The Secretary of State was asked—
Energy Company Obligation
We will shortly be consulting on changes to the energy company obligation. We are aware of a number of ECO-funded solid wall insulation projects that are not going forward, but we have been encouraged by the large number of households that have already benefited from ECO measures, which is now estimated at nearly 450,000 properties at the end of December 2013. Moreover, thanks to the package of changes that I announced on 2 December 2013, which included the proposed ECO changes, consumers across the UK are set to see their energy bills reduced this year by an average of £50.
The Secretary of State already knows the devastating impact that his changes are having on thousands of residents in Clifton in my constituency who live in hard-to-treat homes, but what hope can he offer to the 12 local youngsters who, after completing their initial training, were due to start year-long apprenticeships in installing solid wall insulation when his change of policy put their futures and hundreds more green jobs on hold?
I am sure that the hon. Lady welcomes the many ECO measures in her constituency. The ECO measures that we announced in December prolong the programme for two more years and have a particular focus on fuel poverty, which I would hope that she welcomes. We will announce quite soon our proposals on incentives for people who want to invest in green deal measures, through which I am sure she will see real benefits for solid wall.
I welcome the news that the energy company obligation scheme will offer targeted support to low-income households until at least March 2017. Does my right hon. Friend agree that it is often the poorest families who live in the worst insulated and hardest-to-heat homes, and that these targeted measures have the potential greatly to reduce energy costs in such difficult-to-reach houses?
My hon. Friend is absolutely right. As a result of our changes, we believe that more ECO measures will help more households. The fact that we have managed to ensure that the affordable warmth and carbon-saving community obligation aspects of the ECO will be extended at the existing rate for two more years is extremely good news for our efforts on fuel poverty.
Last month, in answer to a question from me, the Minister of State, Department of Energy and Climate Change, the right hon. Member for Bexhill and Battle (Gregory Barker), said that he would speak to the energy companies about the fact that under the affordable warmth aspect of ECO, as run by them, off-grid gas boilers are not available. Has any progress been made on that, and will the Secretary of State take action to end that discrimination?
We have listened to several representations on that and other areas. We will shortly publish the consultation document on the ECO, to which the hon. Gentleman might want to respond formally, as well as our fuel poverty strategy, which will cover some of the issues that he raises.
Thank you, Mr Speaker—
This time last year, work under the affordable warmth component of the ECO—the element that helps low-income households—was trading on the brokerage at between 25p and 30p in the pound. Today it is trading at just 6p, which means that a maximum of £840 is available for each job, whereas last year £3,500 would have been available. Given that the Government’s figures on the boiler scrappage scheme show that 96% of boiler replacements cost more than £1,000, what assurances can the Secretary of State give that such work is being done legitimately, safely and responsibly, or even at all?
It is certainly being done in great numbers, and we can contrast the situation with that under the Warm Front scheme that the previous Government introduced. In 2010-11, about 80,000 households received help under that scheme at a cost of £366 million, but in the first year of affordable warmth, 130,000 households benefited at a cost of £350 million.
The hon. Lady—the hon. Gentleman; I am making the same mistake as you, Mr Speaker, so I do not know what it is about the hon. Gentleman today. However, I am surprised that he complains about costs coming down, because I would have thought that he would welcome that. He knows that there is regulation to ensure that standards are met.
More than 450,000 homes received energy efficiency improvements in 2013 as a result of the coalition’s pioneering energy company obligation and green deal measures. We expect that figure to grow substantially in 2014 and that the green deal market will continue to expand.
I hear what the Minister says, but more than 7 million homes in the UK are without adequate loft insulation and more than 5 million are without cavity wall insulation, so will he explain why the number of households getting help through Government programmes fell last year by more than 90%?
So it is inadequate. We now need to move on, not just to simple measures such as loft insulation, but to a much broader holistic approach to home insulation—whole house retrofits. They are more complex and more expensive, but they also cannot be done just with subsidy. The Labour party has to make a choice. Do Labour Members want to force up consumer bills giving ever more subsidy to a small number of people, or do they want to work with us to create a genuine new market where people are incentivised to pay for themselves?
The green deal has the potential to revolutionise energy efficiency, but we all need to understand how we can ensure that our constituents link into it. What is my right hon. Friend doing to ensure that the green deal is as straightforward and efficient as possible, and that as many people as possible in north Oxfordshire can benefit from it?
During the past few months we have certainly been taking advantage of the fact that we now have the green deal up and running, and we have been improving the experience of the green deal, both for the consumer and the supply chain. We have now had more than 145,000 assessments by the green deal, and we know that it is getting high levels of customer satisfaction and that more than 80% of people who have had an assessment are moving on to install measures.
Since the privatisation of the public utilities, in Yorkshire the gas is now owned by the Germans, electricity by the Chinese and water by the Singaporeans. Should not the six major energy companies be driving this bid? We know that the Government are really lacking in green energy and the green deal. Why cannot the Minister galvanise the six energy companies, or should I ask Mrs Merkel this morning?
