Energy and Climate Change
The Secretary of State was asked—
Energy Markets (Competition)
From day one of the coalition we have worked to improve competition in energy markets. Deregulation stimulated growth in the number and size of small independent suppliers, competing with the big six we inherited, and we have taken action to encourage switching, including easier switching, faster switching and collective switching. Ofgem’s retail market reforms and market maker obligation are also improving competition in both wholesale and retail markets. However, because we believe more should be done, I asked Ofgem and the competition authorities to make an annual assessment and last week we backed its proposal for a market investigation reference.
I welcome the referral to the Competition Commission. In an article earlier this year the Secretary of State criticised Labour’s proposals to put up a ring fence between the generation and supply arms of the vertically integrated energy companies saying it would push up prices. Is he still ruling out the introduction of a ring fence?
What we need to do in these matters is to go on the evidence and recommendations of the competition experts. I would not prejudge the market reference—let us see what it says—and I am glad the hon. Lady welcomes that, but one of the things the Opposition have failed to recognise is that there may be problems in the gas market, where there is not vertical integration. The Opposition have been completely silent on this matter, and I am not surprised as I am afraid their competition policies in this area have been appalling.
Is the Secretary of State not embarrassed that despite his Government’s talk of market forces, competition, switching and incentives, it took the threat of intervention from a future Labour Prime Minister to bring about the prospect of some relief—[Laughter.] The Secretary of State laughs but it took that to bring about the prospect of some relief for hard-pressed energy consumers.
I think the hon. Lady ought to talk to the leader of her party because when he was doing my job he said, after many years of increases in gas and electricity prices that were higher and faster than they have been under this Government:
“As I have said before in the House, I am not in favour of referring these matters to the Competition Commission.”—[Official Report, 25 February 2010; Vol. 506, c. 444.]
When the Leader of the Opposition had the chance to take this measure, he did not.
May I draw the Secretary of State’s attention to the fact that the Institute for Public Policy Research has said that increasing competition in the energy market will produce efficiency savings which could mean £70 a year being knocked off the average bill? Why will he not back Labour’s plan to break the domination of the big six, require them to sell power into a pool, get new businesses into the market and cut bills for consumers and businesses?
Some Labour Members are suffering from amnesia. It was the Labour party that created the big six. It was this coalition that deregulated to enable new independent suppliers to come into the market—11 new suppliers coming in since 2010, and there has been a big increase in the number of customers for the smaller suppliers, who are taking on the big six. It is this party and this coalition Government who have been the force behind competition, while Labour Members are the friends of the big six.
It is always interesting to hear about this because when the Leader of the Opposition talks about an energy price freeze, he is not absolutely clear that it will go ahead. When he was on the “Today” programme in September 2013, he was asked what would happen if wholesale prices were to rise, and he admitted that the price freeze might not go ahead, which is not something that the right hon. Member for Don Valley (Caroline Flint) is prepared to admit. I have to say that we need to read the small print of this price freeze because it might not happen. It is a con.
The Secretary of State wants to have his cake and eat it. Does he not see that the Ofgem report and the referral to the competition authorities makes it clear that the market is just not working in the interests of consumers? It is going to take at least 18 months for them to report, and then he is going to have to implement the recommendations. Why does he not just do the decent thing and introduce a price freeze now?
We have been reforming the energy markets since day one, but we were not happy enough with the results and we wanted to do more, because of the mess we had inherited. That is why we asked the competition authorities to look at this matter. They have proposed a market investigation reference, and we are completely behind that. Neither we nor Ofgem are going to stand still during that 18 months, however. We are going to be working on trying to improve the markets even before the market investigation reference reports. We are being really active on reducing switching times, for example. We also want to push the smart meter roll-out programme, which will help people, and the Ofgem retail market review will complete and implement its proposals, including taking customers off dead tariffs. We have acted, we are acting and we will continue to act on behalf of customers. The last Government failed to do so.
Will my right hon. Friend take this opportunity to examine the role of the regulator, Ofgem, in improving and increasing competition? How is it that above-inflation—sometimes double-digit—price increases have been allowed, when they are not allowed in other sectors, such as water?
Price controls were taken off this sector in 2002, so Ofgem does not have the power to control prices. Hon. Members should remind themselves that it was the Labour party that took the price controls off. We want to ensure that the regulatory framework and the policies are correct. That is one of the reasons we are pushing the policies that we have adopted. It is also interesting to remind colleagues of the record of the Labour party and its leader. When he was doing my job in 2009, the right hon. Gentleman talked about reforming Ofgem, saying that
“the regulator needs stronger powers to deal with abuse, and the Bill will specifically act to prevent the exploitation of market power by energy generators.”—[Official Report, 24 November 2009; Vol. 501, c. 412.]
