterling that has been speculated against in the currency markets.

Listening to what my right hon. Friend the Member for Rotherham (Mr MacShane) said about Portugal being our oldest ally, I was reminded of the only word that survived the Peninsular war. It was “vamos”—the Portuguese and Spanish ran away. It seems from the speeches of the hon. Members for Stone (Mr Cash) and for Harwich and North Essex (Mr Jenkin) that they wish to run away from the European Union. They have been running away from it since its beginning. In response to a question from me, the Prime Minister said recently that he believed in “a healthy eurozone”. Is it not better for the eurozone to have its competitive pact and its financial stability system? Furthermore, building on the point made by my hon. Friend the Member for Nottingham East (Chris Leslie), is the Minister not worried that 17 member states in the eurozone will create a two-speed Europe?

It is absolutely right that Europe should be competitive and able to compete with companies in north America, Asia and south America in what are becoming increasingly challenging global markets. Europe needs to address its competitiveness, which is why we engaged in the economic taskforce led by Herman van Rompuy. We need to see changes in Europe, and my right hon. Friend the Prime Minister will be pressing for that at the summit.

The Minister will know that although Portugal has not so far requested any help, it is in a similar situation to Ireland, in that Ireland did not request any help at the very beginning, but was forced to take it later. Yesterday, we voted—essentially—on a treaty change. Will the Minister confirm that, if the change is made in the coming weeks—the Prime Minister having come back to the House—the UK Government will still have a veto to play, or will the veto be played this weekend, meaning that we cannot change anything in the future?

I do not know whether my hon. Friend was present for the debate in the House on 16 March when we discussed the ESM, but let me remind him of what my right hon. Friend the Minister for Europe said:

“Should there be any suggestion of amending the draft decision at the European Council—there is no such suggestion from any quarter at present—the Prime Minister could not legally agree to it at the European Council without first coming back to this House and the other place for additional approval after a further debate.”—[Official Report, 16 March 2011; Vol. 525, c. 424.]

Of course, there can be no change to the treaty unless primary legislation passes through both this place and the other place.

Will the Minister confirm that had we joined the euro, we would have been expected beyond 2013 to make a significant contribution? Has he had a chance to ask the Chief Secretary to the Treasury whether he has abandoned his policy of joining the euro at the earliest possible date?

Do Ministers agree that, having just put in place the most comprehensive system of democratic checks on further transfers of power to the European level of government, it is now high time that this Government got on with the priority of providing a positive leadership role for Britain in all European decision-making forums, and that the anti-European guerrilla warfare from the Back Benches really does not help?

My hon. Friend is right to point out that much work needs to be done in Europe. I believe that this Government have played an important role, particularly in pushing the competitiveness and growth agenda, and that is the right role for this country to play.

The Minister and colleagues on the Government Benches are again keen to draw an analogy between this country and, this time, Portugal—previously it was Ireland and Greece. Can he confirm that the UK is in an entirely different position from those countries, given that it controls its own interest rates and its own currency?

The only reason that this country is in a different place from Greece, Ireland and Portugal is the action that this Government have taken to sort out the mess left by Labour.

Will the Minister confirm that the contingent liability under the scheme was set up after Labour had lost the election by the then Labour Chancellor? Does what is happening in Portugal, where interest rates have today risen above 8%, not provide the most eloquent lesson on what would happen here if we did not get a grip?

My hon. Friend is absolutely right. The decision taken by the previous Chancellor meant that we became part of the ESFM, and that is why the liability exists today. My hon. Friend is absolutely spot on: we have taken difficult decisions in this country. This Government have decided to tackle the deficit that Labour left behind, and we have a clear plan to do it. The Opposition have no ideas. Under a Labour Government, this country would be running out of steam.

The events last night in Portugal bring into sharp focus why it is important to maintain the confidence of the markets. Is the Minister glad that this Prime Minister did not attend the meeting of the 17 eurozone countries, because the last Prime Minister attended and gave away our rebate?

Certainly, the previous Government very rarely showed any backbone in dealing with our European partners on the rebate or other matters. This Government stand up for Britain’s interests when it comes to the debate in Europe. We have done that on the rebate, on the budget and on this mechanism.

When Ireland was in trouble, we helped out. Ministers brought forward a proposal to give a loan to Ireland to help sort out their finances. I appreciate that at the moment there is no proposal to do the same for Portugal, but will the Minister give an assurance that we as a House will be given the opportunity to debate any such proposal that comes forward?

As I said before, I do not think that it is helpful to engage in unnecessary speculation. However, I would point out to my hon. Friend that this Government have sought to ensure that we keep the House informed on all matters of importance.

Business of the House

The business for next week will be:

Monday 28 March—Continuation of the Budget debate.

