Energy and Climate Change
The Secretary of State was asked—
Household Energy Bills
Energy bills remain a worry for many, so we have three main ways of helping households: giving direct financial help, promoting competition and enabling energy efficiency. Our financial help includes the £2.15 billion winter fuel allowance for pensioners, and more than £31 million will be spent this winter on providing assistance to more than 2 million low-income and vulnerable households. Although there remains room for improvement, energy markets are more competitive than they were in 2010, enabling many people to save around £300 a year by switching supplier. Our energy efficiency policies, which provide permanent cuts to bills, have improved the energy efficiency of more than 1 million homes, enabling us to meet our target earlier than expected.
There is indeed room for improvement. The Children’s Society tells me that there are 2,200 children in families that are trapped in energy debt in my constituency of Wythenshawe and Sale East, yet Which? says that given the global changes in commodity prices, energy companies could be driving down household bills by £164; does the Minister agree with it?
I certainly agree with Which?, which has welcomed the referral of the energy market to the Competition and Markets Authority—something that we have backed. The Leader of the Opposition, when he was doing my job, failed to back such a referral on three occasions. It is vital that the cuts in wholesale costs are passed to consumers, and we are on it.
The Children’s Society tells me that there are 3,300 children in families that are in energy debt in my constituency, yet only last week, Ofgem estimated that household bills could be cut by £114 because of the cost of energy. Why will the Secretary of State not give Ofgem the power to cut bills when they are that high?
The problem with the Opposition’s policy is that if we had listened to them and frozen bills, people would now have even higher bills and would be in even more debt. We are not going to listen to the Opposition’s failed energy policy. Our policy has seen bills come down, not just frozen. People can get some of the best deals by switching to the independents that we have encouraged into the market.
With the news this week that price comparison sites do not always show customers the cheapest offers because they would not get their share, and given that switching is so crucial to the Government, is it not time that we had a non-commercial Government comparison site?
The hon. Lady raises an important question, because it is vital that consumers can switch with confidence. That is why I am pleased that Ofgem has decided to toughen up the confidence code for the accreditation of switching sites. That will be a big step forward.
The report to which my hon. Friend the Member for Wythenshawe and Sale East (Mike Kane) and my right hon. Friend the Member for Delyn (Mr Hanson) referred shows that 2,300 children in my constituency live in families that have energy debt. Equally, at the other end of the spectrum, many of the high-energy businesses that sustain some of the most valuable jobs in my constituency are struggling because of this policy. What sort of policy is it that creates failure at both ends of the market?
I disagree that the policy is creating failure, but I agree with the hon. Gentleman and other Opposition Members that high energy bills need to be dealt with. The question is what is the best way of dealing with them. We have been dealing with them every single day since I took office by using competition, energy efficiency and direct financial support, and by helping energy-intensive industries. Our policies are working. Frankly, if we had listened to the Opposition, people would be paying higher energy bills.
Does the Secretary of State agree that transmission and distribution charges account for more than a fifth of many household bills? Will he press Ofgem to bear down more toughly on the charges made by the monopoly transmission company, National Grid, and by near-monopoly distribution companies all over the country?
My hon. Friend is right that network costs account for about a fifth of the average household bill. Of course, the Energy and Climate Change Committee, which he chairs, is looking into this issue and has taken evidence on it. We look forward to receiving his report. If one looks at an historical analysis of network costs as a proportion of energy bills, they have been coming down steeply since privatisation. We obviously want Ofgem to continue to bear down on them, and our regulatory regime is one of the strongest in the world.
My hon. Friend is right: a liberal approach is definitely the best. In the spirit of the coalition, we have together managed to bring down energy bills by reducing policy costs by £50, something opposed by Labour. It is often forgotten that because we have liberal markets in Britain, the UK enjoys the lowest domestic gas prices in the EU15.
New research shows an 80% fall in insulation measures for fuel-poor homes under the coalition. While the Secretary of State desperately spins about having helped 1 million households, the facts show that had the Government not weakened their policies, nearly 3 million homes would have been helped by now. When will he make energy efficiency a top infrastructure priority with the funds to match?
I am grateful for the hon. Lady’s question, although I do not recognise her figures. Energy efficiency is a top priority for the Government, and I hope that she will welcome the fact that yesterday I laid before Parliament new regulations to require landlords in the private sector to meet minimum energy efficiency standards by 1 April 2018. That will help 1 million tenants in the most energy-inefficient houses in the country.
Is not the last thing that will help household energy bills a policy that freezes prices at a level above the market, the mere announcement of which—even while the proposers are in opposition—has had a detrimental effect, distorting the markets before the policy is even implemented?