What went wrong with Labour’s plans when it was in government?
If we are to improve the energy markets, we must also increase capacity, as this Government have rightly noted. Does the Secretary of State welcome the fact that my local enterprise partnership is launching a plan for a skills centre in Berkeley, so that we will have the skills to deliver the extra capacity that we need?
My hon. Friend is absolutely right. We need to see a big investment in the skills and expertise of our young people, as well as in the existing work force. This is a great opportunity, given the massive investment taking place in our energy sector, and we are going to need all the young people that the skills centre in his constituency can deliver.
Does the Secretary of State agree that increasing competition in the energy market, as in any other market, requires the Government to remove red tape and regulation and the barriers to entry so as to increase the number of new entrants to the market?
I am grateful to my hon. Friend for that question; that is exactly what we did in 2010. Since then, we have seen a boom in the number and size of independent suppliers taking on the big six that Labour created. As Ofgem and the competition authorities’ assessment makes clear, however, we need to see more progress. That is why I am strongly behind the market investigation reference.
There is already a cash gap between what the big six are planning to spend on infrastructure and the amount that needs to be spent. Does my right hon. Friend agree that a price freeze would serve only to discourage competition, which would reduce investment and place a greater burden on the taxpayer and the consumer?
My hon. Friend is absolutely right, and this point is not discussed enough. When we talk to the industry, and to investors in the UK and internationally, they tell us that one of the things they fear most from Labour’s price freeze is that it would prevent them from going ahead with the investments that they want to make. A price freeze would undermine investment; it would represent a lurch back to the ’70s. Let us look around Europe to see what has happened when price freezes have been implemented. Hungary implemented a price freeze—indeed, a price cut—recently, and investment there has plummeted. All that is needed is a grasp of standard economics, but the Labour party does not appear to have even that.
As the Secretary of State is well aware, competition in our energy markets is partly governed by EU regulations, particularly those relating to state aid. In the light of the announcement by UK Coal yesterday, will he confirm what the trade unions learned in talks with the Commission this week—namely, that the attitude to Government support to prevent the immediate closure of the two deep pits at Kellingley and Thoresby is much more flexible than his officials’ interpretation seems to suggest? Given that the amount of support required would be less than one tenth of the £700 million that the miners’ pension scheme paid to the Government last month, does he agree that he and his officials should be taking urgent action to prevent immediate job losses?
The energy Minister, my right hon. Friend the Member for Sevenoaks (Michael Fallon), has been working tirelessly on this matter with our officials. I hope the Opposition will recognise the huge efforts that officials in my Department, under his leadership, have been putting into it. We have been talking to all parties, including the Commission, to make sure that interpretations are based on the law, and we will do whatever we can to help.
For competition to work best, domestic consumers have to be able to switch their suppliers easily. Residents in Kettering want to pay the lowest prices for their electricity and gas, but many constituents, especially those who are elderly or not online, find the complexity of bills overwhelming and far too confusing. What can the Secretary of State do to take the hassle out of switching supplier?
My hon. Friend makes a good point. One aim of the retail market review put forward by Ofgem was to reduce the complexity and confusion in the amount of tariffs, which many people thought was a barrier to competition and switching—the previous Government refused to do this. But I do not think we can rest there, and one reason I have been so supportive of things such as collective switching and engaging with the third sector—Age Concern, Citizens Advice and National Energy Action—to develop the big energy saving network is to ensure that we are reaching out to those people who find switching, even when the tariffs are more simplified, a difficult process and a hassle. We are doing everything we can to make sure that the benefits of switching and competition can be enjoyed by all.
Yes, have your conversation with the man who is dealing with coal, because this is very important. The Secretary of State referred to lurching back to the ’70s, but this is about the fact that we are reaching the end of an era. There will be one pit left if this decision goes through and it is all about some money. An idea has been put forward from those on the Labour Front Bench regarding the pension fund, but another solution could also be used. Why is it that the oil companies are being encouraged to take tax breaks in order to exploit those narrow seams of oil which are uneconomic? We have more than 100 million tonnes of coal beneath our soil, so surely he could use the same sort of system, with the EU and anybody else, to stop the demise and the closure of the last three remaining pits.