We should celebrate foreign investment in the UK and welcome the fact that the UK, particularly under the coalition Government, is becoming a world centre for inward investment. We are seeing investment in the green energy sector reach record highs—more than £30 billion since the coalition came into government —and seeing the amount of clean energy that we are generating take us up the European league table from the miserable second from bottom place that we used to occupy under the last Government.
One of the groups most deserving of benefit, from the warm home scheme in particular, are those who live in park homes, of which we have many in North Wiltshire. Due to the curious anomaly that electricity payers have to match exactly the people listed in the Department for Work and Pensions, they are not eligible for the warm home discount. Will the Minister find some way of getting around this anomaly, so that these deserving people, who live in their own homes, many of which are the coldest that could possibly be imagined, benefit from the scheme?
I pay tribute to my hon. Friend for his tenacity in raising this issue. He is right. Park home owners and occupants have traditionally had a very poor deal compared with other consumers. We do not have the full answer yet, but I am determined to try to improve their lot, and I will be happy to meet him to try to iron out some of these quite difficult problems where people do not own the meter. There must be more that we can do.
A staggering amount of electricity is used and several large power stations kept running simply to power electronic devices such as televisions and computers that are left on standby. What can the Minister do, perhaps with other Departments, to try to tackle the problem of electronic devices having to be left on?
My hon. Friend asks a good question. Such electronic devices are largely covered by EU-wide product standards rather than just domestic initiatives. Innovation is the key, and that is what we want to spur. DECC has an innovation fund, and if my hon. Friend has some suggestions, I would be happy to hear them.
We announced in the annual energy statement that Ofgem would work with the Office of Fair Trading and the new Competition and Markets Authority to deliver the first annual competition assessment in late March, early April. These independent competition authorities have set out the remit for this assessment. They have said that they will look at prices, as well as profits and other relevant matters.
I recently wrote to those competition authorities, drawing to their attention three specific matters that have received little attention in the energy price debate but which I consider are of strategic importance, including profits, prices and market share in the domestic gas supply market. It is for the regulators to decide what steps they now wish to take in light of all the evidence.
Given that 31,000 winter deaths were caused by the cold during last winter and that there will be further rises in energy bills this year, why does the coalition give a higher priority to maintaining the energy cartel’s 77% increase in profits and shareholder dividends than to the lives of vulnerable people?
We do not; I am afraid that the hon. Lady is wrong on many counts. First, the structure she describes as a cartel was created by the previous Government. The big six were created during the consolidation under Labour, so they are Labour’s big six. It is under this coalition Government that we have seen a massive increase in the number of entrants to the market; we now have 20 independent suppliers taking on Labour’s big six. That is good competition that will help people. Secondly, we take winter deaths extremely seriously. If she looks at the data, she will see that winter deaths have gone up and down over a period of years and that the highest figure over the past decade was actually when the Leader of the Opposition was doing my job. The reason they go up and down is that they are related not simply to energy costs, but to health matters such as flu epidemics. We need to ensure that we have a cross-Government approach to tackling winter deaths, which is what we are doing.
I am grateful to the Secretary of State for visiting Norwich recently to listen to my constituents about energy bills and for attacking the high profits made by suppliers on gas bills. Will he explain the analysis that led him to send a letter to Ofgem and the CMA concerning prices and profits in the supply of domestic gas?
I pay tribute to my hon. Friend for his sterling work in this area. When Ofgem published segmental accounts in November, combined with figures on market share and other data, we saw for the first time a four-year time series showing some real concerns. It was that analysis that led me to write to the competition authorities, drawing their attention to the problems in the domestic gas supply market, which were never raised by the Labour party.
The Secretary of State knows that the big six were set up in the way they were because, after the introduction of the new electricity trading arrangements and then the British electricity trading and transmission arrangements, that spread competition in the market. However, Which? has now said that vertical integration has skewed the market, penalised new entrants and impaired competition. Does he not accept that Which? is right and that the Opposition are absolutely right to seek to break up that vertical integration?
I accept that we need to look at the electricity generating market. One of the reasons we support Ofgem’s proposals, which this week it was announced will go forward on 31 March, is that they will contest the vertical integration model for the first time. Again, it is this Government who are challenging the structures we inherited from the previous Government. We are allowing the competition authorities and regulators to take that contest forward, but the Labour party is saying that it must be against the consumer interest, yet it has no real evidence for that.
Does the Secretary of State agree that the high prices we see are not purely the result of the oligopoly set up by the previous Government, and that policy and energy mix are also important? To that extent, has he compared prices in Germany with those in the UK?
There are a number of international comparisons on that basis, and the UK performs very well, by and large, particularly on post-tax analysis of domestic gas and electricity prices. But we should not be complacent; we should do everything we can to help customers and businesses with high energy bills.