Tuesday 29 March—Conclusion of the Budget debate.

Wednesday 30 March—Remaining stages of the Police Reform and Social Responsibility Bill (Day 1).

Thursday 31 March—Conclusion of remaining stages of the Police Reform and Social Responsibility Bill (Day 2).

Friday 1 April—Private Members’ Bills.

The provisional business for the week commencing 4 April will include:

Monday 4 April—Opposition Day (14th allotted day). There will be a debate on an Opposition motion, subject to be announced.

Tuesday 5 April—General debate on Britain’s contribution to humanitarian relief in Libya, followed by a general debate on matters to be raised before the forthcoming Adjournment. The latter debate has been nominated by the Backbench Business Committee.

I should also like to inform the House that the business in Westminster Hall for 31 March 2011 will be:

Thursday 31 March 2011—A debate on high-speed rail.

I am grateful to the Leader of the House for that reply. The House will welcome today’s statement on Libya and will look forward to being further updated.

The Welfare Reform Bill will involve a large number of regulations being presented to the House. Will the Leader of the House assure Members that they will appear in good time to allow for full parliamentary scrutiny?

The Government gave a clear undertaking that they would talk to the Opposition about their draft legislation to increase—in a terrorist emergency—the number of days for which someone can be held from 14 to 28. To date, the shadow Home Secretary has not been consulted, despite a number of requests to the Home Secretary. Will the Leader of the House encourage his colleague to respond?

On section 44 stop-and-search powers, the Home Secretary has got herself into a difficulty and has had to introduce, by way of a remedial order, the new provisions on stop and search that were due to be included in the Protection of Freedoms Bill. She has done that by means of a written statement, thereby denying the House the chance to debate and scrutinise the change before it was made. May we have an explanation of why that happened?

Given that just about everything that we heard in yesterday's Budget statement had already been leaked to the media in advance, could the Leader of the House look at a different system for next year? Perhaps the Chancellor could get up, simply say, “I refer the House to the briefing I gave the newspapers a few days ago,” add anything new and sit down. Then we could move straight on to the Leader of the Opposition and the debate. It might help some Members to stay awake.

Will the Business Secretary make a statement on the failure of the Government’s much trumpeted one in, one out policy on new regulations? For the Department for Business, Innovation and Skills—the Department meant to be leading on the policy—it has been a case of 46 regulations in since May, and no regulations out. In fact, the majority of Departments have introduced more regulations than they have removed.

It seems that the policy is being observed only by the Liberal Democrats, although in their case they are applying it not to regulations, but to their principles. One principle out—opposition to trebling tuition fees; one new principle in—helping to undermine the NHS. We also read with interest that the Liberal Democrats are planning to issue a pocket-sized card listing every one of their many achievements in government. Will the Leader of the House find time for a statement on that? After all, it would not take very long.

May we have a statement from the Health Secretary explaining why the latest polling results from Ipsos MORI on public satisfaction with the NHS have still not been published, six months after they were submitted to the Department of Health? It is reported that they show that more members of the public than ever believe that the NHS is doing a good job—not exactly the message that Ministers have been seeking to convey. This is a very curious case of Ministers trying to bury good news.

Also on the health service, we read with great interest this week that the Deputy Prime Minister has told his MPs that he will be “taking the lead” in reining in his own Government’s plans for the national health service. He is said to be determined to make changes to the Health and Social Care Bill, which is currently in Committee, and a senior party source said that he had decided to “front up” the issue with the Health Secretary.

This is quite extraordinary, and presents a bit of a parliamentary challenge for the Leader of the House. Now, the right hon. Gentleman is a reformer, so I wonder whether he would be prepared to break new ground by organising a joint statement at the Dispatch Box from the Deputy Prime Minister and the Health Secretary, so that they can slug it out under the full glare of parliamentary accountability. Or perhaps we could make use of the Procedure Committee’s welcome recommendation—published in the last hour—that we allow the use of iPhones and iPads in the Chamber in place of paper, and the two members of the Cabinet can have an online argument instead. It could probably work, as long as Vodafone kept us all connected.

Finally, on Westminster council’s infamous ban on feeding the homeless, I am sure that the Leader of the House was as pleased as I was to read last week that a Home Office spokesman had said:

“The Home Secretary has no plans to ban soup runs.”

I am delighted that the coalition—if I may describe it as such—between the right hon. Gentleman and me has forced the Government finally to make their position clear. Will he simply confirm for us today that when Westminster’s draft byelaw is put to the Department for approval, it will be treated with the contempt that it deserves and sent packing?

That was a marvellous smokescreen for the rather disappointing performance by the Leader of the Opposition yesterday. The shadow Leader of the House might want to recalibrate his performance in order to avoid this unhappy contrast.

