Energy and Climate Change
The Secretary of State was asked—
May I start by welcoming the hon. Member for Wigan (Lisa Nandy) to her Front-Bench role?
We estimate that closing the renewables obligation early to large and small-scale solar PV projects will reduce costs to the levy control framework by between £180 million and £280 million per year. The estimated saving of closing the RO early to new onshore wind is up to £270 million per year. The details of those cost estimates are published in impact assessments that are available on DECC’s webpage.
Does the Secretary of State agree that publishing impact assessments two months after decisions have been taken is unacceptable practice? Does she acknowledge that, using the alternative methodology in the impact assessment, the net present value of deciding to close the RO early turned out to be minus £100 million? That means that we are £100 million worse off as a result of her taking that decision, instead of allowing the RO to continue. If she had had the impact assessment to hand when she took the decision, might she have made a different decision after all?
What the hon. Gentleman fails to address in his question and does not seem to absorb from the steps that we have taken to address the costs is that at the centre of everything this Government do is the impact on consumer bills. We had a commitment to limit the levy control framework to £7.6 billion by 2020. When it became apparent that we were way in excess of that, but were still meeting our renewables targets, it was right to limit the amount of money we were spending. That is why we took action quickly to do so.
I congratulate my right hon. Friend on the action she has taken, particularly in relation to the wasteful onshore wind turbines that are blighting many areas of the countryside. In June, when she made her original announcement, she suggested that some of the RO money might be diverted to other forms of alternative power generation. Is she in a position to say what those alternatives may be?
The key reason for reining back on onshore wind was its very success. The Government are absolutely committed to supporting renewable sources of energy, and onshore wind has been very successful. On the use of funds that may have been saved, I come back to the point that the Government are committed to staying within the levy control framework budget as far as is possible. That is the key reason we are taking steps to limit spending. Any further spending commitments, as my hon. Friend will be aware, are up to my right hon. Friend the Chancellor of the Exchequer.
I thank the Secretary of State for her kind words. It is a pleasure to speak from the Dispatch Box today and a privilege to follow in the footsteps of my right hon. Friend the Member for Don Valley (Caroline Flint), who has been a fearless advocate for consumers and the environment in recent years.
My right hon. Friend will be as dismayed as I am that this week it was announced that, for the first time, the UK is no longer one of the top 10 countries in the world for investing in clean energy technologies. The Government have ruled out new onshore wind farms, slashed solar support and left onshore wind farm companies with an uncertain future. The only new nuclear plant that seemed to be proceeding is delayed and in doubt, gas investors do not have the assurances that they need to invest, carbon capture and storage has stalled, and other clean generators have been hit with new taxes. What exactly is the Government’s plan to cut carbon pollution and keep our lights on?
I, too, am sorry that the right hon. Member for Don Valley (Caroline Flint) is no longer on the Front Bench. She and I used to have regular, robust exchanges, and she had a realistic approach to energy security, describing nationalisation proposals as “turning the clock back”. How much I agree with her.
The hon. Member for Wigan mentioned investor confidence, but perhaps I may ask her to look within her own team as there are real concerns about the Opposition’s approach to nuclear power—who knows their position ahead? The Government are committed to a mix of energy supply and to ensuring that nuclear power, which she mentioned, is part of that mix. It is so disappointing that under the previous Labour Government there was no planning or looking ahead—
I was going to thank the right hon. Lady for that answer, but I do not think I will.
Investors looking at the UK are scratching their heads. On the one hand the Government say that they are trying to reduce the cost of energy for working families, but on the other hand they say that they want to go for shale gas and CCS, which are unproven markets. We have
“new nuclear build and offshore wind which are substantially more expensive than renewables such as onshore wind and solar PV. Investors don’t know what the government is trying to achieve.”
Those are not my words; those are the words of Ernst and Young’s energy analyst in a report that was published this week. When will the Government return with a plan to keep our lights on, cut pollution, and get energy bills under control?
The hon. Lady is entirely wrong. This Government have a clear plan, and in a way she summed it up in her conclusion. We are committed to ensuring that energy security is at the forefront, to carbon reductions, and above all—a feature that never appears except on the Conservative Benches—to keeping consumer bills down.
Low-carbon Energy Generation
I welcome the shadow Secretary of State to her position, and in particular I welcome Otis, who I gather was born only a few months ago. That is fantastic, and I congratulate the hon. Lady on being here so soon afterwards. I wish her every success in her new role.
The Government remain totally committed to our green energy future and to tackling climate change. The success of our renewables programme has exceeded expectations, which means that we are on track to meet our targets comfortably. A key priority for the Government is to keep consumer bills down and limit the cost to hard-working families, while ensuring that the UK remains an attractive location for all forms of low-carbon energy.