We are working tirelessly on this. We have to make sure that we get a solution that all parties can sign up to, that provides value for money and that will actually work. We are trying our best, but the hon. Gentleman should know that there are genuine economic and geological issues, and other difficulties, involved. My right hon. Friend the energy Minister is trying to resolve this, working with everybody involved.
We recognise the competitiveness concerns of electricity-intensive industries, which is why the recent Budget included new compensation for the costs of the renewables obligation and feed-in tariffs, and capped the carbon price support mechanism. We are also providing compensation for the costs of the European Union emissions trading scheme, and to date we have paid out £31 million to 53 companies.
Following the £7 billion package of support for the energy-intensive industries, EEF, the manufacturers’ organisation, said that it will
“help to level the playing field these companies need to compete effectively with others around the globe, and keep production here in the UK.”
What estimate has my right hon. Friend made of the potential for reshoring in the chemicals sector, now that conditions are so much more attractive to investors?
I am grateful to my hon. Friend for her question. By 2018-19, British business will have saved some £4 billion from the measures we have put in place. We have cut green taxes for households and now we are cutting green taxes for business. That should be a further incentive for the chemical industry not only to grow in this country, but to bring further investment back to the UK.
Will the Minister take this opportunity to guarantee to energy-intensive industries that the compensation for the carbon floor tax that this Government introduced will be backdated to the date from which the Government have promised compensation, which is April 2013?
Carbon price floor compensation is something that we are still pursuing with the Commission in Brussels. I am hopeful that that will be agreed soon. The state aid clearance procedures are lengthy in these cases. Obviously, we are continuing to press the case for backdating.
The carbon price floor tax introduced by this Government makes it four times harder for UK industry to compete with EU competitors. How many companies have received compensation for the carbon price floor tax? Is it more than one or fewer than one?
We have introduced compensation for the EU emissions trading system, as I have said. We have already paid out compensation to more than 50 companies in the steel, paper and chemical industries. Some of the major industries concerned have welcomed the further proposals that the Chancellor announced in the Budget, including Tata Steel, which said that the measures that were announced in the Budget
“will make an important difference to Tata Steel in the UK.”
Energy Bills (Park Homes)
Unlike previous schemes, park homes are now eligible for the energy company obligation, and some park homes have already begun to benefit from support. Additionally, we have made it possible, since February this year, to create an energy performance certificate—an EPC—for a park home, and this lifts a key barrier to accessing green deal finance for park homes.
I thank the Minister for his reply, and it is heartening to hear that some progress has been made after the very many questions that I have asked on the subject. I know that he will agree that we are talking about some very vulnerable people who are terribly exposed to energy prices. There is an imperative to get better insulation. How widespread is the publicity about this help, and has he found a way around the joint metering for electricity and water and the subsequent recharging, which often seems to add even more to their energy pricing?
The hon. Lady raises a valid point. Frankly, successive Governments have failed to act sufficiently for park home residents. Although the measures that we have taken move the agenda on, we accept that there is more to do, and we want to do more to help park home residents. Providing better information and support is part of that strategy, and we are making more information available to residents. We are looking to see what further steps we can take to help to insulate the homes of park home residents.
One problem with energy in many park homes is that the supply is in the name of the operator of the site, who then sells on the energy to the tenants. One quirk of that is that under the warm home discount the name of the tenant must be on the bill, and it is not in these cases, so although these tenants would otherwise qualify, they do not in fact get the warm home discount. Will the Minister look at that and see whether there is a way around that anomaly?
I fully accept the hon. Gentleman’s point. That has made it difficult for successive Governments to reach out and act effectively to help park home residents. We are determined to try to crack this, and we are looking carefully at exactly the point he makes.
14. What steps he is taking to help households with their energy bills. (903474)
There are three main actions we are taking to help households with energy bills, including direct financial help, improving competition and energy efficiency. With direct financial help, the coalition introduced the warm home discount, which will take £140 off the energy bills of over 2 million of the poorest households this year. We permanently trebled cold weather payments, and we continue to spend over £2 billion a year on winter fuel payments. Last December, we reviewed Government policy costs, to take an average of £50 a year off a household’s bill.
Today, 3.4 million people pay their energy bills with their credit cards. Although some will do that to manage their finances efficiently, half report that they are doing it because of the rising costs of energy. Is it not about time we had a price freeze?