This week, the consumer body Which? added to the growing body of evidence that energy companies do not pass on reductions in wholesale costs to their consumers. Which? confirmed that cuts to consumer bills should have been larger and made far sooner. Does the Secretary of State regret that he voted as recently as last month not to back Labour’s plan to give the energy regulator the power to cut energy prices when wholesale costs fall?
This is a very important issue, and when I considered it last year, I looked at the record of a predecessor of mine as Secretary of State—now the Leader of the Opposition—when wholesale prices fell far faster and further. He did nothing. We have acted all the way. I agree with much of the analysis by Which?, especially on the need to work even harder to make our markets more competitive. The markets we inherited in 2010, with Labour’s big six, needed reform. We have undertaken that reform, and that is why the big six’s market share has fallen so significantly, and why we have backed, unlike Labour, a reference to the independent competition authority, so it can look at the energy market.
As usual, the Secretary of State did not answer the question. Will he explain why Ofgem estimated only last week that profit margins for the big energy companies are set to soar to £114 per household, citing expected future falls in wholesale costs as the reason for the increase? Is that what a functioning, competitive market looks like?
Of course we all want to see falling prices, not increased profits, and that is one of the reasons why we are increasing competition. It is ironic that Labour is now quoting Ofgem—the regulator it introduced, tried to improve and now wants to abolish. The hon. Lady and her party must come behind our policy of increased competition, must start backing the Competition and Markets Authority reference, and should change their policy in the face of the evidence. They should say that they will abide by the recommendations of the CMA and will stop playing party politics with a very serious issue.
I am grateful to you for that guidance, Mr Speaker. I received a letter from the Department yesterday saying that my question, which was then question 22, was linked with question 5, tabled by my hon. Friend the Member for Coventry North West (Mr Robinson). The Department has created great confusion which you, Mr Speaker, with your usual efficiency and consideration, are clearing up.
We have doubled the amount of renewable energy from 6.8% of electricity in 2010 to more than 14% of electricity generation.
So it is true: this is the greenest Government ever. Will my right hon. Friend tell us what proportion of that electricity is generated by onshore wind? Can he confirm that onshore wind is the most mature, least expensive, and most efficient form of renewable energy, and is actually pretty popular?
A high proportion of electricity is from onshore wind, but there is also solar—one million people now live in households with solar panels on their roofs—and offshore wind, which plays an important role. We will continue to have a strong energy mix, with a strong performance from renewables, to ensure that we deliver on our pledge, which we are committed to and are fulfilling, to be the greenest Government ever.
The Minister knows that some Liberal Democrat voices in the Government are keen on this being a green Government, but the fact is that there are climate change deniers in his own party in other Departments. Every time wind power is brought in, it is knocked down by the Secretary of State for Communities and Local Government. The Minister knows there is a subversive element in the Government who hate anything to do with renewable energy.
The hon. Gentleman is normally quite sensible, and I normally agree with him, but subversive elements are certainly not part of the current Government, as we can tell from our record. The proportion of electricity generated from renewables has doubled under this Government. We are committed to ensuring that renewables play a big part of the mix in the most cost-effective way that they can.
Will the Minister join me in congratulating Wiltshire council, which has already achieved its 2020 renewables target through a whole variety of means? Does he agree that that achievement ought to be a substantive consideration when the Planning Inspectorate decides on further applications for solar on greenfield sites?
I know my hon. Friend has a concern about solar panels being put in inappropriate places. There are appropriate places for solar to go, especially on roofs and in brownfield sites. That is, of course, a matter for a strong planning system, in which those local decisions are rightly made, but that does not take away from the fact that we have so much more renewable energy than we did just five short years ago.
On the subject of the energy mix, which the Minister referred to, is he aware that we would not be discussing this question of wind power had not the Tories shut more than 100 pits after 1984? There are three of them left. We had a big march in Kellingley on Saturday, and more than 500 people from Thoresby and Hatfield turned up demanding the state aid that he has promised for several weeks at that Dispatch Box. Will he now state emphatically that he will apply for state aid to keep those three pits open, so that they can exhaust their reserves and enable those 3,000 miners to keep their jobs? That’s energy mix—get on with it.
I admire the hon. Gentleman’s ability to get a question on coal into one on the Order Paper about renewables. I come from coal mining stock, and I have delivered support to the three remaining deep pits so far to make sure they stay open on a commercial basis, and to ensure, as far as possible within the constraints of affordability and value for money, the continuation of this mining. There is nobody who has done more than me in the past six months to make this happen. I will continue to work with all parties, including the National Union of Mineworkers, to get there.
