Energy and Climate Change
The Secretary of State was asked—
Onshore Wind Power
Before I begin, I should like to offer my apologies on behalf of the Minister of State, my hon. Friend the Member for Bexhill and Battle (Gregory Barker), who is unable to attend owing to pressing engagements in Cape Town. As Minister of State with responsibility for climate change, he is deputising for me at a vital meeting in advance of this year’s United Nations framework convention on climate change negotiations so that I can be here today.
Support for onshore wind through the renewables obligation is estimated to add £5 to £6 to an average household annual electricity bill of £585 in 2011. The Government recognise the need to protect hard-pressed consumers and are committed to driving down the costs of renewables, as well as realising the economic growth and new jobs that renewables projects bring.
I thank the Secretary of State for his answer. He is well aware that the level of subsidy granted drives the siting of wind turbines, not their efficiency, and that this drives price, meaning that consumer bills for energy produced from these things are higher than they should be. What plans does he have to amend this subsidy regime?
We have today announced the latest consultation on the renewables obligation. That reduces by 10% the renewables obligation certificates available for onshore wind, reflecting the fact that there have been further technological improvements that mean that the costs of this technology are coming down. I realise that my hon. Friend has a long-standing interest in this, but I caution him, particularly given his experience in the European Parliament, to recognise that under the renewables target for 2020, which is EU law, we are committed to meeting 15% of our energy from renewable sources. Onshore wind turbines are one of the cheapest renewable sources, so the fewer onshore wind turbines we have, the more expensive renewable sources we need to have instead. That is a very important factor for him to bear in mind.
The Secretary of State will be aware that subsidy is not just for wind power but for other forms of carbon reduction, which are incredibly important to all our constituents, not just for their energy bills but for their personal efforts to reduce carbon consumption. What is the Secretary of State’s view of the report on the front page of today’s Financial Times, which suggests that he is completely pulling the rug from underneath thousands of people up and down this country who might have taken steps to invest in solar power for their own houses and who are now finding that their investment is being completely undermined by his decisions?
There is no question of anybody’s investment being undermined by any of our decisions, because this Government—in this respect, I think we are no different from previous Governments—are very committed to not having retrospection in legislation and legislative changes. However, we keep all our subsidies under review. I just told the hon. Member for Daventry (Chris Heaton-Harris) that we are cutting subsidies for onshore wind turbines by 10%, and that reflects what is going on in the real world. I recently visited a project run with the city council in Birmingham, where people were able to show me invoices from solar panel suppliers showing that they had managed to get a 33% reduction in the cost of solar panels in just one year. It is absolutely right that the Department goes on looking at the appropriate levels of subsidies to bring on these important technologies, and that is obviously what we will do.
On Tuesday, the Office of Fair Trading published its study of the off-grid energy market, which found that action is needed to protect heating oil consumers in some areas. Ahead of next winter, the Department has been working with industry and consumer groups in a national campaign to encourage customers to order early and ensure they are well prepared for winter. We have also reminded terminal operators to ensure that they have sufficient salt to maintain access to their depots in the event of snow and ice over the coming winter.
I welcome the study published this week and the debate yesterday, when a lot of contributions were made on this matter. I encourage the Minister, though, to think about extending Ofgem’s protection to consumers so that they can all enjoy greater focus and access to the energy ombudsman.
As my hon. Friend will be aware, I extended an offer to her and other colleagues yesterday to meet me to talk about how we can take forward the work of the Office of Fair Trading to identify potential market abuses that still need to be dealt with, to see how the gas grid can be developed and to check that the appropriate regulation is in place.
The OFT was very clear on this matter. It said that it was looking for guidance from outside input on whether there should be a Competition Commission referral. It has said that it will continue to look into cases of potential market abuse to ensure that consumers are protected.
The Domestic Bulk Liquefied Petroleum Gas Market Investigation (Metered Estates) Order of 2009—excuse me for giving its full title—from the Competition Commission has failed abjectly to increase the ability of metered estates using LPG to change. What is the Minister going to do about that?
The hon. Gentleman raises an important issue. One of the most complex areas to try to get a market to operate in involves entire estates metered by a single access point. I am happy to talk to him further, and to other colleagues who have concerns about this matter, to see whether there are ways to take the situation forward. I share his concerns that people living in such estates do not always get the protection to which we feel they are entitled.
It is the affordability aspect of this matter that concerns me deeply. The OFT report clearly indicates that the experience people once had of getting cheap fuel in the summer months, especially heating oil, no longer exists. We need to look seriously at the affordability aspect, especially for low-income households that have never before been in fuel poverty but are now being driven into that category.
The hon. Gentleman makes a useful point. This summer, we have not seen the drop that one would expect. After a year that has seen unrest in the middle east, it is clear that wholesale prices are higher. It is therefore understandable that the drop has not been so great. We should not fall into a trap, however, of assuming that prices will not ramp up again in the busy period before Christmas and the cold winter. There is a real sense that consumers are ordering early to ensure that their tanks are as full as they can be at this point, because one thing about which we can be absolutely certain is that as we move towards winter, prices will go up further.