A bit of a non-sequitur there! We have made it very clear that we are doing everything we can to help the people on the lowest incomes, and we shall shortly be publishing our fuel poverty strategy, the first in more than a decade. It is interesting to note that when we considered how fuel poverty was measured under the previous Government, we found it was very inaccurate. We have therefore improved it so we can get to the people who are really struggling. The hon. Gentleman knows in his heart of hearts that the price freeze is a complete con. It will not help consumers, but it will undermine competition and prices will end up going up.
The over-75s are the most likely to live in the least energy-efficient homes and are most vulnerable to cold weather, yet they are the least likely to switch energy suppliers so they often pay more than they need to. Will the Secretary of State back Labour’s call for all over-75s to be put on to the lowest possible tariff?
The Secretary of State mentioned going back to the 1970s. I hope he has seen the Office for National Statistics figures published yesterday on hourly pay rates, which showed that on average they are down 7.6%, and twice as much in construction. Why can the 36,000 households in my constituency that would benefit from a price freeze not enjoy the £120 they would have if he implemented such a freeze?
Since the Tories privatised the energy companies, things have got worse, with more than 6 million households now behind on their bills. When will the Government stop tweaking prices in the energy sector and take on the energy giants that are making billions at the expense of ordinary people in this country?
The hon. Gentleman really is suffering from amnesia. There was a 13-year period in which Labour could have done something about that and failed. In fact, Labour took price controls off. The leader of the hon. Gentleman’s party refused to refer the energy markets to the Competition Commission; this Government have done that.
Some of the highest fuel bills and worst fuel poverty are faced by people in rural areas who are off the gas grid and by the small but even more vulnerable group of people who do not even have mains electricity. Is my right hon. Friend going to introduce some targeted measures to help these vulnerable groups?
My right hon. Friend is absolutely right to point out that many households that are off the gas grid and the small number that are off the electricity grid suffer high energy bills. Interestingly, the new analysis we have done for our fuel poverty strategy shows much more clearly than the measures used under the previous policy that that is a key group of people we need to help. That is what we will be doing very soon when we produce our draft fuel poverty strategy, in which he will see a number of measures.
Further to the question asked by my right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith), when will off-grid rural residents get a fair share of energy company obligation spending? Will the Secretary of State ensure that rule changes do not create another loophole by focusing on off-grid customers in general rather than off-grid rural customers in particular?
The private rented sector has the highest proportion of the most energy-inefficient homes, which leads to high energy bills and fuel poverty. Does the Secretary of State agree that we need a robust and enforceable minimum standard for all such homes, and will he explain the failure of the Government’s proposal to specify that that minimum standard should be at least an energy performance certificate band E for all homes?
I am grateful to the hon. Lady for that question. She will know that this Government brought in a power in the Energy Act 2011 that would allow us to introduce legislation and regulations for the private rented sector. We plan to consult on that soon and take the sort of measures I think she will support.
The most sustainable way to cut bills is to improve the energy efficiency of our homes. On 16 January the Minister of State, Department of Energy and Climate Change, the right hon. Member for Bexhill and Battle (Gregory Barker), told the House:
“we have extended the ECO out to 2017 and increased the number of people that it will help.”—[Official Report, 16 January 2014; Vol. 573, c. 987.]
Will the Secretary of State explain why the impact assessment published by his Department on 5 March says that 440,000 fewer households will get help with energy efficiency following the changes to the ECO?
The Government formally reviewed Ofgem’s role in 2011. Since that review, we have strengthened its powers to investigate and penalise market manipulation, and Ofgem has taken firm action to improve competition, including reforms of the retail and wholesale markets. Last week it proposed referring the energy markets to the competition authorities—the first ever such reference.
Finally, one might say, Ofgem has referred the six big energy companies to the Competition and Markets Authority. If the Minister reads the small print in Ofgem’s statement, however, he will find that it does not cover power generation. Is that not another failure by Ofgem to deal with the problem properly? It is not possible to deal with the issue if power generation is left out. Is it not time that Ofgem had the plug pulled on it and we had a real regulator with teeth?
I am afraid that the hon. Gentleman is not right about that. This reference is of the energy market; it includes power generation. Simply winding up Ofgem would mean that another regulator had to be set up in its place. Labour set up Ofgem, and now they want to abolish it, but they would have to set up another regulator. They seem to have a quango fetish.
Does the Minister of State agree with the consumer report published by Which? at the end of last year which said that consumers had been put out by £4 billion a year since 2010? If he does agree with that report, does he think it is consistent with the regulator having done a good job, as he has just assured the House it has done?