To change the question slightly, one area in which there could be improvement is in encouraging industry to move from electricity to more renewable sources for heat and energy. Is the target of 20% being met, and what discussions has the Minister had with his equivalent in the Northern Ireland Assembly, Arlene Foster, to ensure that these targets are met across the whole United Kingdom?
If I may say so, that was a rather better question than the previous one. This is an important issue. We are working with our colleagues in Northern Ireland at an official level and throughout the Government to deliver on the commitments made, and it is important that we continue to do so.
Solar Power Panels (Installation)
Solar PV has been a major success story, with the most recent deployment figures showing a total of 5 GW of capacity across the UK, 99% of which has been put in place under this Government. The solar strategy, published last spring, set out a range of actions that will allow more businesses to enjoy reduced energy bills through installing solar PV. The changes we have made, financial and non-financial, for solar PV will make it an affordable part of our low-carbon energy mix, and we anticipate that splitting the feed-in tariff will promote rooftop solar, particularly at industrial premises.
Unfortunately, I do not have many small businesses in my constituency, so it is a tragedy when I lose one; losing MG Renewables, which had invested in a fleet of vehicles, was a matter of great regret. Will the Minister reassure the House that we will have a steady and clear set of incentives, rather than this constant changing, which makes it particularly difficult for small businesses to plan and maintain their viability? Will she talk to the Treasury and the Department for Business, Innovation and Skills to ensure that?
Small businesses are essential to economic growth, and we are determined to support them. I understand the hon. Gentleman’s point, which is about the support for solar through our feed-in tariffs. Owing to the reducing capital costs of solar, we have reduced the support. It is essential that we strike the right balance between using taxpayers’ money and supporting businesses, but I appreciate his point and will bear it in mind.
Given that we are constantly told that the reducing costs of solar panels will soon render them competitive with conventional electricity, why do we not abolish subsidies completely? Or do Ministers not believe their own projections?
My right hon. Friend is entirely right. The reduction in cost and the success of solar PV mean that, according to the industry itself, it will become subsidy free, we hope, by the end of the decade. That is because of investment under this Government. It will be something to celebrate, and something that the taxpayer, as well as everyone in the Government, will appreciate.
There are some excellent energy companies springing up in my constituency, such as Saving Energy Renewables, a PV solar panel firm, but projects are stalling because of the low-grade capacity for exporting energy from the systems. What can the Government do to ensure that companies can connect these systems and make serious contributions to both rooftop solar and deployment as part of the solar road map laid out by this Government?
Electricity consumed in the UK comes from a range of sources. In 2013, 35% came from coal, 27% from gas, 18% from nuclear and 15% from renewables, including wind generation. The “Electricity Market Reform Delivery Plan”, published in December 2013, stated our aim of achieving total UK renewable deployment of around 43 GW by 2020, which would generate about 109 TWh.
Given that the Minister cannot possibly know how windy it will be in 2017—there are huge variations in these things—or the relative price of different methods of energy generation this year, let alone in 2017, why not scrap the wind subsidies to the big corporations and allow energy producers to compete freely and produce energy at a price householders are willing to pay? Surely that would give people a much better deal.
Wind is an essential part of the renewables mix. I appreciate the hon. Gentleman’s point that it is not 100% reliable—the wind does not always blow—but that is why it is part of the energy mix and is supported by other energy sources. We are continuing as a Department to invest in the battery industry and we hope that when that industry develops we will be able to find wind more reliable, with the subsidies coming down accordingly.
Transmission lines from large wind farms such as Clocaenog in my constituency can have a severely detrimental effect on the lives of residents in the locality. What consideration has my hon. Friend given to requiring the heavily subsidised developers of those wind farms to pay for installing those lines underground?
It is an interesting question. The National Grid is responsible for surveying and implementing these matters, in conjunction with the Planning Inspectorate, and it will be for them to take that into consideration, if appropriate, for the different wind farms.
The UK has the most fully installed, operational offshore wind capacity in the world and is consistently rated the No. 1 market for investment attractiveness. The Government are supporting significant levels of offshore wind deployment which will deliver the volume necessary to help achieve cost reduction and give the supply chain the confidence to invest. The competitive contracts for difference process will also reduce cost to ensure greater scale of delivery.
Last year, despite assurances from the then First Minister of Scotland, Alex Salmond, that there would be an offshore wind development in Dundee that would have brought 700 jobs to the city, SSE withdrew the plans. Does the Minister agree that Scotland cannot rely entirely on gas and oil for its economy and cannot rely on the separatists to bring renewables to Scotland?
I agree that renewables are part of the energy mix and must be stimulated and grown in conjunction with existing energy supplies. The Scottish Government already have the responsibility for consenting to and licensing offshore wind. When the Smith commission proposals are implemented, the Scottish Government will also assume the Crown Estate’s existing role as landlord. That will give them the ability to offer more areas in Scottish waters for offshore renewable development should they wish to do so. I suggest he continues to take the issue up with the Scottish Government.