The Government are axing support for onshore wind earlier than expected, cutting feed-in tariffs for solar, and ending the exemption for renewables from the climate change levy. If renewables really are the future for our energy supply, what action will the Government take to repair investor confidence?
That is an incredibly important question. More than £42 billion has been invested in renewables, nuclear and CCS since 2010, and 2014 was a record year with more than £8 billion being invested. The Government remain committed to our long-term, low-carbon future in all areas of low-carbon generation. As the hon. Lady will appreciate, we must also consider our other priorities, such as keeping bills down for consumers. The policy reset that we are undertaking is about ensuring that through our success in generating renewables, we do not impact in a devastating way on the bills of hard-working families in this country.
The hon. Lady will be aware that the Government are incredibly keen on those new technologies, and we are looking closely at that tidal lagoon and doing our due diligence. The Government would like to support that project, but it must of course offer value for money. It has gone through the first stage of the process and it will take some time, but I assure the hon. Lady that that project, and other firsts for the UK, are on this Government’s agenda.
East Anglia Offshore Wind, which will be developing the UK’s largest offshore wind farm, has the objective of being subsidy-free by 2023. Can the Minister confirm that the Government will set out a clear vision that will enable the industry to plan properly for the future, both to achieve this goal and to maximise the creation of British jobs?
As I am sure my hon. Friend will be aware, the UK is the world’s No. 1 in offshore wind. We are fully committed to the continued growth and development of that sector. As part of the spending review, we need to look at the impact on consumer bills and make sure that we can manage the ongoing development to reach that subsidy-free point while not impacting too much on the bills for hard-working consumers. We will set out our plans later this year.
Does the Minister agree that the progress so far on new renewables sets the scene for even more investment in research and development, and that we need to have a clear pathway for that to happen so that we can encourage more investment, the strengthening of supply chains and the export of these technologies?
Yes, my hon. Friend is right. That is exactly what we want to do. We want to continue to support the growth of the renewables sector. I have already explained that there has been £45 billion of investment since 2010 in this sector and we want to encourage it further. We have to do that in the light of what is affordable for bill payers. At the same time we want to encourage new forms of renewables and keep Britain at the forefront of renewables technologies.
Will the Minister explain how she can possibly think that investor confidence will be enhanced by taking yet another wrecking ball to the British solar industry with the enormous subsidy cuts, alongside ending pre-accreditation? On the latter issue, the Government’s own consultation concedes that her Department has not even bothered to estimate the likely impact on deployment. With tens of thousands of jobs at risk, will she withdraw this now and stop all the waffle about consumer bills? If she were serious about consumer bills, her Government would not be subsidising fossil fuels and nuclear to the extent that they are.
I am afraid the hon. Lady has not done her homework. She should be aware that it is a requirement of EU state aid that we regularly review the subsidies to ensure that we are not overcompensating the sector. That is exactly what we are doing. We are now in a consultation which closes on 23 October. I am sure she will give her response to that. As I keep repeating, we want to ensure that we are not impacting negatively on consumer bills, but at the same time we are supporting this very valuable and growing sector to become subsidy-free within the next few years.
I welcome the Minister’s earlier replies, but she will know that there is a lack of confidence and certainty in the offshore industry, which is vital to the future economy of my constituency. Can she assure me that when she visits north-east Lincolnshire later this month, she will have a positive message for the industry representatives?
I can assure my hon. Friend that I will always have a positive message. I am very much looking forward to my trip to Humber and Lincolnshire. While I am there I will seek to reassure investors and project managers that it is our intention to continue to support and promote the very important renewables technologies in which, particularly in offshore, Britain is world No. 1.
May I add the welcome of the SNP to the hon. Member for Wigan (Lisa Nandy)? We look forward to working together where there are shared interests.
On the renewables obligation for onshore wind, it will come as no surprise to the Minister that the SNP is opposed to that closure. The implementation of the Government’s policy is causing additional and unnecessary difficulties through lack of finance owing to the lack of clarity about grace periods. Will she clarify when her Department will produce the grace period provision clauses to the Energy Bill, and will she consider a flexible approach where there is an element of community ownership involved in a project?
As the hon. Gentleman will know, we are looking very carefully at the consultation responses on the grace periods, and we intend to publish our response as soon as we can. That will be within the next few weeks, as part of the process of the Bill’s passage through the Lords. As he will realise, around 30% of the total support under the RO goes to Scottish projects, and we are delighted that Scotland still forms part of a GB-wide energy sector. That is very important for Scotland and for the whole UK.