A significant number of my constituents are dependent on home heating oil to heat their homes. There have been severe price rises in recent months. Is there not a clear case for regulation in off-grid as well as on-grid energy? Will the Minister consider that urgently?
This issue is more acute in Northern Ireland than any other part of the country. Many more consumers are off-grid in Northern Ireland than elsewhere. This issue therefore has a particular resonance there. The OFT investigation established that 97% of consumers have access to at least four independent providers—“independent” being the critical word. The OFT is prepared to look again at examples of consumers not having access to a sufficient number of operators. In addition, where there is a potential takeover, the OFT will require it to be investigated if it appears to be uncompetitive.
Coal Mining Safety
All serious incidents at coal mines are investigated by the mines inspectorate of the Health and Safety Executive. Fatal incidents are also investigated by the relevant local police force. I would like to take this opportunity to express again our sympathy, and I am sure the whole House will join me, to the families and colleagues of the victims of the recent incidents at Gleision and Kellingley collieries. I was able to visit Kellingley myself to see what was being done. The responsibility for implementing any recommendations in resulting reports lies with the Health and Safety Executive of the Department for Work and Pensions.
I am grateful to the Secretary of State for that answer and thank him for visiting Kellingley colliery with me. Given that 42% of electricity in the UK during last year’s freezing winter came from coal, what assurances can he give the 2,000 or so remaining coal miners about the role that coal will play in this country’s energy mix in future?
I thank my hon. Friend for that question. This matter always arises when there are sad incidents of the kind that we have recorded. The Government are committed to ensuring that we can continue to use fossil-fuel power generation, not just in the short term to maintain our energy security, but in the longer term with carbon capture and storage. The challenge of decarbonising the next generation of coal-fired and gas-fired power stations is part of the carbon capture and storage programme. Yesterday, we announced the decision on Longannet. I would have very much liked to proceed with that project. However, that decision in no way undermines our commitment to the budget of £1 billion for carbon capture and storage, nor our belief that we can get a commercial project up and running within that budget—we will do so.
When the mines were publicly owned, there were safety committees at every single pit every month, manned by the Coal Board and the National Union of Mineworkers and other appropriate unions. There were also mine inspectors, paid for by the union and the board, and unannounced inspections would take place. Now that we have a scattering of small mines employing very few people, what safety measures are in place? Are they parallel to what went before, and can the Secretary of State assure me that the mine rescuers in south Wales had all the necessary equipment available and ready to move when they had to go into that mine?
I thank the hon. Gentleman. This is an important issue, and he is absolutely right to highlight the potential difficulties now that the industry is smaller. I and my hon. Friend the Member for Selby and Ainsty (Nigel Adams) insisted that we saw the NUM representatives when we visited Kellingley, for example, and their clear message was that they thought safety had been carefully respected in that incident. We need to keep under constant review safety at Gleision, Kellingley and the other collieries, and we will continue to do so.
As somebody who lived in the village of Rhos, may I ask the Secretary of State to join me in paying tribute to the local community for the way in which it pulled together during the tragic events at Gleision colliery? What subsequent discussions has he had with the Welsh Government about the future resourcing of the mines rescue service, considering that private mines are an expanding industry in the south Wales coalfield?
The mines rescue service is available throughout the UK, and in Gleision there were staff available from outside Wales who came in to help. That is absolutely appropriate, because in any particular case we do not know the scale of the situation.
I certainly join the hon. Gentleman in paying tribute to the local community. One of the most admirable features of coal mining communities has historically been their extraordinary solidarity when faced with such dangers.
Carbon Emissions (Economic Situation)
The Department published updated energy and emissions projections last week. They took due account of the latest published economic outlook by the Office for Budget Responsibility, and of Office for National Statistics figures covering gross domestic product and output for the first six months of 2011. Both current and projected carbon emissions are now lower than in our previous projections. However, our assessment is that only a small part of those revisions is due to lower economic growth, with most being a result of higher projections for fossil fuel prices and other changes.
I thank the excellent Secretary of State for that full answer, but are we not seeing that the economic climate has produced a carbon reduction that the Government could never have hoped for? Is it the Government’s policy to increase the economic downturn to save more carbon?
It is absolutely not the policy of this Government—nor, I am sure, was it the policy of the last Government or any other British Government—to have a downturn in order to improve carbon emissions. It is certainly the case that if there is a downturn, it goes hand in hand with a reduction in carbon emissions, but our efforts are directed entirely at ensuring that we can have greater energy efficiency, so that we can increase our output with a lower intensity of energy use. In fact, that has been a long-standing trend in the UK economy. We have had a very substantial increase in GDP, even though we have managed to hold our energy use completely stable. That gives us considerable hope that we can continue to do so.
Order. We now need to increase our efficiency and have somewhat lower intensity in the answering of questions from the Treasury Bench. May I say very gently to the Secretary of State that the “War and Peace” versions of answers should be preserved for fireside chats in the long winter evenings that lie ahead?
Plans for carbon capture and storage have descended into a farce. The length of the pipeline from Longannet to the empty reservoirs in the North sea, which is the excuse for not continuing, has not changed. Is it not the Government’s economic commitment to CCS, and to the pioneering project at Longannet, that has changed?