In a recent written answer the Minister told me that
“it is a priority for Government to support the development of a UK-based supply chain for offshore wind and to increase the UK content of wind farms ”,
but that she does not require developers to report on UK content. Companies in the north-east, such as Deep Ocean in Darlington, that have already invested over £400 million in production and installation facilities want to know why her Department is not being more proactive in ensuring UK companies benefit fully from this taxpayer-subsidised activity.
Notwithstanding what the Minister says about the licensing of offshore, the fact is that the financing of it is through the contracts for difference. Given that there is a four to five-year horizon between being granted a CfD and the commissioning of the first turbines, offshore developers have expressed concern over the levy control framework and, in particular, what they perceive as a budgetary cliff in 2020, with no indication of what comes thereafter. Is the Minister intending to meet developers to give them any confidence that there will be continued CfDs available after 2020?
There is more visibility about funding offshore wind in this country than anywhere in the world. We are keen to continue that, so that we are No. 1 for offshore wind. I will continue to make everyone aware of our plans. For 2020, we certainly hope that we will be in a position to do that. As the hon. Gentleman is aware, the current CfD winners will be informed on 26 February. We will all be interested in the outcome.
We have extended our successful energy companies obligation to 2017 and reformed the green deal with changes such as the green deal home improvement fund. Together, ECO and the green deal have helped more than 1 million homes become more energy efficient. As I have said, I laid regulations before Parliament yesterday to require landlords to bring their properties up to a minimum level of energy efficiency by 1 April 2018. If the House agrees these new, tough rules for the private rented sector, we estimate that around 1 million tenants will benefit from warmer and cheaper-to-heat homes.
It was almost two years ago that the then Energy Minister, the right hon. Member for Bexhill and Battle (Gregory Barker) said that he would be having sleepless nights if fewer than 10,000 people signed up for the green deal. Since then, 5,000 people have benefited from the measures—that is all. For how long is the Secretary of State seriously going to insult the intelligence of Members by saying that the green deal has been a success?
Not for the first time, the hon. Gentleman is wrong with his statistics. More than 445,000 green deal assessments have taken place, and our evidence shows that over 70%—[Interruption]—over 70% of those people having assessments go on to install measures or intend to install measures. That is far more than the hon. Gentleman talks about. For the benefit of the House, let me clarify that the figures he used relate to people who have gone through the system and used green deal finance—only one part of the green deal. Green deal assessment is a key part: it has been working and it has played forward to enable us to meet our target for insulating 1 million homes four months ahead of schedule.
I ask the Secretary of State to revisit the figures. He is making great play of them, but 80% fewer people had energy efficiency schemes last year in comparison with 2011-12. Rather than just trade figures, is it not time that the Secretary of State really looked at putting energy efficiency at the heart of his energy investment infrastructure policy?
Let me reassure the hon. Lady that energy efficiency is at the heart of our policies. That is why we have managed to achieve our 1 million target early, and why I have put forward legislation for the private rented sector, which I hoped the hon. Lady would welcome. She might be interested to know that today John Alker, acting chief executive officer of the UK Green Building Council said:
“This could be the single most significant piece of legislation to affect our existing building stock in a generation”.
I am proud that this Government have introduced that.
What specific energy efficiency measures has the UK proposed should be included in the European INDC—intended nationally determined contributions—and how will the Secretary of State ensure that, unlike the domestic green deal, a rate of success is not promised in one year when less than half of it has been achieved in two?
I think the hon. Gentleman is muddling a few things. I talked to Commissioner Miguel Cañete, who showed me the draft of the EU’s INDC—and I am afraid that it is rather more high level than the hon. Gentleman suggests. The EU’s INDC will, I think, be published and go to the Energy Council or perhaps the Environment Council at the end of this month, and it will not go into that level of detail. The hon. Gentleman might want to take up his point with the commissioner.
Government data show that more than 16,000 households in the north-east of England have spent in total £1.6 million on green deal assessments, but that only 140 have benefited from energy efficiency measures costing £500,000—a net loss of £1.1 million for householders. Will the Minister just face the facts and admit that the green deal is simply not working?
I do not recognise the hon. Gentleman’s figures. Let me gently tell him that the figures he mentions relate to people who invested in the green deal following the original assessment, and people might not have used green deal finance as a way of financing their investment. All the evidence shows that many people are using their own finances and savings; for some, it is a remortgage, and others are borrowing in other ways. I would have thought that what the hon. Gentleman, I and the whole House would be interested in is improving the nation’s building stock—not whether people use a particular form of consumer credit.