It is estimated that 22,000 jobs could be lost as a result of swingeing cuts of up to 87% in the solar industry. Will the Minister confirm that the potential loss of jobs was not taken into account in her decision to cut support for solar power? Can it be right or proper for a formal consultation to ignore such harmful effects on the industry and on the thousands of families whose lives will be affected by these changes, including, as both Ministers have mentioned, their ability to pay their energy bills?
The hon. Lady is completely wrong to say that we have not considered all aspects of the consultation on reducing subsidies. She will appreciate that, because it is a consultation, it is only as a result of that consultation—which, as I say, closes on 23 October—that we will be able to assess the impact properly and then to make a decision. As I have said a number of times, we are fully committed to the ongoing development and progress of this very important sector. All jobs in the sector are of course extremely important and we will be doing everything we can to ensure that it continues to grow.
Carbon Dioxide Emissions
As our manifesto made clear, we are determined to meet our climate change commitments. We will do this as cheaply as possible and in the interests of bill payers, hard-working families and businesses. The policy announcements that this Government have made to date are consistent with those commitments. We are making good progress towards meeting our 2050 carbon target, with emissions already down 30% since 1990. We will bring forward further proposals on how to meet carbon budgets over the course of next year.
In its June report to Parliament, the Select Committee on Energy and Climate Change said that stronger action was needed to meet the carbon budgets for 2025 and 2050. Since then, as we have heard, the Government have cut support for solar and onshore wind, extended the climate change levy to renewables, and weakened housing standards. Will the Secretary of State go back to the Committee and ask it to make a new analysis, taking account of those policy changes?
I repeat to the hon. Lady that we are committed to meeting our climate change commitments. She will be aware that there are some areas of this that are more challenging than others. For instance, we still need to work up and make more progress on heat. As far as the relationship with the Energy and Climate Change Committee is concerned, she is right that we are in regular contact. I believe it will shortly be publishing a response to some of the changes we have made and we will have more comment to make on that in October.
Will my right hon. Friend confirm that the main factors accounting for the reduction in carbon dioxide emissions since 1990 have been the recession, the dash for gas and the outsourcing of the manufacture of carbon-intensive products to China and other third-world countries? The huge expenditure on trying to reduce CO2 emissions by renewables has had far less impact. Is she therefore not right to try to pare down the cost of this rather ineffectual policy?
I have to confess that I do not agree with everything my right hon. Friend has said, but I agree that our energy needs a mix of policies. The bringing on of more gas has certainly been a successful way of reducing carbon emissions. With the development of shale, we believe that that will continue to happen.
Surely the Minister realises that if we are to have a cleaner and better environment, we also need to balance that with consumer interest in energy security. We need high-quality innovative technology—in which I have a long-term and registered interest. Many big environmental companies with leading technology have been absolutely alienated by the Government’s policy and are ceasing to invest.
I do not share the hon. Gentleman’s interpretation of what has happened. The Government are completely committed to innovation and are absolutely admiring of the areas in the industry where innovation is changing things. For instance, I named storage, where we think there will be great opportunity for more solar deployment.
Despite the Government’s policy announcements, investor confidence in green energy in the borough of Kettering appears still to be high, because, much to residents’ alarm, fresh applications for solar farms are being submitted to the local council. What can the Government do to get solar energy out of our agricultural fields and on to the big roofs of warehouses?
My hon. Friend raises a key point. It is the Government’s aim to ensure that subsidy support is only temporary, and we are hearing that solar could soon be without subsidy, which is something we want to encourage. Finally, just to agree with him, we much prefer, and will try to encourage, roof-top solar, rather than solar in fields.
Climate Change Conference
Securing an ambitious global climate change agreement is crucial, and I am taking every opportunity to press for an agreement that is ambitious, legally binding, has mitigation commitments from all parties and includes a set of robust rules that allows the world to track progress. Over the coming weeks, at meetings in China, India and the US, I will be making the case for an ambitious climate change deal to my international counterparts that helps deliver on these key objectives.
No other country has yet passed climate change commitments to match those in the Climate Change Act 2008, which we passed nearly 10 years ago now. Indeed, globally we are seeing a resurgence in coal, led by countries such as Germany, which is replacing low-carbon nuclear with coal. Does the Secretary of State believe that the Paris process will result in a more level playing field? Without that, the prognosis for energy-intensive industries in this country, which employ 900,000 people, is bleak.
I do not accept that we are acting unilaterally. The fact is that the UK is a leader, which is a good thing when we are trying to be ambitious in this area, and we are finding that other countries are increasingly working with us. I believe that Paris will be critical to getting an international level playing field and, to return to earlier questions, supporting investor confidence.