This year the coalition launched the UK’s first ever Government community energy strategy. That marks a profound step change for the energy sector and includes a series of ambitious new measures. To take that agenda forward, the Department is setting up a dedicated community energy delivery unit.
Those are wide-ranging plans that have been long in gestation. I am sure that the Minister is as keen as I am to take specific steps to help clean our energy supply and sustain local communities. What specific measures in the plan will enable local communities to take a lead in developing renewable energy in their area?
I pay tribute to my hon. Friend’s long-standing interest in campaigning for renewable energy. Let me assure him that there is a great deal of meat in the community energy strategy. We are establishing a £10 million urban community energy fund, providing seed funding for a one-stop-shop information resource, launching a £100,000 community energy saving competition, and setting up an industry-led taskforce to achieve greater shared ownership of onshore renewables. Altogether, it is a bold vision with a plan for delivery.
The Minister will be aware that a number of community-based combined heat and power schemes that were proceeding exactly on the basis set out in the strategy paper he mentioned have now collapsed thanks to the changes in the energy company obligation that his Department announced recently. Does he intend to take steps to use the resources he has mentioned, as set out in the community energy strategy, to help retrieve those schemes? If not, what message does he think will be sent on the future of the community energy strategy as a whole?
We certainly want to see more CHP, and we now have a dedicated resource in the Department supporting it. This comes back to the point I made earlier. Labour Members have to decide: are they going to stand up for endless subsidy or support us in driving down the cost of consumer bills? They cannot have it both ways.
Energy Companies: Charges
Energy companies are required under the terms of their licence to ensure that any differences in charges to consumers between different payment methods reflect only the differing costs to the supplier of that particular form of payment. Ofgem is looking at payment differentials, including higher charges for customers who choose not to pay by direct debit, in its competition assessment, which will be published this spring.
I am grateful to my hon. Friend for raising this important issue. The coalition is absolutely committed to improving access to financial services for the vulnerable, particularly the fuel-poor. As recommended by the Parliamentary Commission on Banking Standards, the Government are seeking a voluntary industry agreement on renewed minimum standards for basic bank accounts. In addition, we have committed nearly £2 million over this year to develop the big energy saving network to ensure that the most vulnerable are getting the best deals they can.
No, it is not. This is an ongoing situation. Ofgem has looked at the issue, but it is not something that one can look at once and then discard. That may be Labour’s approach, but we are maintaining long-term vigilance to make sure that the consumer is looked after on an ongoing basis, month in, month out. It is very important that they will now have the additional benefit of a referral to the competition test.
I am aware of the comparison that my hon. Friend makes. However, the fact is that we have an extraordinary requirement for new investment thanks to the dearth of investment, and long-term investment, that we saw under 13 years of Labour. We are now playing catch-up. We require over £100 billion to go into our energy sector to secure our supplies, and I am afraid that that money has to come from somewhere.
One in five of the fuel-poor does not have access to mains gas, and the majority of those households are in rural areas. We are determined to increase the delivery of energy efficiency improvements to the rural fuel-poor and to achieve far more for rural areas than previous schemes. We are actively taking forward a number of initiatives to deliver on that.
There are an estimated 10,000 off-grid homes in East Hampshire. I know that the Minister is personally committed to tackling rural fuel poverty where it appears, but what is being done on a practical basis, including on encouraging off-peak buying and ensuring that the code of practice is upheld?
I know this is an issue about which my hon. Friend feels particularly strongly, so I am happy to confirm to him that we are taking real steps. I will shortly be meeting the biggest seven energy suppliers to discuss improving the delivery of ECO measures, specifically to off-gas and rural homes. We are also consulting on increasing the number of rural low income homes eligible for ECO and incentivising the delivery of measures to off-gas grid, low income and vulnerable households. And—
In many of the rural communities that are finding it so difficult because of fuel poverty, those who get the winter fuel payment would love to receive it earlier. Is the Minister prepared to meet a delegation of the all-party group on off-gas grid led by his hon. Friend the Member for Suffolk Coastal (Dr Coffey) to discuss this matter?
This has been raised with me and I understand the work that the all-party parliamentary group is doing on it. I am sympathetic to the point that is made, but there are practical problems and costs to doing as the hon. Gentleman suggests. But I am not unsympathetic to him and, of course, I would be happy to meet.
Over half the people in this country who are in fuel poverty live in solid wall properties, and a significant number of those are people living off-grid in rural communities. Again, the changes announced to ECO in the autumn statement mean that no more than 25,000 solid wall insulation jobs a year will be done, whereas a few years ago 80,000 jobs a year were being done. If the Minister really intends to tackle fuel poverty in off-grid areas, how can he do so without an adequate solid wall insulation industry?
I am afraid the hon. Gentleman is scaremongering slightly about the solid wall insulation industry. The figures he referred to are the de minimis; they are not the maximum. There are other ways in which we will be installing solid wall insulation, not least working with our cash-back. I am surprised he did not mention the cash-back, as we are now offering up to £4,000 for solid wall insulation under the roll-out of the green deal. This has been very warmly welcomed by the industry, including the National Insulation Association, so perhaps he could join us in supporting the supply chain and talking up this market, rather than acting as a little bit of an Eeyore.