Given that energy efficiency is an important weapon for combating climate change, and given that it also lowers the energy bills of householders —particularly those on low incomes—has not the Government’s institutional meddling with energy efficiency structures not only wasted a huge amount of taxpayers’ money but actually made people on lower incomes pay more? Is not the Secretary of State’s green deal nothing but a pack of cards that contains only jokers?
I enjoyed the first half of that question, but it deteriorated into inaccuracy rather rapidly. I am afraid that the facts are against the right hon. Gentleman. Green deal assessments have been carried out for more than 445,000 people, and figures show that more than 70% of those people have subsequently installed energy efficiency measures. Furthermore, as a result of the combination of the green deal and the energy companies obligation, more than 1 million homes had benefited from such measures by the end of November. I should have thought that the right hon. Gentleman would welcome the huge success of a scheme that is permanently reducing the energy bills of so many people, and I might have hoped that he would welcome the fact that the private rented sector regulations that we are introducing today will help many tenants in his constituency.
Energy efficiency has done absolutely nothing for people who are in fuel poverty. Estonia is the only country in Europe with a higher proportion of its population in fuel poverty than Britain. I invite the Secretary of State—and I mean this helpfully—to come to my constituency, so that I can show him exactly what I am talking about. He obviously does not believe anything that he hears from Opposition Members, but if he comes to Glasgow, we can meet and I can show him.
I am always keen to listen to the hon. Gentleman. As he knows, I have read the report that he wrote on prepayment meters and their users, and am responding to it. However, his analysis of fuel poverty was wrong on at least two counts. First—as he will see when we publish our poverty strategy shortly—the energy companies obligation, along with other measures that we have taken, has already helped many fuel-poor households during the current Parliament, Those measures are a significant step forward. Secondly, the way in which we are reforming those measures is helping even more people.
The hon. Gentleman suggested that Estonia was the only EU country with a higher proportion of people in fuel poverty than Britain. I do not know whether he has looked at the way in which the EU and individual EU member states compile fuel poverty statistics, but I do not think that it enables him to reach that conclusion.
I, for one, congratulate the Secretary of State and welcome the new regulations, which will bring relief to many people living in poorly insulated rented accommodation in my area. However, may I press him to define the minimum level of energy efficiency more clearly?
I am delighted that the hon. Lady welcomes the new regulations, which will make a significant difference by requiring landlords to raise the energy performance certificate rating of their properties to a minimum of band E by 1 April 2018. We believe that that will help about 1 million tenants over the next three years.
Given that this is a particularly cold week, may I remind the Secretary of State of the people who live in park homes? Will he support the call by the park home owners justice campaign for a dedicated, fully funded insulation programme? Is it not time for action, rather than mere consultation?
My hon. Friend has been a doughty champion of park home owners. As she knows, we have been the first Government to engage with some of the challenging issues that they face. She will know, for example, that our reform of the warm home discount will make many park home owners eligible for it for the first time. That is action. As for the insulation programme that she mentioned, if she can wait until we publish our fuel poverty strategy, she will see that we are continuing to think about what can be done for park home owners.
The homes of millions of low-income households desperately need to be made highly energy efficient, so I welcome the Secretary of State’s announcement today about the private rented sector, but will he ensure that the scale and value of grants available are up to that challenge in the next Parliament?
My hon. Friend is right to say that, in moving forward to take out the least energy efficient homes in the private rented sector and in other sectors, we need to ensure that there is a financial framework to support them. Landlords will be able to use either ECO, grants such as the green deal home improvement fund or green deal finance to assist them to meet the regulations.
May I pay tribute to the former Member of Parliament for Sheffield, Heeley, Frank Hooley, who has died at the age of 91 and who campaigned for what was then described as alternative energy?
In that vein, may I ask the Secretary of State what discussions he has had with Ministers in the Department for Business, Innovation and Skills about the Government’s providing greater investment to support companies that are developing mechanisms to improve energy efficiency such as micro and combined heat and power?
I am sure all hon. Members will join the hon. Lady in paying tribute to the former Member who has died. I did not know him but I am sure he was a doughty campaigner for alternative energy.
The hon. Lady asks what my Department can do with BIS to assist in the deployment of technologies such as CHP. I assure her that I work closely with my right hon. Friend the Secretary of State for Business, Innovation and Skills on those issues, particularly to ensure that energy-intensive industries have support with the high costs that they face.
Earlier this week, the National Federation of Occupational Pensioners predicted that the death toll from this year’s winter cold weather could be 40,000 people, the highest for 15 years. With figures such as those, how can the Government defend not spending the majority of the funds that they raise for energy efficiency on tackling fuel poverty?