On the Welfare Reform Bill, of course we will seek to publish the appropriate regulations well in advance so that the House has an opportunity to reflect on them. I will pass on the right hon. Gentleman’s request for more consultation between the shadow Home Secretary and my right hon. Friend the Home Secretary. On the Protection of Freedoms Bill and the written ministerial statement, the Bill is now before the House and I hope that there will be adequate opportunity for the House to cross-examine Ministers.

As for leaks, the right hon. Gentleman will know that there has always been a good deal of speculation before Budgets—and I have to say that he does not have much of a leg to stand on in this regard. He was a special adviser in 1997, and most of the Labour Government’s first Budget was systematically leaked to the Financial Times before the Chancellor had even got to his feet. Some years later, a BBC reporter interviewing the Treasury spin doctor Charlie Whelan asked him directly whether he had been responsible for the leak. Whelan replied:

“I might well have been. I can’t remember, to be honest. Probably was me. It could be Ed Balls, it could be me.”

So I hope that we will hear no more from Labour about Budget leaks.

If there is one person who is known to be able to stay awake during Budgets, it is my right hon. and learned Friend the Lord Chancellor, who delivered six excellent Budgets when he was Chancellor of the Exchequer. On the issue of regulations and the Department for Business, Innovation and Skills, my right hon. Friend the Business Secretary will be taking part in a debate later today about regulations, and will therefore have an ample opportunity to deal with the one in, one out policy.

Labour has had more than one policy on tuition fees over the past few years, and it would do well to reflect on that before starting to make that its currency. As for joint appearances at the Dispatch Box, I wonder how the then Prime Minister Tony Blair and the then Chancellor Gordon Brown would have got on if they had both appeared at the Dispatch Box, as members of the same party, to hammer out an agreed policy.

On health and social care, I do not think that the right hon. Gentleman should believe absolutely everything he reads in the press.

On Westminster city council, the right hon. Gentleman might know that the consultation ends on 25 March. The portfolio holder on the council has made it clear that he wants a non-legislative solution. He plans to have discussions with those running the soup runs, and two soup run providers have already agreed to provide their services in a more settled environment. I welcome that. The right hon. Gentleman might also look at some of the comments from those helping rough sleepers about the desirability of focusing the soup runs within an established building, rather than their acting as a magnet that attracts rough sleepers from all over the capital. I very much hope that he and I are at one on rough sleepers, and that we can support Westminster city council and the enlightened approach that it is now taking.

Order. Many colleagues are seeking to catch my eye, but I remind the House that there is a statement by the Foreign Secretary to follow, and a heavily subscribed continuation to the Budget debate. If I am to accommodate this level of interest, brevity will be of the essence.

Will the Leader of the House find time for a debate on the Department of Health’s drugs procurement process in relation to companies such as Pfizer, to ensure that corporate social responsibility comes into the process?

I applaud my hon. Friend’s campaign on behalf of those in her constituency who are threatened by the decision taken by Pfizer. I will certainly draw the attention of my right hon. Friend the Secretary of State for Health to her request for more corporate social responsibility. It might also be appropriate for her to intervene during the Budget debate, as that is a direct matter for businesses in this country.

I thank the Leader of the House for his business statement, as well as for his written ministerial statement yesterday on extra time for private Members’ Bills, Opposition days and time allocated to Back Benchers. Will he tell the House exactly how many extra days will be allocated to Back Benchers? Will he also tell us how many of those debates will be in the Chamber? He has just announced that the pre-recess Adjournment debate—a Back-Bench debate—has been reduced from the normal six hours to three, to give the House the chance to have an important debate on Libya and humanitarian aid. I acknowledge how important it will be to have that debate, just before we break up for the recess, but will he explain why he cannot simply add an extra day on to the parliamentary calendar in order to give the pre-recess Adjournment debate and that important debate on Libya and humanitarian aid a whole day each? It is in the Government’s gift to do that. I am sure that this would never have crossed the mind of the Leader of the House, but perhaps that will not happen because the extra day would be a Wednesday, and the Prime Minister would therefore be forced to come to the Dispatch Box to answer questions.

Let me rebut instantly the hon. Lady’s final suggestion. My right hon. Friend the Prime Minister looks forward to every Wednesday with relish. On her question about the extra days, we have tabled a motion to extend the number of days for private Members’ Bills. We do not need to lay a comparable motion to deal with the days for the Backbench Business Committee. Since the Committee was established last July we have allocated roughly one day a week to it, and I propose to continue to do that. We do not need to table a motion in order to do so, however.