The coalition Government recognise the huge potential for tidal energy in the UK, and have put unprecedented resource and effort into supporting the UK marine energy sector as a whole. This week in Belfast I chaired a meeting of the Marine Energy Programme Board, which regularly brings together all the major companies and entrepreneurs in this exciting sector in which the UK leads the world.
Given the regularity, the predictability and, as we have seen lately, the strength of the tides round these islands, is it not about time we had something like a national policy statement on tidal energy to get investment going in what could be a very important sector?
I fully share my hon. Friend’s enthusiasm for tidal technology. It has huge potential in UK waters and my hon. Friend is right, as usual. A national policy statement is the next logical step for the industry, once it can demonstrate that it can deploy at scale commercially and economically, ideally above 50 MW. I am determined to work closely with the sector to make that happen.
I am sure that like me, the Minister would welcome a decision by the Scottish Government this week to grant £2 million to a tidal power global engineering hub in Edinburgh. Following the decisions about carbon capture and storage this week and earlier grants from DECC for wave energy in my constituency, does the Minister agree that the interests of the Scottish renewables industry are best served by the two Governments working together, with unlimited access to the UK-wide market, rather than any separation between the two countries?
Absolutely. Undoubtedly we are better together, and the fact that we are seeing increased co-operation between the UK marine energy park in Cornwall and the south-west and the Scottish marine energy park in the waters of the Pentland firth is a clear demonstration of how, together, we are much greater than the sum of our parts.
Following the Minister’s last reply, he will be aware that the UK is the global leader in wave energy, especially in relation to the wave park project off the north Cornwall coast. What can he say to ensure that we retain that position, bearing in mind that research and development in this field is measured in decades?
My hon. Friend is right. We are leading the global race in wave and tidal energy, and we are seeing increased inward investment into the UK by major international firms that want to be part of the development of the UK marine sector. The marine energy park in the south-west has a key part to play in that. I am delighted with the positive news about Wave Hub and the berths there, and we can look for more positive news as a result of the substantial resource that this Government have put into the sector.
Good progress is being made. The first technical specifications have been confirmed and some energy suppliers are installing smart meters already, although most consumers will be offered smart meters from next year. We are on track to complete the national roll-out to 30 million premises by 2020.
Absolutely not. I am a little surprised at the hon. Gentleman’s criticism, given that his colleague the right hon. Member for Wentworth and Dearne (John Healey) told this House on 23 April 2012 that our plan
“has a number of world-first features.”—[Official Report, 23 April 2012; Vol. 543, c. 782.]
European Green Capital 2015
I congratulate Bristol on being named European green capital 2015. Ministerial colleagues across Whitehall are working to explore what support we can provide to the city. The Minister for cities, the Minister of State, Cabinet Office, my right hon. Friend the Member for Tunbridge Wells (Greg Clark), will shortly be hosting a business round-table with the mayor of Bristol to discuss the role the Government can play.
Bristol is a hub of green technology and growth and thoroughly deserves its title. However, it is also a city that has very bad traffic congestion problems, leading to carbon emissions. Will the Minister lend his support—possibly working with other Departments —to make sure that the European green capital award provides the impetus for a railway revolution in Bristol and the Henbury loop line in my constituency?
My hon. Friend is a powerful champion of the Henbury loop. It is for the West of England Partnership to identify that particular rail scheme as a priority in its strategic economic plan. If it does so, it may be considered for funding under the local growth fund.
Household Energy Bills
Energy bills are a real concern, so we are helping households with them in three ways: direct financial help, energy efficiency measures and increased competition. Direct financial help includes the warm home discount, the winter fuel allowance and cold weather payments. Energy efficiency measures are delivered in a variety of ways, but especially through the energy company obligation and the green deal. Our relentless focus on increasing competition ranges from Ofgem’s retail market review to our focus on new suppliers and making switching quicker and easier.
In July 2012, off-grid fuel was selling for as low as 56p per litre, but by December the price was as much as 65p per litre, so a pensioner couple with an average 1,800-litre tank of oil in their garden could have saved £150 if they had bought in July. To put it another way: their winter fuel payment was half wiped out by December. Will the Secretary of State bring forward early payment of winter fuel payments for pensioners on off-grid energy?
We have been working extremely hard and the Minister of State, Department of Energy and Climate Change, my right hon. Friend the Member for Sevenoaks (Michael Fallon) in particular has been leading the work to promote the “buy early” campaign so that consumers can buy oil when it is available at a lower price. Moreover, we have a six-monthly round-table with the industry to make sure we are doing everything we can.
The hon. Gentleman asked about winter fuel payments and he will know that they are a matter for the Secretary of State for Work and Pensions. We are working with the Department for Work and Pensions and other Departments on the fuel poverty strategy, and that issue and others will be dealt with as part of those discussions.