Fuel poverty increased significantly under the previous Government and it has fallen, albeit not as much as I would like, under this Government. When we publish the fuel poverty strategy shortly, the hon. Gentleman will see not only that we have managed in this Parliament to focus scarce resources on the problem, with significant success, but that we plan, through the private rented sector regulations and other measures, to bear down on fuel poverty even further and faster.
The Secretary of State is too complacent and I do not agree with his assessment at all. The fact is we have the means to tackle fuel poverty. What is lacking is the political will. His Government know that. Is it not a fact that the technical annexe to the Government’s own fuel poverty strategy admits not only that the Government will not eradicate fuel poverty by 2030 but that it will rise?
He is probably talking about the draft strategy. He needs to see the final one before he makes such points. The fuel poverty regulations that we have introduced are radical and have not received the attention they deserve. Under the regulations, by 2030 any person who is in fuel poverty must be in a house of at least EPC rating C. That is a major step forward and we have the policies, set out in the fuel poverty strategy, to deliver that.
Oil Prices (North Sea)
9. What assessment he has made of the effect of lower oil prices on oil and gas extraction from the North Sea. (907452)
Oil companies around the world are reacting to the rapid fall in oil prices and prioritising activity. We are working to ensure that we deliver maximum economic extraction from the North sea. I will be travelling to Aberdeen later today to discuss that with the industry.
It does seem that others are doing things around the world, but this Government are doing very little. The Energy Minister did not reply to this; he is posted missing on it. He was also posted missing at the summit in Aberdeen. At that summit, the point was made that the two things that are required are investment tax write-offs, so that people continue to invest in future fields, which will stop if they do not continue to invest; and a reduction in the taxation on the fields, which the Government increased massively to 30%. If we bring the tax back down to 20% and put in tax investment, we might sustain this field—this week, Shell announced that it is closing the Brent field, the first field to bring oil into this country from the North sea.
Work of a collaborative tone to support maximum extraction from the North sea might be more appropriate considering some of the inaccuracies in the question. Not only did we take measures in last year’s autumn statement to support oil companies to ensure the maximum extraction, but we are looking at what further we can do in the Budget. The Secretary of State was in Aberdeen last month, and I will be in Aberdeen later today. We are taking this action to support the maximum possible extraction in terms of economic ability from the North sea.
I am glad the Minister will finally make his way to Aberdeen, and while he is there I hope he will have discussions with all aspects of the industry and the trade unions. I have two asks of him when he is in Aberdeen. One is to talk about what will happen to replace the jobs that have been lost—in one week, 600 jobs, and over the piece it is now into the thousands in one geographic area, if we can imagine that. I wonder what the reaction would be elsewhere. The second ask is to make sure that investment continues, even though we know the industry has to squeeze costs out of the supply chain, so that when the price of oil does pick up the industry has not been decimated.
These are good questions and they were being discussed even before the oil price fell. It is very important that we come to the best possible answer, but I think the hon. Lady and I would agree that it is far better that we sustain a strong industry through these challenges in Aberdeen—which we can do because we have a whole-of-the-UK balance sheet off which we can take decisions to support Aberdeen.
Community Energy Generation
This Government are proud of launching the UK’s first community energy strategy, which is increasing the proportion of home-grown, low-carbon generation across the country. We have committed £25 million to rural and urban community energy funds to help kick-start generation projects, and communities can access the feed-in tariff scheme, which provides a long-term guaranteed income stream for communities.
Bristol, as European green capital this year, is certainly very keen to push forward on community energy, but I am told that progress has stalled as a result of Treasury changes to tax incentives and Financial Conduct Authority changes to the rules for establishing energy co-ops. Community Energy England and Co-operatives UK say these changes threaten the very viability of the community co-operative model. What is the Minister doing to respond to these concerns?
I congratulate the hon. Lady on Bristol’s nomination for European green capital, and it was a pleasure to visit the city with her and see some evidence of the green initiatives. I am aware of the problem she raises and I will follow that carefully and try to ensure it does not create any further blockage, because community energy is essential to our development of a proper renewables strategy in the UK.
Will the Minister look carefully at the application of community feed-in tariffs to small-scale hydro? I recently wrote to the Secretary of State on behalf of villagers in West Lydford, who have made a heroic effort to repair a weir in Lydford. They formed a company to do so, and now find themselves in difficulties because of the rules.
My hon. Friend raises a vital issue and we have indeed been pressing the larger energy firms on this for some time. The good news is that energy prices have not only been frozen over the last year, but they are now being cut. Moreover, there is now a plethora of lower priced deals out there, especially from the independents, thanks to our policy of promoting competition, encouraging switching, and piling the pressure on the big six with an in-depth investigation of the energy market by the Competition and Markets Authority. I assure my hon. Friend we will continue to fight for the consumer every day.