Given that so many of the intended nationally determined contributions submitted so far, particularly from developing countries, are conditional on international finance, what efforts has the Secretary of State been making with her counterparts in Europe to ensure that Europe’s contribution to a financial pot to meet those contributions is fulfilled?
I share the hon. Gentleman’s concern about climate finance, which is key to getting a successful deal, and I am happy to say that I have been playing a leading role in that, chairing climate finance committee meetings with our international counterparts to ensure the transparency and confidence necessary to bring developing countries into the final deal.
Does the Secretary of State accept that global warming can, by definition, only be tackled globally, and will she confirm that the UK is responsible for about 1.5% of global carbon emissions? Will she therefore agree that although unilateral action might make a few people feel good about themselves, in terms of changing the world’s climate, it is completely and utterly futile?
The green economy is a fantastically growing opportunity for employment and businesses, and I hope my hon. Friend would agree that it will become even more important if and when we get a deal in Paris, because countries internationally will want to invest in the green economy. They are all making it a priority, as the UK has done.
The Secretary of State is meeting her EU counterparts in two days, and she has the Opposition’s full support in negotiating a tough deal ahead of the historic Paris conference later this year. It is clear from recent analysis that the national climate plans do not currently offer sufficient ambition to reach climate safety. She talked about the UK’s being a leader, which was extremely welcome, but what concrete action is she taking to ensure that the UK pushes us further on an international stage and plays a leadership role in the talks in Europe?
The hon. Lady raises one of the most important questions and challenges facing us this year, and I am encouraged to have her support. We are playing a leading role in Europe—I referred earlier to the role I have been playing not just in Europe but internationally to help broker support from the developing and developed countries. It is important to play that role to make sure we get the right outcome, and we continue to be ambitious in the EU, but in truth the EU is committed to this; it is bringing in the other countries that is so challenging.
I am grateful for that answer, but the Secretary of State will be aware that, outside this place and in the wider world, there is real fear that we will not reach climate safety through these negotiations. Will she commit to push the EU to go beyond the existing target of a 40% reduction in emissions by 2030, to secure a provision in the agreement that international goals will be increased every five years and to ensure that the UK acts as a force for higher ambition both in Europe and on the international stage?
May I gently point out to the hon. Lady that it is not the EU that is the issue; it is making sure that the other international large emitters participate in the process? China, for instance, produces 26% of the world’s emissions, which is more than the US and EU combined, so the real challenge is to ensure that we get other countries on board. She is right that we are also pushing for, and hope to get an outcome on, regular reviews. If the final outcome will not put 2° immediately within reach, we need to ensure that the ongoing process—the reviews—does.
Ensuring that hard-working families and businesses across the country have secure affordable energy supplies that they can rely on is our top priority. The Government have worked closely with National Grid to put in place an effective plan, which worked well last winter. Last week, I met Steve Holliday, the chief executive officer of National Grid, to discuss its readiness, and he confirmed that it has everything it needs to manage the system this winter.
Last month, Scottish Power announced the closure of the Longannet power station, citing a disproportionate transmission charging system in which Scottish electricity generators pay substantially more than their counterparts south of the border. The charges were forecast to increase from £40 million this year to £51 million next. With up to a fifth of UK generating capacity expected to close over the next few years, does the Secretary of State agree that an unfair disproportionate regime is punishing operators in Scotland and undermining UK energy security?
I do not agree with that assertion. The fact is that Scottish taxpayers and bill payers have exactly the same needs as the rest of us in the UK—and that is to have secure and affordable energy. We spoke to National Grid about Longannet and we were reassured that it has the resources in place to ensure that we continue to have a secure supply of energy.
We understand that due to the failure of the policy of previous Governments, it is necessary for National Grid to buy in from mainland Europe electricity supplies to keep the lights on in Britain. What is not acceptable is for the Grid to run massive pylons from Richborough in Kent across to Canterbury, which is totally unnecessary. If the Grid can bury cables in the New Forest, it can bury them in the garden of England. Will the Secretary of State please make sure that that happens?
The report “The Size and Performance of the UK Low Carbon Economy” from the Department for Business, Innovation and Skills estimated that there were over 34,000 jobs in the UK solar sector in 2013. Our consultation on the feed-in tariff review reflects the need to balance sector support, while keeping bills down for consumers. We strongly welcome evidence from the sector during this review consultation, which ends on 23 October, and only then can we begin to analyse the impact on jobs.