On the question of extending the sitting days to include next Wednesday, the House values the certainty of having a calendar published well in advance, and there are precedents for the pre-recess Adjournment debate taking half a day rather than a whole day. We have tried to reconcile the need for certainty with the need for the House to be updated on the difficult position on Libya and to contribute to that debate, as well as respecting the demands of the pre-recess Adjournment debate. I hope that we have struck a fair balance between those three demands. I can tell the hon. Lady that I propose to table a business motion so that the protected time of three hours for the pre-recess Adjournment debate will not suffer any injury as a result of any statements or other events on that day. I hope that when I table that motion, she will smile at it.

May we have a debate in Government time on the future of the euro and the economic governance arrangements in the European Union? Those of us who fought long and hard, and successfully, to keep Britain out of the euro would like ministerial reassurance that we are not going to be dragged into any of the financial or governmental consequences of its current problems, and that we will get something back for Britain when those countries need our consent to change.

I understand my right hon. Friend’s concerns, but I cannot promise an imminent debate on that subject. Following the important meeting of the European Council that begins today, however, there might well be a statement early next week, which would give him an opportunity to share his concerns with my right hon. Friend the Prime Minister.

Today, 30,000 14 to 15-year-olds from 815 schools in every part of the country are working with the BBC to make the news, and 30,000 other young people have taken part in news-related projects during the year. Will the Leader of the House find time for a debate on how we can support the BBC in that work and recognise the incredible importance of the work in developing civic awareness and an understanding of the news among young people?

I applaud the BBC’s initiative; I saw one of the programmes before I came into the Chamber. I cannot promise a debate, but there is an unallocated Opposition day on Monday week. The right hon. Member for Leeds Central (Hilary Benn) will have heard the hon. Lady’s bid; perhaps part of that day could involve a debate on that important subject.

The House holds the principle of one person, one vote to be absolutely sacrosanct. Will the Government find time between now and the referendum on 5 May to hold a debate in the Chamber on the referendum question?

My hon. Friend asks a very good question. We have not had a recent debate on the alternative vote, although we debated the matter when the legislation was going through. There is some confusion on AV. One person, when asked what the AV referendum was all about, thought that it was about whether Aston Villa would come top of the league this year. I hope that between now and 5 May there will be a good public debate on this matter. Again, the Opposition have not yet chosen their subject for Monday week. However, we know that there is some difference of opinion on AV within the Labour party, and for that reason it might not choose the subject for discussion on that day.

Will the Government make time for a debate on the proposed changes to the DNA database, following evidence to the Protection of Freedoms Public Bill Committee by the chief constable of the West Midlands, who said that 1,000 criminals would go free as a result of this Government’s changes?

The Protection of Freedoms Bill is before Parliament at the moment; it is in a Public Bill Committee. Within that Bill are the clauses on DNA to which the hon. Gentleman has referred. I know that my hon. Friend the Minister who is taking the Bill through the House would like to respond to the hon. Gentleman’s assertion, with which the Government disagree.

Any large corporations that enjoy public contracts also enjoy favourable payment terms. However, many of the small and medium-sized enterprises that support the same contracts do not benefit from equally favourable terms. Will my right hon. Friend require a statement from the Cabinet Office to ensure that current and future contracts are reviewed to help our SME businesses?

I am sure that the Government want to be an enlightened party to contracts and wish to discharge their obligations and pay their bills on time. I will certainly convey my hon. Friend’s suggestion to my right hon. Friend the Minister for the Cabinet Office and make it clear that in his opinion—I think it is a widely shared view—the Government should not make SMEs wait for payment due to them from the public sector.

Parliamentary questions are an essential mechanism by which the House is able to hold Ministers to account. There are, however, some gaps in the system. One of those is a member of the Cabinet, Baroness Warsi, who last year claimed that the Conservatives failed to win an overall majority at the general election because of electoral fraud, predominantly within the Asian community. Will the Leader of the House find time next week for a statement at which the Baroness could either justify that statement or profoundly apologise for it?

As the right hon. Gentleman knows, I cannot find time for such a debate, because the right hon. Lady would not be able to appear in this Chamber. However, I am sure she will have heard what the right hon. Gentleman has said and will want to respond to it in the appropriate way.

When I was elected, I tried to do the right thing and save money by using second-class post. I discovered that of the five small envelopes used, three are, illogically, more expensive if second-class post is used rather than first-class post. One of the differences amounts to £2.24 for a 250 batch. According to my back-of-the-envelope maths, including the printing costs for two types of envelopes based on 2009 usage, a saving of £15,500 a year could be made. The print runs are huge; the set-up costs are minimal. The House of Commons uses 2,000,703 first-class envelopes, costing £1,000,646. If 5% were urgent and 95% were sent second class, the postage savings would amount to more than £250,000 of taxpayers’ money. Will the Business Secretary please promote and encourage the use of second-class envelopes by—