No, I disagree with the hon. Gentleman on that. Once we had gone through the front-end engineering design studies, the specifics of the Longannet project were clear, including on the costs of transferring carbon into the reservoirs. Those costs were high; as a result, we could not do carbon capture and storage at Longannet, compared with where we believe we can do it elsewhere.
The UK low-carbon and environmental sector is growing strongly, despite the disappointing recovery. It employs about 910,000 people, and this could reach more than 1 million by 2015—[Interruption.]
You are absolutely right, Mr Speaker.
We have negotiated a voluntary agreement with suppliers to provide consumers with a prompt on their bills to cheaper deals this winter, and an additional communication to their customers who pay by cash or cheque to let them know how much they could save by moving to the cheapest direct debit tariff. There is also a commitment from suppliers to assess the impact of the prompt on bills and to improve it in the light of this evidence.
I thank the Secretary of State for that reply. Last week a Which? investigation uncovered the appalling behaviour of the big six energy companies, finding that they failed to offer the cheapest tariff in a third of calls. I welcome the moves announced this week, although I remain slightly cynical about the willingness of the energy companies to give consumers the fairest deal. Ofgem currently has the power to fine energy companies, but surely it should also be able to force companies to pay compensation in cases such as those highlighted by the Which? report, where they have effectively been mis-selling and providing inaccurate information.
I consider mis-selling to be a very serious offence, and it is a matter for the independent regulator Ofgem to investigate. As my hon. Friend pointed out, Ofgem has the power to fine energy companies. When customers have lost out, I expect energy companies to pay compensation. Unfortunately, Ofgem currently does not have the power to force companies to give consumer redress, despite the last Government having 13 years and several energy Bills to give it that power. This Government are not going to sit on our hands, unlike those on the Opposition Benches. We are carefully considering legislation on the issue as part of the next energy Bill.
Last week the Secretary of State wrote to me explaining that he believed that doorstep selling was a useful method for the big six in the industry to encourage people to a better tariff. Given that two days ago RWE npower became the fourth of the big six to give up the practice, does he not see some irony in the fact that the organisations that he was supposed to be castigating are way ahead of him?
The key issue with doorstep selling is whether the companies believe that they can control the work forces who are doing it. If they do not believe that the safeguards are adequate and that they face a reputational risk, that is a commercial matter for them to decide on.
Low-carbon Energy (Employment)
6. What recent discussions he has had with the Secretary of State for Business, Innovation and Skills on steps to increase employment in the low-carbon energy sector. (75589)
I shall try to ensure that I give the right answer this time.
The UK low-carbon and environmental sector is growing strongly despite the disappointing recovery. It employs about 910,000 people. We believe that this could reach more than 1 million by 2015, not least because of policies such as the green deal—which is in the Energy Act 2011, which has just received Royal Assent—which could see the number of people employed in the insulation industry rising from an estimated 27,000 today to around 100,000 by 2015.
I thank the Secretary of State for that response. My constituency of Hereford and South Herefordshire is home to the first house refurbished to international PassivHaus standards and is blazing a trail internationally in the quality of environmental design and construction. What advice can my right hon. Friend give to firms in Herefordshire to ensure that they are well placed to benefit from the green deal?
The green deal is a major opportunity for businesses of all sizes, in all parts of the country, because our homes are in all parts of the country. Therefore, the scheme will help to revitalise the market for energy-efficiency products in every part of our nation. The green deal and the eco-consultation will be published shortly and will set out the requirements for businesses to help them to gear up for autumn 2012, I hope in a clear way.
The Secretary of State rightly criticised the previous Government for pulling out of the Peterhead project, losing us world leadership and potential jobs. Is he not doing exactly the same thing with his disgraceful decision on the Longannet project?
No, I cannot agree with the hon. Gentleman on that point. It was regrettable that we did not proceed with Peterhead in 2007, and one thing that we can hold out real hope for is the fact that we have had considerable expressions of interest from Scottish and Southern, and other potential consortium members, for a Peterhead project, which should be able to proceed within budget and on time.
I welcome today’s announcement on the renewables obligation certificates review, particularly in respect of marine renewables and the wave hub project off the north coast of Cornwall. What will the Secretary of State do to ensure that the UK leads the world in marine renewables from now on?
One of the features of the renewables obligation review that my hon. Friend will have noticed is that we have increased our support for marine technologies to five renewables obligations certificates. In our view, that will bring forward the necessary innovation and testing to ensure that we have a world lead in this sector.
One such opportunity to increase employment in the low-carbon energy sector was scuppered yesterday by the Government’s announcement that they were pulling out of the carbon capture and storage demonstrator at Longannet. Will the Secretary of State now confirm to the House that there will be no backsliding by the Treasury, and that the £1 billion funding will definitely be in place and will be used to get four CCS demonstration projects in place for the future?
I welcome the hon. Gentleman to the Dispatch Box and to his new role on the Front Bench speaking for the Opposition. I can certainly confirm that there is absolutely no backsliding on the money available for carbon capture and storage. The Treasury will confirm that there is £1 billion available to support CCS, and we are looking to do that in the most effective way possible so that we can ensure that the industry is rolled out, that we can have a lead in that industry, and that we are able to meet our strategic objectives in making CCS available.