Estimates suggest, as we heard earlier, that over 20,000 jobs are at risk. Some companies are already giving notices to workers, and projects such as the Greater Manchester community renewals project, which is planning to install solar roof panels in schools in my constituency, will become unviable. How can the Secretary of State fulfil her promise to “unleash a solar revolution” when she undermines jobs and investment in this way?
Jobs are always an important priority for this Government. Under the last Government, of course, we created 2 million jobs and we are expecting, hoping and planning to create another 2 million under this one. Solar is a great opportunity for consumers and for businesses, and I believe it will continue to flourish. As the Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for South Northamptonshire (Andrea Leadsom) said earlier, we had to do this as part of the European Commission’s requirement for a proper review to make sure that we get the right balance between bill payers and producing more solar. I hope it will reach subsidy-free status soon.
I very much welcome the review of feed-in tariffs. We should be working towards a zero-subsidised solar industry, but does the Secretary of State not agree that the way to deliver zero subsidy is to have a slightly more tapered reduction so that we continue to have a vibrant solar industry and also make sure that we do not deliver a huge rash of applications over the coming months?
I know that my hon. Friend takes a particular interest in solar power. It is too early to say what the outcome will be—we are the middle of our consultation—but we are receiving some very helpful replies from businesses and other participants, which will help us to work out the correct level of support. We want to be careful with bill payers’ money, while also ensuring that we support the solar industry.
While the world embraces solar power, here the Government change feed-in tariffs, thus costing jobs—20,000 in the United Kingdom, as we heard earlier, and 25 from BayWa r.e. in Machynlleth. That may not sound much, but the vast majority of those who are employed in Machynlleth earn less than the official living wage. Will the Secretary of State agree to table, on behalf of the Government, a prayer in the names of the hon. Member for Brighton, Pavilion (Caroline Lucas) and me to annul the Feed-in Tariffs (Amendment) Order 2015, which amends the preliminary accreditation arrangements, so that Members can debate the issue rather than rushing into economically damaging implementation?
Oil and Gas Authority
8. What assessment she has made of the implications for her policy of (a) the findings of the Oil and Gas Authority's “Call to Action” report, published on 25 February 2015, on employment in the oil and gas industry and (b) that report's other findings; and what steps she plans to take to support employment in that industry. (901439)
The Government are fully committed to the oil and gas industry. In fact, the first visit that I made as the Minister was to Aberdeen. The industry is vital to our energy security, and it supports about 375,000 jobs across the United Kingdom. We fully recognise the huge challenge presented by lower oil prices, and accept the Oil and Gas Authority’s Call to Action report. The OGA is working with groups such as the Scottish Energy Jobs Taskforce to encourage companies to consider all possible alternatives to redundancy, as well as ensuring that we keep the vital skills that we will need in the future.
As the hon. Gentleman will know, the legislation to establish the OGA formally is currently being dealt with in the House of Lords. The authority’s key responsibility will be to maximise the economic recovery from the North sea basin, and it is already fully employed in that respect. The Government have made some fiscal changes to promote investment, and, importantly, we have also invested £20 million in seismic surveying of under-explored areas in the North sea basin to try to identify new opportunities for businesses that are based there, in order to encourage the investment that we so badly want.
17. Thank you, Mr Speaker. I am sorry; I was slightly thrown.I would appreciate it very much if the Minister would tell us what action the Government are taking to ensure that decommissioning is delayed for as long as possible. A total of 375,000 people are employed in the industry, directly and indirectly, and many of them are based in my city of Aberdeen. (901450)
You threw me as well, Mr Speaker, but I get the point.
I am entirely sympathetic to what the hon. Lady has said. We all agree on the need to avoid decommissioning for as long as possible. The OGA is working with operators throughout the supply chain to try to increase co-operation in relation to, for instance, supply ships, and to ensure that they share resources rather than saying, “That is mine, so you cannot have it.” A great deal of work is being done, but key to this will be looking at the long-term possibilities for new exploration. I hope the hon. Lady welcomes the new Culzean project near the Shetlands, which has just been given the go-ahead. That is a good example of what we can do if we all work together.
May I commend you, Mr Speaker, for the element of surprise that you are introducing to our proceedings?
According to the OGA’s report, more than 5,000 jobs were lost in the sector last year, but analysis carried out by Oil & Gas UK suggests that the wider impact on the industry could involve the loss of some 60,000 jobs. The industry’s calls for support must be listened to. A survey of 450 industry leaders, conducted by the Press and Journal’s Energy Voice, found that there was an overwhelming demand for tax breaks to boost exploration in the North sea, and those calls were echoed yesterday by the National Union of Rail, Maritime and Transport workers. Does the Minister agree with me, and with industry leaders and trade unions, that the Government must provide incentives to encourage exploration and protect jobs?
