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.