I am grateful for that response, and I hope that we will see that come to fruition, even perhaps after the Secretary of State is no longer responsible for these issues. Does he also understand the urgency involved if we are to get the employment benefits as well as the emissions benefits from CCS? Will he undertake to have urgent discussions with Infrastructure UK, to ensure that the energy hubs needed to go alongside the CCS projects are put in place, so that we get the jobs and investment benefits as well as the environmental benefits?
I have to say that I find it somewhat ironic to be lectured by the Opposition about the importance of speed in this area, given that it was the Labour Government who cancelled the Peterhead project in 2007. The reality is that we are attempting to proceed with this as quickly as we can. We have learned an awful lot from the negotiations and from the engineering studies at Longannet, and we hope that we can proceed and deliver on time and within budget.
Energy Efficiency Schemes (SMEs)
There are a number of Government policies that support small and medium-sized enterprises. The green deal, for example, will be available to SMEs when it is launched next year. It will enable them to improve the energy efficiency of their properties, thereby reducing carbon emissions and energy costs. The green deal will also drive demand for energy efficiency products and services, from which SMEs will be able to benefit.
Ormiston Wire in Isleworth has previously won the Queen’s award for sustainable development, and has a wealth of experience in wind turbines, solar panels and energy-efficient lighting. Will the Government ensure that SMEs such as Ormiston Wire are represented in the discussions on the green deal, to ensure that SMEs are given real support for any energy-efficient schemes?
I am delighted to hear from my hon. Friend of the steps that Ormiston Wire has taken; they are typical of the measures that many companies have taken. The green deal is a way of encouraging SMEs to put in place energy efficiency measures, and I am glad to see that they are taking advantage of that. The feed-in tariff regime will also encourage them to look at microgeneration.
One of the key aspects of the green deal is that companies will be able to seek an assessment and take it to any green deal provider. This will provide real consumer choice. We have found it most encouraging that providers have been coming forward and offering their services, because they see this as good for growth in the economy as well as for energy efficiency.
But may I urge the Minister to press the Department for Business, Innovation and Skills to do more to engage with SMEs on the green deal. The experience of a small enterprise in my constituency is that officials have stopped talking to them and that BIS is going ahead instead with trials with large organisations such as B&Q. More joined-up working is needed.
I am intrigued to hear what the hon. Lady has said and I would be grateful if she gave us more information about it. We have regular contact and a very constructive relationship with BIS, which is looking at a finance aggregator to try to help SMEs to take advantage of the opportunities available within this package. The whole issue of financing is at the core of the work that BIS is doing. If the hon. Lady would like to give us more information, we could respond in more detail to her particular concerns.
With growth flatlining and unemployment rising we urgently need a plan to get our economy growing. That means creating jobs, particularly for Britain’s 2 million small businesses. That is why we proposed amendments to what is now the Energy Act 2011 that would have boosted small business. We suggested lowering the cost of administration to give small businesses, along with charities, social enterprises and co-operatives, fair access to the green deal marketplace. Will the Minister tell us why the Government voted in Committee against supporting small British businesses, and will he commit today to backing our plans in secondary legislation?
We are absolutely committed to small and medium-sized companies having access to these issues and we are keen to find the best way of dealing with it. In that respect, we are committed to bringing forward further measures. As for the delays, the hon. Lady should be aware that we proposed a green deal, exactly as it is now, in the Energy Bill of 2010—almost two years ago—and it was voted down in principle and in concept by the then Labour Government, who have lost us nearly two years in rolling out energy efficiency.
One of the main aims of the Ofgem retail market review is to reduce tariff complexity, making bills easier to compare. I welcome these proposals and look forward to Ofgem’s forthcoming consultation on its plans to simplify tariffs and boost competition.
In the light of the news that fewer customers are now switching supplier, despite the proven benefits of doing so, I welcome the Government’s new “check, switch, insulate to save” scheme, but how will the Minister ensure that consumers, particularly the elderly who do not necessarily have access to computers or computer skills, take up the savings available?
My hon. Friend raises an important issue. After yesterday’s debate, I think the whole House will be entirely aware of my own inability to switch because of the complexity of the regime online. We have required the energy companies to write to 4 million vulnerable customers this winter so that they understand that they could be on a lower tariff and what more might be available to them in terms of energy efficiency and they get what help is currently available.
The hon. Gentleman raises an interesting point. The important point about the summit was that the industry, consumer groups and the Government were working together. Most of the energy companies have already said that they will freeze the prices right through this coming winter and that there will be no further increases. What we have also looked at is what can be done right now. Sometimes the cynicism—not from the hon. Gentleman but from some of his colleagues—about the measures to check and insulate in order to get the best savings is unfortunate because it means that constituents who could be doing more to help themselves and take advantage of what is already on offer might be inclined not to do so.
I regularly engage with stakeholders such as energy companies and consumer organisations to discuss our policies to assist low-income and vulnerable households to heat their homes more affordably. I recently had interesting discussions with Professor John Hills, the author of the fuel poverty review.
I thank the Secretary of State for his response. One way of reducing fuel poverty is through providing more support to lower-income families to make their homes more energy-efficient. I appreciate that the Government’s proposed energy company obligations seek to do that, but I ask the Secretary of State for an update on his Department’s progress in creating those obligations, and will he tell us when he hopes they will come into effect?