As the hon. Gentleman will know, the Chancellor introduced some strong fiscal measures in the March Budget to maintain and build investment, including a reduction in the supplementary charge, introducing a new investment allowance and a reduction in the petroleum revenue tax from January 2016, and we will continue to look closely at what else we can do to provide that fiscal support for further exploration and to keep the oil and gas sector thriving in the North sea basin.
Green Growth: China
The UK and China enjoy strong and growing co-operation on low-carbon policies and green technologies. This includes working together on the means of financing renewables and low-carbon infra- structure and a cost-effective response to the challenge of climate change.
Is my right hon. Friend aware that minimum import price fixing is having an adverse effect on the solar industry because of the trade dispute between the European Union and China? Will my right hon. Friend ensure that the matter is raised with the Chinese President when he visits this country next month?
We are indeed aware of that, and we are trying to address it. The cost of solar panels has fallen dramatically, but we would like it to continue to fall. I am working with my colleague the Secretary of State for Business, Innovation and Skills on this issue, and I can confirm that we will continue to press the EU on this matter.
10. What assessment her Department has made of the potential effects in different regions of the feed-in tariff review. (901441)
The FITs review covers a wide range of technologies for which deployment across the UK varies depending on the specific benefits of that region. For example, there is more solar deployment in the south-west and more wind in Scotland and the north. The effects of the review will therefore affect all in different ways, and the impact assessment acknowledges this.
Just this week the National Farmers Union Scotland expressed deep concern that the FITs proposals will have a damaging impact on those looking to diversify. Why did the Government not consider a steady and more gradual reduction of FITs for small-scale solar and wind as recommended by the industry itself in a strategy published last year?
As I think my right hon. Friend the Secretary of State and I have made clear, this review is required under EU state aid rules and it is now out for consultation. We hope the NFU and other organisations will feed in their response to the consultation, which closes on 23 October, and only at that point will we look at the right balance between keeping bills down and continuing to support the industry.
Many people in Cornwall feel we have been overrun by wind turbines and solar farms, and may I assure the Minister that the recent changes announced have been warmly welcomed by many people in Cornwall? Does she agree with a constituent of mine who recently wrote to me asking me to thank the Government for their recent decisions because they have saved Cornwall?
Cornwall is a beautiful place and all of us will probably have had fantastic holidays there and would not like to see it overrun by something unsightly, so I can sympathise with my hon. Friend. I am always grateful for thanks; we do not get much of it in government, so I ask him to thank his constituent for thanking us. We are still in a consultation period, however, but this is an important sector and we want it to continue to be successful.
Let me tell the Minister, in case she is not aware, that the north-west of England is a beautiful region as well.
Green energy is vital to our economic future and I am afraid that companies such as Natural Energy Sources based in Bromborough in my constituency simply would not recognise the Government’s account of what they have done, given the risks they have created for the solar industry. I ask the Minister to think again, do as so many Members have suggested, and restructure this change to feed-in tariffs.
I understand what the hon. Lady says, but there has been a lack of understanding about what we are trying to do. We have been enormously successful in supporting renewables. The generation, particularly of solar energy, has far exceeded expectations, and we are on course to meet our legally binding targets, so in a sense we are victims of our own success. As the hon. Lady will appreciate, in this country we have the trilemma of energy security, decarbonisation and keeping the bills down. The problem is the more we subsidise and the longer we subsidise excessive deployment, the more it costs the bill payer.
Energy Supply Market
There are 31 companies supplying households in Great Britain, providing greater competition —that is an increase from the 13 in 2010.
Labour’s price freeze plan discouraged the cost of capital and investor decisions in the competition marketplace. What steps will my right hon. Friend take to encourage smaller entrants into the marketplace, in order to make up the £30 billion or so shortfall between what we need to spend and what is planned to be spent on our pipes and our pylons in the next 10 years?
My hon. Friend raises the important issue of electricity transmission, and I intend to publish proposals later this year to enable the competitive tendering of certain onshore electricity transmission assets. Initial estimates show that these competitions could bring savings of at least £380 million in the first 10 years.
What assurances can my right hon. Friend give community trusts such as that spun off from Transition Belper, in my constituency, that they can continue being supported in their pre-accreditation bid towards the use of hydro power, which has been four years in production?
I know that my hon. Friend has taken a particular interest in community energy. I acknowledge that this change could make it more difficult for community energy projects to deploy, but we had to remove pre-accreditation as a matter of urgency, in order to safeguard spends under the scheme while we carry out the feed-in tariff review. But as part of the review, we are seeking views on whether the scheme should be focused towards specific groups or sectors, which might, for example, include households or communities.