Energy prices have been rising in the UK and many other European countries for nearly a decade, largely driven by the rise in global gas prices, itself driven by forces such as high economic growth in Asia and higher demand for gas in Japan post-Fukushima.
The other main causes of the rise in energy prices seen in the UK have been the need to fund the investments needed in new generation, including low carbon, and new transmission and distribution networks, as old power stations and networks need replacing. Although we cannot control price pressures from global markets, and although we have to make vital investments to keep the lights on, we are doing everything we can to help people and businesses struggling with this decade of energy price rises.
Further to the exchanges earlier in this sitting, I am still a little confused about the Government’s position. Will the Secretary of State support Labour’s plan to break the dominance of the big six and require them to sell into a pool, which could have a real effect on energy prices?
The hon. Lady is right to say that there are issues, because the previous Government created the big six. We have acted from day one to put pressure on them.
On the hon. Lady’s last point about selling into a pool, let me explain the Labour party’s policy, because it is already out of date. Because of measures that we and Ofgem have taken, next-day trading has increased dramatically to more than 50% of electricity. That is equivalent to a pool. From talking to independent generators competing with the big six, we know that they are not interested in increasing that more; they are interested in forward markets, because that provides greater liquidity to enable them to compete. That is what Ofgem announced this week. I am afraid that Labour, as always, is completely behind the curve.
My hon. Friend is absolutely right to raise that issue, because there are some really cost-effective and good wins to be had. That is why we introduced the electricity demand reduction strategy in the Energy Act 2013. We will have a pilot—we expect it to go forward later this year—which will be the first ever electricity demand reduction project in this country.
Off-grid Homes: Fuel Bills
This winter’s “Buy oil early” campaign, co-ordinated by my Department, was launched by the industry in September. We have worked with industry to provide consumer guidance on how to form oil buying clubs, which allow savings through bulk buying. I will review its progress at the next ministerial round table in May. The launch of the domestic renewable heat incentive this spring will also provide payments to promote a switch to renewable forms of home heating.
I very much welcome what my right hon. Friend says. As several colleagues have already mentioned this morning, the cost of heating oil for off-grid homes is a major concern. Will he give us more details of the domestic renewable heat incentive scheme, particularly in respect of domestic biomass boilers?
The domestic renewable heat incentive scheme is designed to drive forward the uptake of renewable heat technologies, such as biomass boilers. We published details of that scheme last July, and we intend it to be open for applications this spring. It is targeted at, but not limited to, homes that are off the gas grid, because those without mains gas have the most potential to save on fuel bills and to decrease their carbon emissions.
Surely one of the biggest problems for off-grid homes is that they are not even entitled to the protection of the fairly weak regulator, Ofgem. Regardless of who created what, will the Minister please tell us why oil customers are not entitled to this most basic of regulatory protections?
The new code that we have agreed with the industry gives those customers more protection than they have had in the past. We are looking at the operation of the code this winter, and we will review how effective it has been when we hold the next ministerial round table in May.
Energy suppliers are required to investigate if a customer suspects that their energy meter is not recording consumption accurately. Under Ofgem’s standards of conduct, that must be carried out in an honest, transparent and professional manner. If necessary, a consumer can request that the meter be independently tested by a meter examiner appointed by the National Measurement Office.
What the Minister has outlined does not appear to have happened in the case of a customer working in my constituency to whom npower recently agreed to give a rebate of £2,548. He is a professional man who is well able to go through the time-consuming process and to afford the £96 fee he had to pay, but the process would have been a challenge for a more vulnerable customer. To add insult to injury, three months after the rebate was agreed, he still has not received his refund. What can be done to improve this unacceptable situation?
Extreme Weather Events
The science is clear: we are already seeing some effects of man-made climate change and the future threat from climate change is great, as my right hon. Friend the Prime Minister confirmed in the House yesterday.
The Intergovernmental Panel on Climate Change published its fifth assessment last September, which covered the relationship between climate change and extreme weather events. It stated:
“Extreme precipitation events over most of the mid-latitude land masses and over wet tropical regions will very likely become more intense and more frequent by the end of this century”.
It also stated:
“It is very likely that heat waves will occur with a higher frequency and duration.”
With respect to recent events, the UK Met Office’s chief scientist said that
“all the evidence suggests there is a link to climate change”.
I welcome that response. It seems that extreme weather events are increasingly becoming the norm. Tomorrow, I am hosting a Green Alliance event in Eastleigh to discuss with local businesses, community groups and service providers how climate change will affect our area. Does the Secretary of State agree that such inclusive local approaches are as vital as international agreement?
I do agree with that. My hon. Friend and Eastleigh borough council are leaders in the bottom-up approach. He will know that there are two areas that we need to tackle. First, local communities and individuals must reduce their carbon emissions to stop climate change getting worse. Secondly, communities must work together to make people’s homes and communities much more resilient to the climate change that has already happened.