Last December the Secretary of State declared that Ofgem was fit for purpose. Is not last week’s reference to the CMA evidence that it is not fit for purpose and needs to be scrapped?
It is Ofgem that made the reference, so I do not follow the hon. Lady’s logic. We have strengthened the powers of the regulator, and for the first time ever, the regulator has referred the energy markets to the competition authorities. That is evidence of a strong regulator doing its job.
For the security of electricity supply, we are taking short, medium and long-term actions. In the short term, National Grid and Ofgem are implementing a reserve of power stations—stations that would otherwise be mothballed or closed—to be used if necessary, and we are actively supporting new proposals for interconnectors with Europe. In the medium term, we have finalised our plan for a capacity market, and plan to run the first auction for capacity later this year. In the long term, we have introduced our electricity market reform which is leading to the current boom in low-carbon energy investment.
My right hon. Friend will know that under the previous Government, the number of energy suppliers halved, which did nothing to promote energy security. Will he set out the steps that this Government are taking to ensure that new entrants come into the marketplace to promote competition and energy security?
My hon. Friend is right. The generating market, to which not enough attention is paid, is becoming more competitive. The amount of electricity traded on the day ahead market has increased from 5% to more than 50%, which has really improved competition, and Ofgem’s measures to create more liquidity in the forward market, which take effect next week, will enable the entry for which he asks.
Given the public backlash throughout the country against onshore wind farms, will the Secretary of State update me on future investment for tidal and wave energy, which is a much less intrusive form of renewable energy that can provide a constant energy supply that would help to deal with security in the future?
My hon. Friend and I may disagree about onshore wind, as I have visited many popular sites from which local communities see real benefits, but I agree that tidal and wave power has a big future. The Government, and especially the Minister for climate change, my right hon. Friend the Member for Bexhill and Battle (Gregory Barker), have been active by allocating £20 million for tidal arrays and ensuring that the EU provides funding for other projects. Generous support has also been given through the renewables obligation certificate and contract for difference systems.
Given the almost complete lack of movement on investment for all the permissioned sites for gas-fired power stations, the Department’s estimates of spiralling costs for the capacity market mechanism, the state aid difficulties with proposals for that mechanism and the mothballing of existing power stations, will the Secretary of State review the case for a strategic reserve mechanism, which his Department suggested in 2011 would be a far less expensive and more secure method of supplying future capacity?
The hon. Gentleman is very knowledgeable about such matters, but our plans for the capacity market are on schedule, so the fears that he voices are not there. He talks about the benefits of a strategic reserve, which we debated during the passage of the Bill that became the Energy Act 2013, but what National Grid and Ofgem are doing in the short term has similarities with a strategic reserve, yet avoids the disadvantage of creating perverse incentives for the wider energy market.
Does the Secretary of State agree that security of supply will not be enhanced by the closure of two of the last three deep mines, Kellingley and Thoresby, and open-cast mines? Bearing in mind the fact that the Government have taken £4.5 billion from the mineworkers’ pension scheme, including £700 million this year, surely it is not beyond their imagination to use the miners’ own money to support what is left of the industry.
Ogfem tells us in its most recent energy capacity report that supply will fall by about 5% between 2012 and 2016, leaving an estimated capacity margin of between 2% and 4% in 2016. Will the Secretary of State confirm that contingency planning is allowing for that and that a cold winter will not cause the industry to have to close shifts?
I can confirm that. Obviously, we have been preparing for that for some time and working with the industry, National Grid and Ofgem. As I said, we have short-term plans with National Grid to have a reserve of power plants, as well as our longer-term reforms regarding the capacity market, so I can confirm that the lights will stay on.
Under this Government, just one new gas-fired power station is being commissioned and three power stations have been mothballed. Last week, National Grid warned that any delays to the planned capacity mechanism auction in December could lead to brown-outs throughout the UK. The Secretary of State indicated earlier that the plans are on track, but will he clearly confirm once and for all that there will be no delays to the auction later this year?
We are on track. We are working both within the Department and across Government. We saw the Chancellor of the Exchequer confirm in the Budget that all the remaining issues are being taken forward in secondary legislation. The right hon. Lady will know that there is a state aid case at the Commission. We do not control the Commission—no Government ever do—but our communications and partnership working with the Commission have been very fruitful.
My understanding is that the auction can be held before that, but let me ask another question. Even if capacity auctions are not delayed, they will not be operational until 2018-19, which is why we need the supplemental balancing reserve in time for the capacity crunch this winter and the next. The timetable for that has already slipped, meaning that some plant cannot be brought out of mothballing in time for this winter. Does the Secretary of State believe that the supplemental balancing reserve is still required, and if it is, when will it be operational?