My constituency is one of the coldest in England—it might not be as cold as parts of Scotland—so energy prices make up a significant part of the household budget there. I hope that my right hon. Friend shares my belief that increased competition will help to keep prices down and make energy much more affordable for constituents in High Peak and those across the country.
I share my hon. Friend’s views; keeping bills down is a key priority for this Government, and competition is absolutely one of the ways to achieve that. An unprecedented number of companies have entered the supply market since 2010, challenging the big six and providing customers with more choice. We expect that trend to continue, enhancing competition and keeping bills down.
I welcome the Minister’s replies, but solar energy companies are having to reconsider their business plans in the light of Government decisions to eliminate subsidies to the sector. That is creating difficulties for solar companies in my Lewes constituency. What steps is she taking to ensure that all energy companies compete on a level playing field?
I thank my hon. Friend for her question, and I know she has a particular interest in solar companies in her constituency, having brought them to my attention before. The sector has, of course, been a great success and has deployed at significantly higher volumes than we anticipated when the subsidy schemes were set up. That is why we are looking again at the right level of subsidy, to ensure that we continue to have a thriving solar industry while ensuring that the bill payer is not disadvantaged.
I welcome my hon. Friend the Member for Wigan (Lisa Nandy) to the Front Bench and wish her all the best. I thank her for her kind words, as I thank other colleagues across the House for theirs.
Of course competition should put downward pressure on prices. I have discovered, through a freedom of information request, that despite a tough letter from the Secretary of State demanding price cuts for energy companies in May because of low wholesale costs, responses have not been received from Centrica, RWE npower, E.ON and EDF. The Competition and Markets Authority interim report made it clear that the 70% of customers on their suppliers’ standard variable tariff are being overcharged and it recommended a better deal. Will the Secretary of State therefore join me in calling for the introduction of a protected tariff—a default tariff, as it is known—to make the energy market more competitive and give a fair deal to the consumers who are being ripped off?
I thank the right hon. Lady for joining me in making sure that consumers and bills are a priority. The CMA has recently reported—sadly, the Opposition opposed that reference at the time—and we are very interested in what it has proposed. It is just a report at the moment, but the principle of a safety tariff is a very interesting way of approaching the matter. I do feel that we need to take more action to support the vulnerable customers who are not making the switch and are missing out on those opportunities.
Scottish Islands Renewables Delivery Forum
This is a very important issue for those living on the Scottish islands, and I want to assure the hon. Lady of the Government’s support. The work of the Scottish Islands Renewables Delivery Forum was discussed by the Secretary of State and Fergus Ewing on 8 June and 24 June. I am looking forward to co-chairing the next meeting of the forum in Glasgow with Mr Ewing next Monday. My office has invited the hon. Lady to meet me there, and I look forward to seeing her if her diary allows.
In January, the Prime Minister committed to the deployment of renewable energy on Scottish islands, and the previous coalition Government pledged to publish information about the remote island wind contract for difference by July 2015. It is now the autumn and we have had no further detail on the CfD for remote island wind, which is critical to release the potential of remote island renewables generation. When does the Minister plan to publish those important details on the CfD scheme?
The Government are actively seeking EU state aid approval to ensure that we can treat remote island wind as a separate technology to onshore and offshore wind, as they operate in high wind areas with very challenging conditions. We are awaiting that approval, and, as the hon. Lady knows, we will be making announcements about CfD rounds later this year.
Since we last met, the Competition and Markets Authority has reported. We have concentrated, as always, on keeping our focus on consumer bills. We have engaged with it, and we will continue to ensure that we give it all the support we can to ensure that the focus stays on consumer bills.
The Government have form in excelling at supporting solar and ensuring that the costs to the bill payer are kept down. I do recall that, in 2011, the reduction in the tariff was opposed by the Opposition, which is extraordinary and could have cost an additional £2.5 billion a year.
T2. I am particularly proud that Oxford is a hub of low-carbon research, but the recent Dowling review found that access to innovation support across Government is too complex. Does the Minister agree that, if we want to accelerate renewable research and achieve our climate change targets, we need to follow Dowling’s key recommendation to simplify access to research and development support for innovators? Will she investigate how she can work with the Business Secretary to achieve that? It will be essential in accelerating growth in our low-carbon economy. (901372)
I welcome the Dowling review report and agree that innovation is key to delivering future growth and productivity. I support the recommendation to make access to R and D support simpler, and my Department is working, as my hon. Friend suggests, with the Department for Business, Innovation and Skills, Innovate UK and the research councils to make improvements to simplify access to innovation support.