21. Many of us have welcomed the Prime Minister’s acknowledgement yesterday that climate change is one of the greatest threats that we face. Will the Government follow through on the logic of that position, and will the Secretary of State now rule out categorically any weakening of the fourth carbon budget? (902746)
The fourth carbon budget review is under way. I will not prejudge that, and the hon. Lady should not expect me to do so. I will say that this Government are leading the international climate change debate in Europe. The 2030 energy and climate change targets, which will be discussed at the European Council in March, are critical in tackling climate change. She will know that we have to work internationally to do that. This Government and the UK have been leading that debate.
May I congratulate the Secretary of State and his wife, Emily, on the birth of their daughter? I commend him for taking paternity leave, although I know only too well that he will never have been far from the duties of his office.
The Secretary of State has criticised his Conservative coalition partners for undermining the consensus on climate change. Given that the Secretary of State for Environment, Food and Rural Affairs said that people should
“just accept that the climate has been changing for centuries”
and that the Minister of State, Department of Energy and Climate Change, the right hon. Member for Sevenoaks (Michael Fallon) said that he has
“not had time to get into the…climate change debate”,
will the Secretary of State tell us whether it was them that he had in mind? Are his comments not a bit rich, given that he voted against setting a decarbonisation target?
I thank the right hon. Lady for her warm comments about the birth of our daughter. May I report to the House that mother and baby are doing well? It is nice to come back to Parliament for a rest.
When I made those comments, I was not talking about my ministerial colleagues; I was talking about some voices on the Conservative Benches, particularly in the other place, who question the science of climate change, and I think that is very unhelpful. The right hon. Lady talks about a decarbonisation target, but it was this Government who brought forward legislation on a decarbonisation target. The Labour party did not have one in its manifesto and neither did the Green party. We took the policy forward and it is in the Energy Act 2013.
Energy Market Competition
We have taken a large number of steps to increase competition in the energy market after the consolidation under the last Government that created the big six. We have deregulated the market to encourage the entry of smaller suppliers and more than 20 independents are now competing with the big six on retail energy. We have supported Ofgem in its reforms of bills and tariffs to make them easier and simpler, including through the ending of so-called dead tariffs. We have also supported Ofgem’s reform of the wholesale electricity market which, as has been confirmed this week, will be introduced on 31 March this year. We are also making it easier and quicker to switch.
On privatisation, some 27 companies were involved in the generation, supply and distribution of electricity, and of course gas. The market was set up to allow new entrants, but under Labour it shrunk to the big six. What action will my right hon. Friend take to allow new entrants to all three aspects of the market?
My hon. Friend is right that we saw consolidation in the energy market under the previous Government, which is when the big six were created. We have acted since day one through deregulation, which has enabled more independent suppliers to come to the market, and through making it easier to switch to the simpler and easier tariffs and bills that Ofgem has promoted. This week’s announcement in the wholesale market will see much greater transparency in forward markets, which will reduce barriers to entry to take on the electricity generation side of the big six.
Given the complaints figures uncovered by Which? recently, which showed that the big six received more than 5.5 million complaints in 2013 alone, does the Secretary of State think the time has come to have a full overhaul of the broken energy market, starting with a full competition inquiry to increase competition after the market assessment has been completed?
It would be wrong of me to anticipate what the annual competition assessment will conclude. We provided evidence for that, which was the right thing to do, but it is for that independent competition authority to decide what the problem is—that is why we have asked it to do it. It is doing detailed work, and when it has analysed the problem, it will decide what remedies are required.
The Secretary of State asserted in answer to an oral question on 16 January that Labour’s proposals to introduce a ring fence between generation and supply would cause “real problems” and push up prices. The Procedure Committee has ruled that the Secretary of State should provide me with evidence for that claim by 26 February, which was yesterday. Can he tell me today what the evidence says and whether he will publish it?
First, the annual competition assessment will, of course, look at that issue in detail. As the right hon. Lady will know if she has read the details of Ofgem’s wholesale market reforms, for example, there is a lot of work to suggest that it is not at all clear that vertical integration is bad for consumers; it may be in some cases, but it will not be in others. The theory behind this is pretty clear: vertical integration was adopted so that people could hedge the risks between generation and supply. That can lower the cost of capital and lower prices for consumers.
The Secretary of State has asserted his own view in the House and in the media before Ofgem has even made its assessment, so I think my question stands. Even Government Members think that the Secretary of State is wrong. The hon. Member for Harlow (Robert Halfon) wrote on “ConservativeHome” on 18 February that if companies had separate licences for generation and supply, as Labour has proposed, it would
“shine a light in some of the murky areas”
of the energy market. Apart from some of the big six, can the Secretary of State name a single organisation that opposes a ring fence, and will he confirm that he is ruling out the introduction of a ring fence while he is Secretary of State?
No, I will not do that for the simple reason that we have asked the independent competition authorities to look at the evidence. Unlike the right hon. Lady, I am not prejudging the outcome of independent competition regulators. We provide the evidence and we allow independent authorities to make judgments on that. It is quite odd that the Labour party is now turning its back on independent competition authorities.