My hon. Friend is right. A key focus of the energy company obligation will be on householders who cannot achieve significant energy savings without an additional measure of support. That will include, through the affordable warmth target, specific assistance to the poorest and most vulnerable people to help them keep their homes warm affordably. We are consulting this autumn on secondary legislation for the green deal and the ECO, as I have said in answer to colleagues before, and we intend to launch them in autumn 2012.
I welcome the Government’s support for Labour’s motion yesterday, which said:
“with a cold winter forecast and Government support cut, millions of families will struggle to heat their homes”.—[Official Report, 19 October 2011; Vol. 533, c. 1006.]
I am glad that the Secretary of State agrees with that. What is he going to do about it this winter?
The right hon. Lady should be aware that under the warm home discount scheme—a statutory scheme, not a voluntary grace-and-favour one of the sort operated by the Labour Government—we will be providing substantial support to 600,000 particularly vulnerable key pensioners. That amounts to £120 off their bills, and is a two-thirds increase on what was available under the voluntary scheme operated by the previous Government.
I understand that the benefit of the warm home discount is less than the profits that the energy companies make. Yesterday, Government Members also supported our demand
“that energy companies use their profits to help reduce bills this winter.”—[Official Report, 19 October 2011; Vol. 533, c. 1007.]
How and when will the Secretary of State make that happen?
On Monday, at the energy summit, we discussed with the energy companies exactly how they could help, and there are a number of ways in which they are doing that. For example, they have made a voluntary commitment, which they will implement this winter, to state in every bill whether cheaper tariffs are available, to provide energy-saving advice and to promote the “check, switch, insulate to save” campaign, which I hope will—with the right hon. Lady’s backing, I am sure—be a great success.
The Prime Minister and the Secretary of State chaired a summit with consumer groups on Monday to launch the “check, switch, insulate to save” campaign and a package of measures to help consumers this winter. We are working with consumer groups, energy suppliers and the regulator Ofgem to ensure that consumers know how to save money on their energy bills by checking on their energy deal, switching their supplier if appropriate and insulating their homes.
I do not know whether the Minister has had a chance to read a recent book entitled “Let Them Eat Carbon”, by Matthew Sinclair of the TaxPayers Alliance, but if he has he will have noted Citigroup’s estimate that this country will have to spend more on meeting environmental targets than Germany, France, Spain and Italy put together. Does he accept that when those costs are passed on they will result in even higher energy bills for consumers?
I have serious doubts about the information in that book about the relative costs, particularly compared with countries such as Germany. We have to deal with a legacy of a failure of investment over the past 13 years. Every year of this decade, we will have to secure investment in our energy infrastructure at twice the rate secured in the previous decade, which will entail a cost to consumers, who are picking up the tab for Labour’s failures.
May I remind the Minister that a leading expert on energy said only this week in the precincts of the House that the real reason for the astronomical energy price rises was the privatisation of the energy industry and the sweating of assets over many years? Is that not the truth? Is that not why we have rocketing energy costs and our European neighbours do not?
The hon. Gentleman makes some of the points that I was just making. The sweating of assets to which he referred resulted from the lack of investment over the past 13 years in the building of new plants. It is 15 years since the last nuclear plant was opened, 25 years since it was commissioned and 40 years since the last coal plant was opened. We have not seen enough investment in plant, and that is a legacy issue that is now being addressed. As a result of competition, we ended up with some of the cheapest electricity and gas prices in the whole of Europe, but we have to make up for that legacy of failure.
I want to return to consumers and their costs. Will the Minister urge Ofgem to reconsider the unit as a specification? What does “a unit” mean? Could we not look at cost per bulb hour, and other things that consumers understand? That will drive behaviour change as well.
Let me say in response to your comment, Mr Speaker, that I like to see myself as a source of endless renewable energy. As for the point that my hon. Friend has rightly made, clarity is indeed a real issue. People are confused because they simply do not know what the term “unit” might refer to. I hope that Ofgem and the industry will try to establish what more can be done to ensure that it is absolutely clear how much energy people are using.
My hon. Friend the Minister of State, Department of Energy and Climate Change, the hon. Member for Bexhill and Battle (Gregory Barker), visited Germany last month to see at first hand how German policy on the competitiveness of energy-intensive industries is put into practice. My officials are also working with the Department for Business, Innovation and Skills and the Treasury to prepare a package of measures for the most affected energy-intensive businesses, which we plan to announce before the end of the year.
Does the Minister agree that the German experience shows that it is possible to adopt both a strong commitment to moving towards a low-carbon economy and a comprehensive range of measures that protect the competitiveness of energy-intensive sectors? Will he take steps to ensure that the mitigating strategies that the Government will announce this autumn benefit not just the larger companies, but smaller energy-intensive companies such as those in the ceramics sector, which can help to rebalance the economy?
Let me begin by thanking the hon. Gentleman for the work that he is doing in the all-party group that he leads. It is extremely valuable to the whole sector. There must be a balance between moving in a low-carbon direction and ensuring that successful businesses are not driven abroad, and the measures on which we are working with BIS and the Treasury are intended to strike that balance. If those companies simply moved overseas, we lost the jobs and they continued to emit carbon in the same way, there would be no net gain for the world climate—or, indeed, the UK economy.