As the right hon. Lady will know, Ofgem has to consult on this. It is expected to complete and announce its plans in May. If, as I expect, Ofgem believes that we should continue for this winter with a supplemental balancing reserve, the working assumption is that the auction would follow fast behind that.
Over 600,000 homes have so far received energy-efficiency improvements as a result of the coalition’s energy company obligation and green deal initiatives. Green deal assessments are stimulating interest. There had been more than 160,000 green deal assessments by the end of February, and yesterday we announced an additional £88 million from the Government to drive a street-by-street roll-out of the green deal under the communities scheme. We expect the green deal market to continue to expand during 2014.
My constituent, Mr Davis, has late onset spina bifida. He needs a wide range of electrical equipment just to live his daily life, including an electric bed and wheelchair, and machines to keep his legs from swelling. Because Mr Davis has an occupational pension and is not in receipt of means-tested benefit, he cannot get any of EDF’s energy-efficient schemes or special tariffs. As a result, he pays £250 a month for electricity. After this week’s Work and Pensions Committee report criticising the Government for targeting disabled people, what can the Minister do to help Mr Davis?
I am very concerned about the point that the hon. Lady raises about her constituent. Obviously, there are some specifics involved—for example, how much his occupational pension is. Clearly, she is concerned and I would be happy to look at the matter in more detail if she would like to meet me.
The Minister keeps making announcements about how well the green deal is going, but it does not seem to be going very fast. No one today has mentioned smart metering. Many of us thought the way to make our constituents more conscious of how much they are spending on energy and reducing it would be through smart metering. How is smart metering rolling out now?
We have one of the most ambitious smart metering programmes in Europe, which we will roll out over this decade. The hon. Gentleman is right—the increasing deployment of smart meters will certainly work well with the green deal. If he talks to some of the entrepreneurs and the new companies coming into the market, which are backing the green deal and getting behind it, he will get a very encouraging picture indeed. There is a huge amount of innovation happening that we should all be proud of.
The sector with the most energy-inefficient homes is without doubt the private rented sector, with thousands of people living in cold, inadequate homes that are expensive to heat. The hon. Member for Brighton, Pavilion (Caroline Lucas) referenced the fact that the Energy Act 2011 placed a duty on the Secretary of State to introduce a minimum standard for this sector from April 2018 at the latest. The Secretary of State was worryingly equivocal in his answer. Will the Minister therefore give a cast-iron promise today that this duty will be fulfilled, without loopholes and with the minimum standard at energy performance certificate rating E by 2018?
We would not have brought forward that measure in the Bill had we not intended to fulfil it. This is a coalition commitment, which we are proud of. We will make sure that it is implemented properly and we will consult appropriately. We are proud of that Bill and we are going to implement it.
Since the last Question Time we have continued to see strong investment and growth in Britain’s low-carbon electricity sector. Last year, for example, renewables accounted for a record 14.8% of all electricity generated in the UK, a 28% year-on-year increase. The news that Siemens and Associated British Ports are to invest £310 million in their wind turbine factories in Hull underlines the fact that the UK is the best place in the world to invest in offshore wind. On bills, we received the competition report from Ofgem and the competition authorities and strongly support the proposed market investigation reference. On climate change, we received the second of three reports from the Intergovernmental Panel on Climate Change, which confirmed that climate change impacts are already occurring on all continents and across the oceans. It should now be clear to everyone that unless we take strong action on climate change, the dangers to human health, food security and the global economy will become intolerable.
The Secretary of State recently spoke at a renewables conference in Edinburgh. He correctly highlighted that, with a third of the support for renewable energy going to Scotland, which has less than a tenth of the population, consumers in all parts of the UK contribute to, and benefit from, Scotland’s renewable energy potential. Does he agree that such pooling and sharing of energy potential and resources, rather than Scotland leaving the UK, is the best way of getting the most cost-effective low-carbon energy for my constituents and his?
I am delighted to say that I could not agree more. The hon. Gentleman is right that the single energy market across Great Britain is a source of benefit for all British citizens, ensuring that we have cheaper and more secure energy and enabling us to go green much more effectively. Rather than being independent, our energy systems are interdependent. We are better together.