Since Energy questions in January we have published Britain’s first ever community energy strategy, which is widely welcomed by the sector. This week we published a review by Sir Ian Wood into our oil industry. I have accepted Sir Ian’s recommendations, and we intend to fast-track his proposals. I am grateful to Sir Ian and his team for their work, which we believe is a game-changer in the management of our offshore oil and gas assets. Finally, we announced a second carbon capture and storage project this week—the world’s first ever commercial-scale gas CCS project—and CCS will play a key part in our decarbonisation strategy.
The CCS project is indeed most welcome; it is a pity it did not get here some years ago. The Secretary of State mentioned the fuel poverty strategy currently under preparation. I appreciate that the winter fuel allowance is for the Department for Work and Pensions, but given the impact it could have on pensioners in rural areas will he press for action to be taken to allow the early payment of the winter fuel allowance?
I say to the hon. Gentleman what I said to the previous questioner who raised this. We are looking at all these matters and we are working across Government—with the Department for Work and Pensions, the Department for Communities and Local Government, the Treasury and the Department of Health—on our fuel strategy, because it touches on all areas of government: benefits, health services, flu jabs and a whole range of issues that need to be looked at. I am not going to prejudge the publication of that strategy.
T3. The Secretary of State stated in the Yorkshire Post on 14 February that he expects Eggborough power station to remain open, even if it does not obtain his support for converting from coal to biomass. Will he explain his Department’s detailed analysis, specific to Eggborough, that leads to that conclusion? I appreciate he might not be able to do that in the time allowed here, so will he—not just his officials—meet me and representatives from Eggborough to discuss that detailed analysis as a matter of urgency? (902716)
My hon. Friend is a consistent champion of Eggborough and its proposed conversion. He will know that I have already met him and representatives from the company to discuss the proposal for converting to biomass. We received a large number of investment projects under the intermediate regime. It was not possible, because of a limited budget, to support them all through the taxpayer, but he will know that Eggborough has a number of other options and routes to consider.
I am very pleased that the matter of Eggborough has been raised. The loss of 850 jobs at Eggborough, with thousands more in the supply chain, is very worrying. What steps is the Minister taking to ensure that his Government’s policies create jobs, not cost jobs, and safeguard, rather than threaten, our energy security?
The jobs have not yet been lost at Eggborough, which is still producing power. A large number of investment projects came forward under our intermediate regimes involving hundreds of other jobs. It was not possible, within a limited budget, to accommodate every single investment project. Eggborough has been given its provisional ranking and it has other alternatives, such as applying for a contract for difference under the enduring regime.
T5. The Minister will recall visiting my constituency a couple of years ago to look at a green deal project to make houses on the Lakes estate more energy efficient. Will he update me on how many families were able to benefit from the scheme? (902718)
I cannot give my hon. Friend the figure off the top of my head, but what I saw in his constituency, and what he has championed, is at the forefront of what we want to see: energy efficiency measures that genuinely improve not just the fabric of the building but the community, living standards and the comfort of people there—as well as driving down energy bills.
T2. The Minister of State previously showed faux concern for communities that are off gas grid. Is not the implication of the Government’s energy policy that many, many more communities will be without gas supply if gas supplies are switched off when the energy industry is electrified? When will he tell those communities that they will no longer be able to have gas? (902715)
T6. Later this morning I will take part in a meeting to assess the progress and way forward on implementation of carbon capture and storage. Alstom, from my constituency, will be taking part. Will my right hon. Friend please update the House on how the UK is leading the world in carbon capture and storage technologies? (902719)
Yes. The UK is extremely well placed to take forward critical low carbon technology. We have all the experience from the oil and gas offshore industry in the North sea. The North sea has some of the largest reserves of carbon dioxide in Europe, and our universities and companies have some of the greatest engineers and scientists who are able to take forward this incredibly low carbon opportunity for the world.
We take this issue very seriously. We want to ensure that every payment method reflects the cost fairly, and that there is no gaming between the different methods. The issue will form part of our competition test, and we are also working on it closely with Ofgem.
T7. CNG is a north Yorkshire success story, serving gas customers, small businesses and small corporations, but it is anxious about entering the domestic market because of the burden of regulation, compliance costs and risk costs. Can we do any more to encourage companies such as CNG to enter the domestic gas market? (902720)
I am interested to hear about the company in my hon. Friend’s constituency. If he writes to me giving the details, we shall be able to look into the issue. He may also wish to send those details to the independent authorities which are conducting the competition assessment. We have deregulated the energy markets to reduce barriers to entry to the market, but we want to do more.
Will the Secretary of State join me in welcoming the launch today of the fourth GLOBE international climate legislation study, which shows how many more national Governments are taking urgent action to deal with climate change? Given the importance of the climate change debate, will he return to the issue of the review of the fourth carbon budget? Will he recognise that if the United Kingdom and Europe want to continue to take a leading role in climate change negotiations, it makes no sense to have that review now?