I am pleased that the Minister recognises the concerns of energy-intensive industries such as those involved in packaging manufacture and CEMEX, in my constituency, which manufactures cement. CEMEX faces a £20 million bill for complying with carbon legislation, which is causing concern about the viability of its UK plant. Will the Minister do all he can to ensure that UK manufacturing industry is not placed at a competitive disadvantage?
Let me reassure my hon. Friend that we regularly meet representatives of industry and industry groups to ensure that we understand the full range of concerns. The work currently being done across Government is designed to ensure that we first understand where the challenges and threats are coming from, and then introduce sensible measures to protect companies of important national and strategic interest. I think that that strikes the right balance, but we are always keen to receive representations from Members on both sides of the House about specific constituency issues.
Carbon Emissions (Local Authorities)
Local authorities are uniquely placed to provide leadership and vision in tackling climate change in their communities. Many are enthusiastic about playing their part, and have stretched their ambitions to reduce carbon emissions in their areas. My Department involves local authorities in a range of policies, including some on the roll-out of the green deal.
Given that 22% of County Durham’s energy needs come from renewable energy sources, including 17 wind farms—is one of the best records in England—and given that the figure in the Secretary of State’s own county of Hampshire is only about 4%, does he agree that we should be sharing the burden as well as the benefits of renewable infrastructure?
As the hon. Gentleman knows, I am very much in favour of increasing the amount of renewable energy throughout the United Kingdom. The renewables obligation review proposes that support should be targeted particularly on areas where there is the most wind, because it is in no one’s interest to build wind turbines where there is an inadequate wind resource.
I refer the hon. Lady to the answer that I gave my hon. Friend the Member for Bury North (Mr Nuttall) a few moments ago.
As the hon. Lady well knows, the winter fuel allowance was introduced by the last Government. Had it not been for the fact that—as one of her colleagues who was then a Minister pointed out—there was no money left, we might have been able to consider some of these matters further. However, we have implemented the policy of the last Labour Administration, and in the meantime we are trying to ensure that people check their bills for accuracy, insulate their homes, and look for better arrangements to which they might switch. That makes evident sense, because it can bring significant benefits, and it should not be dismissed, because it will help many of the hon. Lady’s constituents.
What has been done for customers with prepayment meters and keys? Their bills are more expensive per unit, and as they are not sent a bill there are limited opportunities for the energy companies to communicate with them, and so little choice is offered to them.
There is evidence, which Ofgem is gathering, that people on prepayment meters are paying less now than they were in the past. One reason we have been keen to take forward the smart meter programme is to ensure that people get absolute accuracy in their billing. That programme is furthest advanced in Northern Ireland, and people on prepayment meters there pay less than people on normal tariffs.
My Department is tasked with powering our people and protecting our planet. Since the last departmental questions, we have published the renewables obligation banding review, which examines the support that different technologies will receive under the renewables obligation. We have also published the electricity market reform White Paper, which sets out our plans to secure affordable low-carbon energy for decades to come. We have also held a consumer energy summit, bringing together consumer groups, the industry, Ministers and the regulator to help people save money on their bills this winter. Finally, the Energy Bill—including our flagship energy-saving programme, the green deal—received Royal Assent on Tuesday and is now the Energy Act 2011.
The Secretary of State is aware of the situation at Rio Tinto Alcan at Lynemouth in my constituency. Some 650 private sector jobs are hanging by a thread. The company says that the problem is the green taxes implemented by the Government, which will wipe out £50 million in annual profit. Will the Minister say when he will make announcements on the renewables obligation certificates banding and on the energy-intensive industries package, and will he assure the House that those packages combined will prevent mass job losses in the energy-intensive industry sector?
I am grateful to the hon. Gentleman for his question, not least because I have had discussions with Rio Tinto about the Alcan plant. It is regrettable that it made its decision ahead of the publication of the renewables obligation. That was published today, so, to answer one of the hon. Gentleman’s questions, those figures are now available, and we have just heard from the Minister of State, my hon. Friend the Member for Wealden (Charles Hendry), that the energy efficiency package for energy-intensive industries will be in place by the end of the year. In our discussions with Rio Tinto I asked the company whether it would give a guarantee about local employment if it received the support that it wanted in converting the electricity generation plant to biomass. It did not give that guarantee. That is regrettable, and the hon. Gentleman will have noticed that the Alcan decision is part of a wider programme of worldwide disposals by the company.
T2. Following on from the comments of my hon. Friend the Member for Wells (Tessa Munt), with energy prices at an all-time high, many low-income families are opting to convert to prepayment meters for their gas and electricity supply. However, according to Consumer Focus that can cost up to £195 extra per year. Will the Secretary of State consider introducing regulation of the market to ensure that low-income families pay the same regardless of whether their payment method is by prepayment meters, direct debit or quarterly bills? (75608)
Energy tariffs are a matter for Ofgem. It has put in place rules to prevent unfair price differentials such as those between different payment methods and has reported on the effectiveness of those changes. It has found that prepayment meter customers now pay on average about £20 less than standard credit customers for their gas and electricity. It has also found that direct debit customers now pay on average £70 less than others, which falls within the £88 indicative cost difference between providing direct debit accounts and other types of agreement.
