Wednesday 4 September 2013
Energy and Climate Change
Gas (Security of Supply)
Gas will continue to be a crucial part of our energy mix to the 2030s and beyond. It is therefore essential that we have secure supplies at competitive prices. Great Britain has a well-functioning gas market with high levels of liquidity, and comparatively low wholesale gas prices. Previous independent assessments1 show that we enjoy high levels of gas supply security provided by a diverse range of supply sources, including our own production, pipeline imports from Norway and the EU, imports from global markets via LNG and storage. These sources have provided reliable gas supply over recent challenging winters, including our highest ever daily gas demand in January 2010 and the protracted cold spell earlier this year.
At the same time, new challenges are emerging, including our increased dependence on gas imports, and greater demand volatility. We therefore already have a range of measures in hand to promote our gas security. We also asked Ofgem to report to us on the outlook for gas security of supply and whether there is a case for further interventions in the gas market. Ofgem’s report, published last November, confirmed the resilience of our gas market. Since then, my Department has been working to assess whether the potential benefits of a further intervention in terms of more secure supply and effects on gas prices might outweigh the associated costs and risks.
We have analysed three interventions in the gas market to establish whether they might improve our gas security cost-effectively. Our analysis shows that, although such interventions could enhance our gas security, under most scenarios they would not do so cost-effectively. If considering only the direct benefits in terms of avoided costs of disruption against the cost of building the storage, the costs outweigh the benefits in all cases. In addition, all options risk unintended consequences through distorting a well-functioning GB gas market or crowding out investment in alternative gas supply sources. These effects could undermine any additional security of supply intervention might bring. Therefore, we see no clear case for a further intervention in the gas market.
Given the importance of gas we will instead press ahead with a range of interventions already in hand to improve our gas security of supply. These include:
Ofgem’s proposals to sharpen incentives on gas suppliers to secure their supply via changes to emergency cash-out processes, and review of the efficiency of our gas interconnectors with Europe;
Our work within the EU to ensure adoption and implementation of a variety of measures to enhance gas security through a well-functioning, integrated and transparent European gas market;
Changes to the electricity market which should provide a further incentive for power generators to safeguard their fuel supplies;
Our work to maximise the economic production of our domestic gas resources including from the North sea and unconventional sources such as coal-bed methane and shale.
We expect these measures will further improve the supply security of GB’s well-functioning gas market. Further details of our analysis and a copy of the cost-benefit analysis can be found at https://www.gov.uk/government/publications/gas-security-policy-assessment.
1GB Gas Security and Options for Improvement: A report to the Department for Energy and Climate Change”, Poyry, March 2010, “Gas Security of Supply Report: Ofgem report to Government”, Ofgem, November 2012
Foreign and Commonwealth Office
UK Action Plan on Business and Human Rights
I have today laid before the House a copy of the UK Government paper “Good Business: Implementing the UN Guiding Principles on Business and Human Rights” (CM 8695).
The action plan is the UK’s national implementation plan for the UN guiding principles, which were endorsed in the Human Rights Council in June 2011. In it we make clear the Government’s duty to protect and promote human rights in the business context, outline our commitments to encourage good business practice by UK companies both domestically and internationally, and provide advice to UK companies to help them understand and manage human rights risk as part of their commercial activities.
It is clear that personal freedoms contribute to economic development. Liberties which we take for granted—democracy, good governance, the rule of law, protection of property rights and an open, free and active civil society—create fertile conditions for private sector-led growth. The absence of these fundamental principles can deny peoples their dignity and respect, contribute to political instability and conflict, and limit prospects for prosperity and economic growth.
Promoting trade is vital for our economy and prosperity. Building Britain’s prosperity by increasing exports and investment, opening markets, ensuring access to resources and promoting sustainable growth is one of this Government’s primary objectives. But as British business expands overseas, so too does our responsibility to ensure that our commercial success does not come at a cost to the human rights of others.
We strongly believe that the promotion of business and respect for human rights go hand in hand. In the past, the UK has actively participated or led on several international initiatives which have created guidelines for businesses, including the voluntary principles on security and human rights for extractive industries and as a member of the OECD we have been equally committed to promoting the OECD guidelines for multinational enterprises with businesses. This action plan is a continuance of our commitment. We want British companies to succeed, but in a way consistent with our values. We will engage with British companies to raise awareness of their responsibility to adopt best practice guidelines, and to promote the business case for good corporate behaviour—it helps create jobs, contributes to market sustainability and has potential to generate long-term growth—and to work closely with UK companies who already see the business case for the business and human rights agenda to act as advocates to promote change, both domestically and internationally.
With this action plan, the UK becomes the first country to launch a national implementation plan for the UN guiding principles. It is our commitment to the value of human rights in pursuit of a prosperous Britain. We shall push for the international community to follow our lead and for UK businesses to work with us in taking this proactive action protect human rights and improve the lives of millions.
The House is aware of my plans to modernise the prison estate so that we always have enough prison places for those sent to us by the courts but at much lower cost and in the right places to deliver our ambitions for reducing our stubbornly high reoffending rates.
We are doing this through a significant programme of replacing accommodation which is old, inefficient or has limited long-term strategic value and by reshaping the rest of the prison estate so that we are able to release offenders closer to home which we know improves their resettlement and prevents reoffending.
I am able to update the House today on the progress made and next steps in this programme.
In January I set out my ambition to build a new prison and as part of the spending review in June secured a £250 million investment for it to be built in north Wales. I can today announce that, following the assessment of several site options and subject to local planning approval, the new prison will be built on the former Firestone site in Wrexham.
Work will begin on-site next summer with the prison fully operational by late 2017. The new prison will provide up to 1,000 much needed jobs, great opportunities for local businesses and millions of pounds worth of construction opportunities. It also provides north Wales with its first ever prison, offering an opportunity for offenders from the region to be closer to their homes.
I can also announce that I have tasked my officials to come up with plans that would see the existing Feltham young offenders site replaced with a large new adult prison and a new, youth facility on adjoining sites in west London.
In 2012-13 we were able to remove 2,800 old and uneconomic places which has significantly reduced the running costs of our prisons. I announced in January that we will open up an additional 1,260 places in four new houseblocks. The first one at HMP The Mount, is on track to accept prisoners in September 2014. In addition we will open 180 new places at Rochester and Bure this year.
We are now in a position to close a further 1,400 uneconomic places which will save around £30 million per annum. This means the closure of the following prisons by the end of the financial year:
In addition, we will convert HMP Verne to an immigration removal centre, providing around 600 additional places to hold immigration detainees awaiting removal from the country. Existing staff will continue to run the site but the change means that the Home Office will meet the costs of its operation.
These changes form part of our overall plans that will reduce prison costs by over £500 million within this spending review period.
In addition we will begin discussions with the Duchy of Cornwall about the future of HMP Dartmoor. This lease has a long notice period so nothing will happen immediately but the age and limitations of a prison built in 1809 mean that it cannot have a long-term future as part of a modem prison estate. It therefore makes sense to discuss with the Duchy future options for the site.
It is right that we continue to meet the needs of the prison population. That is why during this year, I commissioned a review on how we best meet the needs of women and conducted a public consultation on proposals to transform youth custody. I anticipate being able to announce the outcome of both in October.
I can however announce two changes as a result of those reviews which form part of our overall prison estate strategy: HMP Downview will stop holding women prisoners and instead will hold adult male prisoners; and HMYOI Warren Hill will stop holding young offenders and will also change to hold adult male prisoners. Both changes will take place by the end of the financial year.