T4. Does my right hon. Friend agree that any Government-imposed price freeze on energy companies would be counter-productive, not least because prices would be likely to rocket afterwards, and in the meantime the discouragement of investment in the sector would be deeply damaging? (903490)
My hon. Friend is absolutely right, but I think it is even worse than he says, because a price freeze would reduce competition. Not only would the big six put up their energy bills after the price freeze ended, but there would be less competition in the years ahead.
T2. Like many people across the country, I am suffering at the moment as a result of the poor air quality. Does the Secretary of State think that the poor air quality is due mainly to sand or to emissions from power stations in other parts of Europe? What is he doing with his European Union counterparts to ensure that we get energy security in Europe, because of the threat of Russia turning off energy supplies, and to ensure air quality in Britain by having cleaner power stations? (903484)
I am sorry that the hon. Gentleman is suffering—as he can see, I am too. He makes a valid point, because air pollution is a serious issue. Although it is the responsibility of my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs, we take it very seriously. Most analysis shows that the air pollution that is most damaging in UK cities comes from the transport sector, but clearly we will do all we can. It is yet another good reason for going green.
T6. Communities to the east of my constituency are facing proposals for two 80-metre wind turbines. To add to their misery, proposals are in the pipeline for a further 40 wind farms across York in the council’s draft local plan. Given that we have already achieved the Government’s target capacity of 13 GW for onshore wind, including those in the planning process and those that have planning permission, will the Secretary of State agree to look again at the subsidy for onshore wind and attempt to rebalance it in favour of other renewables? (903492)
I have to tell my hon. Friend that we are favouring other renewables. Offshore wind and other renewables get much higher strike prices. With regard to the spend from our low-carbon electricity budget, under the levy control framework they get more support because they are less mature technologies. As the technologies mature, we have been reducing support, whether for solar or onshore wind, in particular. Onshore wind is playing a vital role. It is the cheapest large-scale renewable technology, and I would not want to do anything to reduce its deployment.
That last answer was very interesting because
“Onshore wind is by far the cheapest large-scale renewable energy source that can be deployed at significant scale.”
Those are not my words, nor the words of the onshore wind industry, but those of the Department of Energy and Climate Change. Yet it was reported this week that the Prime Minister wants, in effect, a moratorium on onshore wind. What impact does the Secretary of State think such loose talk has on investment, and does he support the Prime Minister on this issue?
The coalition’s policy is to continue to support the deployment of onshore wind. We already have 7.2 GW operational—a very big increase under this coalition—as well as 5.2 GW that have been consented and 6.5 GW in planning. We do not expect all that to come forward, but it does suggest that investors believe that Britain is a good place for onshore wind.
I heard with interest the Secretary of State’s answer which demonstrated how European support for renewable green energy makes a substantial contribution to energy security. Is he surprised that climate change sceptics often seem also to be Eurosceptics?
T3. The Secretary of State will know that almost alone among advanced economies, the UK economy is still smaller, and our industry is still producing less, than before the global financial crisis. Does he agree that strategic industries such as steelmaking are essential for growth that is more manufacturing-based and investment and export-led? While the Budget announcement of relief on the rising costs of the renewables obligation is very welcome, two years is too long to wait. Will he seriously consider the case that Tata and other energy-intensive users are making to bring this in sooner? (903486)
Tata Steel has made it clear that it welcomes the announcement in the Budget. It is important not to promise a scheme that could not necessarily be delivered by April 2015, because these schemes, like the others, take time to receive state aid clearance in Brussels.
The process is that applicants must first have a licence and then receive planning permission from the local planning authority. They then need authorisation from the Health and Safety Executive for the method of fracking, permits from the Environment Agency concerning the protection of water and the environment, and, finally, a consent from the Department. The key to that process is that the major decision within it is local. It is a matter for the local planning authority to decide whether the application, on its merits, is appropriate for that particular site.
T5. Almost 5,000 households in my constituency are living in fuel poverty. Apart from increasing energy bills by an average of £60 this year and cutting insulation projects by 90%, what is the Secretary of State doing on this issue? Please do not refer to the green deal, which is a complete flop. My constituents want a price freeze. Why does he prefer energy company profits over people who cannot afford to heat their homes? (903491)
This Government are absolutely determined to do more for the fuel-poor. That is why we are bringing in the first refresh of the fuel poverty strategy in over a decade and doing more and more to help the vulnerable. We do not just want a cosmetic price freeze that would chill investment; we are taking practical measures to help people this winter by reducing their bills by £50 and paying the warm home discount, with up to £135 off bills for over 2 million of the most vulnerable.