The Labour Opposition day motion, which the Secretary of State supported yesterday, calls on the Government
“to investigate mis-selling and ensure consumers are compensated”.
He seems to believe that that can apply only to future mis-selling, but examples such as payment protection insurance and lawyers charging additional fees to coal health claimants prove that that is not the case. Will he back our demand for an urgent inquiry into mis-selling, with redress for those who have already suffered?
The clear advice that I have received is that, legally, we will have to legislate to ensure that redress is available for energy consumers—but I am happy to look at any evidence that the right hon. Lady has to the contrary, and if we can move further and faster, we will. However, our advice at present is that we will need new legislation, and it is a matter of great regret to me that the Labour Government did not implement that.
T4. My understanding is that under the green deal golden rule, monthly repayments should be lower than the energy savings, but this makes them very sensitive to interest rate charges on the loans. What progress is being made on setting up a new not-for-profit company that can offer green deal loans at below market rates? (75611)
We have made considerable progress on this matter. The Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for Wealden (Charles Hendry) was talking about the aggregator, which seeks to ensure that we get good support for small businesses, and that is an important part of it. On the point about the costs being sensitive to interest rates, the way we envisage this working is that the financing will, in most cases, be available at fixed rates, so that the consumer will know in advance exactly what those interest rates will be. That is one of the reasons why the assurance can be made about the green deal offering a reduction in the overall energy bill.
T3. In five years’ time, when judgments are made about the value of the ineptocracy being created by the Tory-Lib Dem junta at the moment, will we see their main crime as being their neglect of the immense power of the tides in creating energy that is clean, British, cheap and eternal? (75610)
The hon. Gentleman has a marvellous turn of phrase, and I pay tribute to that. However, he has chosen his question with extraordinarily inappropriate timing, because we have today announced a renewables obligation review that increases the renewables obligation certificates available for precisely the technology that he seeks to advocate.
T5. York Handmade Brick Company is precisely the type of company that would benefit from the exemption from carbon floor prices now being given in Germany. Will the Government agree to extend the number of industries—from aluminium and other industries to brick and ceramics—that benefit from high energy user exemptions in this country? (75612)
I am grateful to my hon. Friend for her question. With UK support, the European Union agreed in May that the ceramics sector is at significant risk of carbon leakage, and as a result that sector will receive 100% of its European Union emissions trading scheme credits free from 2013. That will enable the sector to contribute to the environmental outcomes of the ETS while maintaining its own competitiveness.
T6. Professor John Hills’s review revealed that at least 2,700 people die every winter because they cannot afford to heat their homes. With energy prices significantly up in real terms this year and last year, and with winter fuel payments down in real terms this year and last year, what guarantees can Ministers give that that death rate will not increase? (75613)
I thank the hon. Gentleman for his question. I am delighted, as I am sure he is, at the thoroughness of the interim report by Professor John Hills, which I commissioned. I do not think that winter fuel payments are the best way of dealing with this problem, partly because they are not targeted. The warm home discount does target a two-thirds increase in the discounts on this particularly vulnerable group. That will have an effect this winter, despite the substantial increases in prices that the hon. Gentleman points out.
As a London MP, I am often struck by the energy inefficiency of office buildings in the capital, whose lights blaze throughout the night, regardless of whether anybody is working in them. Will the Minister say what steps he is taking to tackle light pollution and the energy inefficiency of office buildings? In particular, is there a case to be made for mandatory movement-sensitive lighting systems?
My hon. Friend raises an extremely interesting issue. I have the sense sometimes that Canary Wharf would be visible from Mars at night, and there are some lessons that we need to learn. The Government are showing leadership on this: simply by using energy-saving measures we have cut our own emissions by 20% in DECC over the year, and all Government Departments have cut theirs by 10%. We need to involve people who work in such buildings so that we can get their ideas about the contribution they can make, because this is as much about human endeavour as the advances in technology.
An increasing number of my constituents are telling me that they are not just anxious but frightened about whether they will be able to pay their winter fuel bills. I ask the Minister not what the regulator or the companies has done but what specific representations the Minister or the Prime Minister made to the six big energy companies about keeping the cost of energy down or freezing it? If he cannot give me the details today, will he write to me and set that out?
I am grateful to the hon. Gentleman for that question. We came away from the energy summit not just having made representations to the energy companies but with a list of specific actions that will help, including, for example, the 4 million letters that will be sent out to vulnerable groups on access to energy saving. We were determined to secure all those points as a result of the energy summit, and we did.
As Rio Tinto has shown itself more determined to sell aluminium plants across the world, including in Lynemouth, than to engage in the discussions that the Secretary of State has been willing to have with it, is he equally willing to have discussions with any new buyer who might be prepared to take on the Lynemouth plant?
I am grateful to my right hon. Friend for that question. Of course I am. I would be delighted to have discussions. I want to see jobs preserved both at Lynemouth and in the rest of the country. We hope that aluminium can continue to be produced in this country because, in our thrust towards low-carbon transition, we will need aluminium as part of the raw materials for that revolution.