Recent Which? research shows that energy bills are the main financial worry of two thirds of households, and that while there has been a welcome reduction of about 5% in domestic tariffs this could have been as much as 10% had they mirrored the fall in wholesale costs. What more can the Government do to make sure the big energy companies are more responsive to falls in wholesale prices?
Some energy suppliers have reduced their prices by 10%, and OVO Energy recently cut its prices by more than 10%. It is a complicated analysis and, working with the Treasury, we have looked at it in some detail. Wholesale gas costs represent about a quarter of the average bill; other costs are also changing and not all of them are going down. This is complicated, but it is right that the independent competition authorities look at this—they are specifically addressing this issue—because if there is any malpractice in the energy markets they will be able to expose it and have the teeth to tackle it.
Since our last Department of Energy and Climate Change orals, we have seen significant progress for consumers on switching, energy prices and energy efficiency. Energy firms have responded to my challenge and halved the time it takes to switch, from five weeks last year to 17 days now. That is helping people to switch to get big savings on their energy bills, as the extra competition we have backed is now seeing bills being not just frozen, but cut. Figures to the end of November show that the energy companies obligation and the green deal have delivered new boilers, windows and insulation to more than 1 million homes, four months ahead of our March 2015 target. In introducing to the House today tough new regulations to require landlords to ensure that their properties meet minimum energy-efficiency standards, we aim over the next three years to help about 1 million private sector tenants enjoy lower energy bills and warmer homes.
The global calculator published by the Department last week found that reducing our meat consumption is essential if we are to reduce our contribution towards greenhouse gases. Everyone from the United Nations downwards has for many years been talking about the contribution of the livestock sector to global emissions. His Department has always ignored this issue, so I urge him now to take action and to tell us what he is doing to encourage people to reduce their consumption.
I think that is a little harsh. My Department published the calculator, so far from ignoring this, we are putting into the public domain not just a UK 2050 calculator but, having helped 20 other countries with their calculators, now a global calculator. It shows that people’s lifestyles—not just their meat-eating habits, but their transport and so on—all have an impact on climate change. The calculator enables people to look at the types of choices we may need to make in the future.
In 2010, the big six, created under the previous Government, had a share of the retail market of more than 99%. As a result of the competition we have encouraged, there has been a big increase in the number of independent competitors, whose market share has increased from less than 1% to more than 10.5%, and is rising fast.
On 13 January, when answering an urgent question in this House on decommissioning at Sellafield, the Secretary of State said on three occasions that he would engage with the 10,000 people working at that complex site. What discussions have he and his officials had with those workers?
We are engaging with those workers through the Nuclear Decommissioning Authority and through Sellafield Ltd, and we stand ready to assist in the discussions to make sure they understand the implications of the changes to their livelihoods. As I said in response to the hon. Gentleman’s urgent question, we are talking about good news for workers at Sellafield, and indeed it was welcomed by the MP representing that constituency.
If it is such good news for the workers at Sellafield, I would expect the Secretary of State to be engaging with those 10,000 highly skilled workers, who are very concerned about what the impact will be on their jobs and their livelihoods. I can tell him that there has been just one local meeting with those workers in the past few weeks, and very many of their questions were not answered. He has had communication from their representatives. Will he now undertake to fulfil the promise he gave this House just three weeks ago to engage properly with those people, at a time of severe anxiety for them?
Does my right hon. Friend agree that maintaining high levels of generating capacity to meet peak demand, which may be for very short periods, imposes a cost on all consumers? Will he therefore undertake to look carefully at the capacity market mechanism next year to see whether a greater contribution can be made by demand-side response—the system under which consumers are incentivised to reduce their consumption at short notice during periods of peak demand?
Demand-side response currently accounts for around 1.8 GW of balancing services, and we expect it to rise to around 2.5 GW. I have met the demand-side response industry a couple of times, and we will ensure that we take into account its concerns as we review the operation of the capacity market, which was incredibly successful this December.
T3. The Children’s Society estimates that in Coventry South 3,200 children are living in families trapped in energy debt. It has been calling on the Government to increase support for those families by changing the Department of Energy and Climate Change strategy and policy statement to include families with children as a vulnerable group. That will ensure that Ofgem and energy companies do their part to give families the support they need when they fall behind with their energy bills. Will the Minister give that some consideration? (907470)
That is a very significant issue. When we were working on the fuel poverty strategy, using the analysis of Professor John Hills—the new method of looking at fuel poverty—we found that it uncovered a number of things that were not so obvious in the old method, such as people in off-gas grid homes being among the most fuel poor, and far more families being in fuel poverty as a proportion of the overall total. That is why the warm home discount is so important; it targets money on not just pensioners but low-income families. The fuel poverty strategy will now address that matter, too.