I do welcome the publication of the climate legislation study. The United Kingdom, including many parliamentarians throughout the House, has played a leading role in encouraging other countries to enact climate change legislation, and it is encouraging to see how many have responded. I pay tribute to the Members involved, particularly the hon. Member for Brent North (Barry Gardiner).
I cannot add anything to the answer I gave earlier about the fourth carbon budget review, which is currently under way. When we published the fourth carbon budget, it was decided that a review would take place at this time, and I cannot prejudice its outcome.
We have already set up an implementation group in the Department, because Sir Ian Wood published an interim report and we were able to study it and make preparations. I asked Sir Ian to chair an interim advisory panel to help us with our work, and he has agreed to do so. We are also keen to introduce legislation during the next Session of Parliament to implement his ideas about new powers for the proposed new regulator.
As the Secretary of State will recall, I told the House back in November 2013 that the npower call centre in Thornaby was placing 500 jobs in jeopardy through its proposal to close the centre and relocate on its existing Sunderland site. We now know that more than 400 members of staff have opted for voluntary redundancy because npower’s promises of a relocation package and transport have not come to fruition. What conversations has the Secretary of State had with his colleagues in the Department for Business, Innovation and Skills with a view to mitigating the problems of the Thornaby workers?
I know that BIS considers such issues very seriously, and we discuss them a great deal across Government. We want to ensure that support is provided in the event of large-scale redundancies, whether voluntary or compulsory. I cannot say any more about the specific case that the hon. Gentleman has raised, but I will ask my officials to look into it.
The German Chancellor is visiting Parliament today. May I invite the Secretary of State to hold talks with her about the support that her Government give to energy-intensive industries in Germany? I am sure that that support is welcomed by those industries, but it makes it increasingly difficult for energy-intensive industries in our country, such as the steel industry, to compete.
We are already paying emission trading system compensation—some £28 million so far—to 53 companies, including eight steel companies, nine chemical companies and 28 paper companies. I discussed a carbon price floor compensation scheme with Vice-President Almunia in Brussels last week, and I hope that that too will be approved next month.
I recently met 90-year-old Norah at the Phoenix centre in Holmfirth to learn about the energy bill revolution. Does my right hon. Friend agree, however, that one of the best ways of reducing energy bills for those facing fuel poverty is to insulate their homes?
I agree completely that energy efficiency measures are one of the best ways of providing long-term sustainable support to the fuel-poor. I completely understand and appreciate the motives behind the energy bill revolution, although hypothecation itself may not always be the most effective way of managing public expenditure.
What action is the Secretary of State taking to ensure that the new fuel poverty target will address the specific needs of people affected by severe and devastating rare conditions such as muscular dystrophy and neuromuscular conditions?
I am grateful to the hon. Lady for the question, and that is one of the reasons why, in developing the fuel poverty strategy, we are working across Government. She is right to say some health conditions may require people to be at home for longer, and they may not be of pensionable age and getting the winter fuel allowance. I hope we can look at that issue during the finalisation of the fuel poverty strategy.
With Angela Merkel’s forthcoming speech to both Houses of Parliament in mind, does the Secretary of State agree that it would be very wise and sensible to incorporate energy more thoroughly into the single market, and what steps is he taking to bring that about?
I discussed these issues with the German Government in Berlin yesterday and I agree with my hon. Friend that completing the internal market, with more interconnection and work on network codes and sharing, is part of the answer to making Europe more self-sufficient in its own energy and in reducing our dependence on fluctuating wholesale costs.
I draw attention to my entry in the Register of Members’ Financial Interests—and, indeed, also in The Mail on Sunday. The Secretary of State was good enough to welcome the GLOBE conference today in Washington and the fourth legislative study. Will he also welcome the forest legislators initiative that is going alongside that, which is looking into REDD-plus and the expansion of that work in Latin America and Africa in particular?
First, may I pay tribute to the hon. Gentleman for the work he does on forestry and the contribution he has made? I am not aware of the details of the legislative initiative he mentions, but it does sound very sensible. This Government have done a huge amount to support efforts to tackle deforestation in Latin America and elsewhere and I will certainly take note of what he said.
Under the current business rates arrangements, businesses have very little incentive to increase energy efficiency as investing in premises can lead to higher business rates. Did the Secretary of State see last week’s British Retail Consortium proposals for modernising business rates, suggesting a scheme whereby energy efficiency and improvements are rewarded with lower business rates, rather than penalised? Will he discuss these proposals with his colleagues in government?
I am grateful to my hon. Friend for her question. I did note those proposals and I thought they were very interesting. It would be unwise of me to prejudge the work that will be done on them in other Departments, including the Treasury, but the Minister of State, my right hon. Friend the Member for Sevenoaks (Michael Fallon), has a meeting later today to discuss the proposals with business representatives.