Will the Minister urgently investigate the impediment that his Department is imposing on new entrants in the energy market by back-charging for levy obligations after a company has a certain number of customers in its roster? Will he make proposals to deal with that anomaly so that such entrants are not impeded?
The hon. Gentleman makes an important point, and I would be happy to discuss it further with him. We have lifted the threshold at which those obligations start from 50,000 customers to 250,000 customers, which will greatly assist smaller companies to get involved in the sector. If there are barriers about which he wants to talk further, we are keen to remove them and will be happy to engage with him in trying to assist such companies.
I see that we have now got on to the topographical, rather than the topical, part of Question Time. The Department for Business, Innovation and Skills, rather than the Department of Energy and Climate Change, has the lead responsibility for the green investment bank. Progress is being made, the advisory group has been set up, and I am confident that we will be able to make good progress in the coming months.
Installing insulation attracts a 5% reduced VAT rate, and so do installing central heating and hot water system controls, but installing an energy-efficient boiler attracts the 20% standard rate. Is the Secretary of State talking to Treasury colleagues about this, and the need for a 5% rate on all building repair, maintenance and improvement works for energy efficiency projects that are eligible under the green deal?
I am grateful for that question. The VAT regime and its complexities are a mystery to many of us who have studied it over the years. It is full of oddities. Of course, that is not just a matter for the Treasury, because the VAT that can be levied is subject to EU rules, too. The question of particular anomalies arises not just at a British level but at European level.
The renewable heat incentive, as my hon. Friend will be aware, is a world beater and a new approach on which we are very glad to lead. We have taken it forward for commercial industrial premises. There has been a challenge from the European Commission that we are in the process of sorting out, and we are finalising the details for the domestic sector because we recognise that it is an important way of encouraging people to consider alternative ways of heating their homes.
Analysis commissioned by G20 Finance Ministers shows that applying a carbon price to international transport fuels will both reduce emissions and generate billions of pounds for climate finance for developing countries. What assessment has the Secretary of State made of that report, and what discussions is he having with ministerial colleagues about agreeing a UK position on it in advance of the Durban climate conference?
I am particularly keen on this area, as I was on the UN Secretary-General’s advisory group on finance that recommended that it should go forward and that the G20 should look at it. We are having continuing discussions, and I am very hopeful that this is one of the most fruitful areas in which we can raise climate finance for developing countries.
I have a number of constituents in very rural areas who are off-gas and have wood-burning stoves that can be connected to radiator systems. They are deliberately avoiding the installation of oil-fired boilers because of the high cost of heating oil and the local availability of wood. If someone in that position were to install a radiator heating system powered by their existing wood burner, would it be eligible for funding under the green deal scheme?
The green deal scheme is specifically for insulation, but the renewable heat incentive scheme is available precisely to provide alternatives to oil-fired boilers in off-gas-grid areas, for example. I understand that some of the offers are very attractive here and now. We have some support for residential schemes, and they will be expanded when we have assessed the pilots next year.
Yesterday’s news on Longannet was obviously deeply disappointing to my constituents, and to the whole of Fife. Will the Secretary of State set out what assessment he has made of the medium-term future of the station, and will his Department work with me to secure a long-term future for it? Will he also confirm that despite the bluster and spin from the Scottish National party Government, not a single penny has been offered by Mr Salmond?
May I first thank the hon. Gentleman for the very constructive way in which he has engaged in this process and for the support that he has given to his constituents? I think that there is joint disappointment that it has not been possible to take that project forward. The longer-term future of the plant will now be a matter for the company, and that was always going to be one of the problems of a retrospective regime at an old plant with the upgrading costs that would have been necessary. I am delighted that he will engage with us as Ministers and with our officials on the best way of taking things forward, because we are completely committed to seeing carbon capture and storage developed, preferably in Scotland. As far as I am aware, not one penny of support was offered by the Scottish Government.
In respect of the Minister of State’s responses regarding the Office of Fair Trading’s inquiry into off-grid energy supplies, which identified the importance of a diversity of suppliers, does he accept that the nature of the contracts that have been entered into restricts the opportunities for those who are supplied, particularly where they are forced to have a container to hold the liquefied petroleum gas?
The Office of Fair Trading has indicated that it will look at further examples of market abuse and anti-competitive behaviour, and that it is looking for evidence to be submitted to it in order to take that work forward, so there will undoubtedly be areas of further work that needs to be done. Some of that may need to be referred to the Competition Commission, and I hope that my hon. Friend will make forceful representations to that effect.
The extraction of shale gas by hydraulic fracturing carries with it significant environmental risks. What assessment have the Government made of those risks, and what discussions have they had with their counterparts in the Northern Ireland Assembly about those?
Let me reassure the hon. Lady that any shale gas extraction has to abide by exactly the same environmental and regulatory restrictions as any other oil and gas developments. There has been only very limited interest, and there is only one drilling application at the moment, in Lancashire, with Cuadrilla. It has potential for the United Kingdom but the issues here are very different from those in the United States in terms of land ownership rights, which I think will impede its development here compared with the rate in the US. It has a potential role to play, but it will be done within very strict environmental constraints.