Earlier, the Under-Secretary of State said that, by 2020, we will see the availability of more advanced lower-cost solar panel technology, which will not require subsidy. Why not wait until 2020, rather than encouraging people to install high-cost, immature versions of that technology that will require us to commit to paying out subsidies right through to 2030?
We have been cutting solar subsidies throughout this Parliament—indeed we have come under great attack for so doing, including from the Opposition. We are consulting on closing the renewables obligation system to the solar industry, and again that has led to a lot of criticism. However, I do not apologise for taking those measures, because it is important that we get best value for money for the taxpayer while encouraging the very important solar industry.
T5. Siemens is to start the production of offshore wind turbines in Hull, potentially bringing in thousands of news jobs to the city. Is the Secretary of State aware that the UK Independence party opposes that investment and those jobs coming to Hull, and that the Greens are calling for a boycott of Siemens locally as well? (907472)
I am glad that this is one issue on which the hon. Lady and I can agree. I recently went to Hull to see the latest development in the Siemens plan. The plan is very exciting and is crucial for Hull. It has been welcomed by business, education and the council in Hull. I agree it is astonishing that, locally, UKIP and the Green party are opposing the development. It is quite bizarre.
I very much welcome the Under-Secretary of State’s very positive response to my campaign with the Children’s Society to extend the warm home discount. Will she go a step further and seriously consider the auto payment of the warm home discount to these vulnerable families, in addition to the auto payment to pensioners?
I thank my hon. Friend for her question. We are all aware of the hard work she has done to support vulnerable people and to make such an extension happen. We are pleased that the warm home discount now extends to a broader group, which includes families with children, particularly those with children under five or disabled children. Data sharing is an important part of being able to find out how to deliver to the right people. We will of course keep those opportunities under review.
T6. Does the Secretary of State share the widespread disgust at Ofgem’s recent advice on paying energy bills, which included suggesting that families in fuel poverty should make packed lunches for their kids and cancel gym memberships? Instead of that insulting response, does he agree that the Government should consider changing the rules, so that Ofgem advises on energy efficiency and not on packed lunches? (907473)
I have not seen that advice. It is important that Ofgem focuses on trying to give the best possible advice that will help people who are struggling with energy bills. Government advice certainly includes practical suggestions on how to get the financial help that is available and to cut bills.
I am delighted that this question has come up although I am a bit surprised that it took until 10.29 to do so. It is also a bit of a surprise that the shadow Secretary of State is not attending DECC questions; I understand that she is campaigning in a Labour marginal seat. It is absolutely imperative and a duty on the Government to allow exploration for shale gas, which has the potential to be a significant resource, but to do so carefully and cautiously, and that is exactly what we are doing.
T7. What is the Government’s current position on constructing a Severn barrage lagoon to generate a substantial proportion of the nation’s electricity? If the Government are serious about their green ambitions, should they not be forging ahead with this project now? (907474)
The hon. Gentleman may be muddling up the barrage and the lagoon. We have said that we will look at any environmentally sensitive and affordable proposal for the Severn barrage, if the private sector wants to propose one. To date, that has not happened, although he may well have missed the fact that my right hon. Friend the Chancellor of the Exchequer made it clear in the autumn statement that we are looking seriously at tidal lagoons. I recently published a consultation on how we would go about agreeing a contract for difference for a tidal lagoon.
T8. Like every other Member here, I am deeply disappointed to hear about further job losses in the North sea oil and gas industry. The National Union of Rail, Maritime and Transport Workers has said that, for every offshore job lost, three jobs onshore are lost. Does the Secretary of State agree that the best way to address this is to work together as a United Kingdom? (907475)
I entirely concur with the hon. Gentleman’s words, and I look forward to working with the Opposition Front Benchers and Labour Back Benchers and, indeed, with the Labour leadership in Scotland, to try to do everything we can to ensure that we have a strong and healthy offshore industry, because the jobs are not only offshore but throughout the whole United Kingdom.
T9. It is becoming increasingly clear that the UK Government have failed to agree the European structural and investment fund’s operational programme with the European Commission. What is happening? What is the Secretary of State doing to ensure that the skills funding needed to achieve energy efficiency objectives is guaranteed until an agreement is reached? (907476)
It is important that we get the details right and the programme will be forthcoming, but it is vital that we have the skills that come alongside energy development. We put a huge effort into getting that right, and I am sure that the hon. Gentleman will welcome the details when they are published.