Despite much positive news in recent weeks, Ministers will be aware of the concern in the Yorkshire and Humber region following the decision in the recent funding round not to support Eggborough in converting to biomass. Will the Minister update the House on the future of biomass generation?
Biomass generation is one of the technologies that is receiving support under our final investment decision renewables round. We had some 16 applications, which include biomass generation, and we hope to be able to confirm the first investment contracts under that regime this month.
There are 4,627 households in my constituency living in fuel poverty, yet across the nation only 33 people signed up to the green deal last month, the lowest level in any month so far. Does the Minister agree that that is simply unacceptable?
Unfortunately, the hon. Gentleman is confusing green deal finance, an option for everyone who does the green deal, with the actual installation of green deal measures. As I said earlier, over 160,000 people have benefited from green deal assessments, over 80% of those people are installing measures and over 600,000 people have benefited from the combination of the energy company obligation and the green deal. I would say to him, wake up and read the real figures.
One of the most valuable initiatives of the previous Labour Government was the publication in 2006 of Nicholas Stern’s review of the economics of climate change. In view of what the Intergovernmental Panel on Climate Change had to say this week, would it be worthwhile to revisit the conclusions of the Stern review and to update it, so that we see the true threats, but also the opportunities, of climate change in this country?
My hon. Friend is right that commissioning the Stern review was one of the better things that the previous Government did. It very much feeds into our policy. He will be interested to know that as we go ahead to the September summit of the UN Secretary-General, Ban Ki-moon, for Heads of State to discuss climate change, the Government have commissioned a new report, working with a number of other countries across the world. It will look at the benefits and opportunities in tackling climate change and is called, “The New Climate Economy”. It will be presented to Heads of State by the former President of Mexico, President Calderon. We believe it will be very influential in getting political momentum at the highest level behind action on climate change.
The Minister will be aware that a recent London assembly report revealed that 76% of disabled Londoners are having to cut back on their heating to be able to afford the bills. What realistic steps are the Government taking to protect vulnerable groups in fuel poverty?
Very practical steps—we are now paying the warm home discount, which will reach a record 2 million people this winter. That is in addition to the other measures of winter fuel payments for pensioners and cold weather payments when necessary. We will be publishing our fuel poverty strategy soon, which will look thoroughly at the whole landscape to make sure that we are doing as much as we can.
The survival of UK Coal and Kellingley colliery in my constituency depends on all parties bringing something to the table, including UK Coal, Harworth Estates, the Pension Protection Fund, the unions and the Government. Will the Minister update the House and my very worried constituents on what the Government are doing to ensure the survival of this important industry? Will he also update the House on the progress of the talks?
On 21 March, new proposals for a managed closure of the two collieries—not survival—were submitted to the Government on behalf of a number of interested parties and supported by the existing UK Coal management team. We have been considering those proposals with interested parties and with the Commission in Brussels. I am fully aware of the urgency of the situation and will continue to keep the House informed.
The Secretary of State rightly spoke of the importance of last week’s IPCC report on climate change. Will he tell the House of any new policy he is considering in the light of that report as a way of advancing progress from the UK on these matters?
I think that the most important thing we are doing at the moment on this issue is trying to get EU-wide agreement on the energy and climate change package for 2030, including a very ambitious binding target on greenhouse gas reductions, which will be binding on the UK as well as other member states. We have been leading that, and last year I set up the green growth group to get all the ambitious states together. Following the March Council, I am very optimistic that we will get agreement on an ambitious package for Europe and the UK at least by October.
The latest quarterly figures reveal that the share of the UK’s electricity generated from renewable sources rose year on year from an eighth of our electricity supply to a sixth. Does my right hon. Friend agree that we need to go further in reducing carbon emissions from our energy supply and that, given that the largest share of that increase came from onshore wind, that should play a key part?
If we can get away from the green deal for a bit, we can talk about 1,300 jobs that are going to go in two of the last three pits in Britain—people who work in the blackness of a coal mine. I want to know the answer to a question that Ministers have been asked on three separate occasions: was there a proposal to use the money from the mineworkers’ pension fund—not the protection fund—in order to save these two pits? Was it raised with the EU? What is the answer? It is time the Government came clean.
Let me be very clear: these issues are being and have been discussed with the unions. I had discussions with the unions last week and we continue to discuss the proposals with the Commission. Any proposal for taxpayer support would have to show good value for money and it would have to be for a clearly defined period. We continue to discuss the proposals for a managed closure with all the parties involved.