Over the past 18 months, the Secretary of State and I have clashed many times, and I have genuinely enjoyed all of our exchanges. The issue that we have discussed perhaps more than any other is the desperate need for the UK to have a stable energy efficiency policy and for there to be some serious political will to tackle fuel poverty. This Government have already scrapped the green deal and zero-carbon homes. There is no taxpayer-funded fuel poverty programme and the Government’s manifesto commitment proposes a huge drop in the already inadequate levels of insulation measures delivered in the last Parliament. That lack of ambition is disastrous for the environment and for consumer bills. What do this Government intend to do to end fuel poverty?
I thank the hon. Gentleman for his question. I, too, have enjoyed our exchanges. He spoke as if it were our last one; I certainly hope that that is not the case. Fuel poverty is an essential part of what this Government are trying to address. As he knows, we set out new regulations under the previous Government for the private-rented sector to ensure that we reach new standards in houses by 2030, 2025 and 2020. We have more ambitious targets. We have committed to making a minimum of 1 million houses more secure against fuel poverty, and I will bring forward more proposals in the autumn.
T3. Like many colleagues, I have had correspondence from residents in my constituency about the consultation on the feed-in tariff system. So that I can inform them correctly, will the Secretary of State please tell me how much energy prices have fallen in the past three or four years and whether she expects the outcome of this consultation to see prices continuing to fall for consumers? (901373)
Gas prices paid by households have fallen by 4.5%. The best deals are available for customers who switch to low-cost fixed term deals on the market, which are up to £100 cheaper than they were this time last year. I certainly hope that that trend continues, but we cannot guarantee it. However, I can say that the Government will take all the action we can to keep bills low.
T5. Stability and simplicity are key for oil and gas operators to make investment decisions, but there have been more than 18 changes to the oil and gas fiscal regime in the past 15 years. Will the Secretary of State reassure me and the industry that there will be no tax rises for the industry for the remainder of this Parliament? (901377)
The hon. Gentleman will appreciate that that is really a question for my right hon. Friend the Chancellor, but I think he will accept that the Chancellor has taken great steps to try to improve the fiscal regime to encourage more oil exploration. By creating the Oil and Gas Authority, we have shown our commitment to trying to ensure that we maximise the economic recovery from the North sea basin.
As our manifesto made clear, we are committed to our climate change targets. The policy announcements the Government have made to date are consistent with those commitments. We are making good progress towards meeting our 2050 carbon target, with emissions already down 30% since 1990.
T6. In recent years, a Scottish Government Minister has joined the UK delegation to the United Nations framework convention on climate change climate negotiations. Will the Secretary of State assure us that an invitation to join this year’s conference of parties in Paris will be extended to the Scottish Government? (901378)
I was grateful for the Secretary of State’s earlier reply to my hon. Friend the Member for Kettering (Mr Hollobone). My constituents share the concerns about large-scale solar parks on agricultural land. How is the Secretary of State co-ordinating with the Department for Communities and Local Government to see how the planning process can assist with rooftop deployment?
My hon. Friend is entirely right that the control of where such deployment takes place is not entirely under this Department’s authority. We engage with the DCLG, which has strengthened planning guidance so that projects must go through a stringent planning process. Decisions should be made locally with community engagement.
T7. The clean energy switch, being run by The Big Deal and 38 Degrees, is Britain’s first ever mass switch to clean energy. Will the Secretary of State place on record the cross-party support for the initiative and urge people to visit thebigdeal.com to sign up? (901379)
I believe that thebigdeal.com is one of many switching opportunities, so it would not be for me to prefer one over the other. We thoroughly encourage and support switching, which is a great way to reduce energy bills and I would encourage everybody to do so, including hon. Members.
Although I appreciate fully the need to cut subsidies, the decision made on 9 September on pre-accreditation for the feed-in tariff will negatively affect my constituents, as well, as we have heard, as those of other Members. It sends a negative message to investors in the green economy, puts dozens of anaerobic digestion projects at risk and jeopardises the conversion of food waste to energy in Suffolk. Will the Secretary of State assure me that investments in green technology will continue to be incentivised?
I am grateful, Mr Speaker. As my hon. Friend the Member for Bury St Edmunds (Jo Churchill) will be aware, the feed-in tariff has been hugely successful in encouraging the generation of low-carbon energy for homes and businesses. We appreciate that pre-accreditation was widely supported as it enabled people to book their tariff, but the problem is that there is a tension between the cost to consumers and the value of the subsidies. We need to get that balance right.
The hon. Gentleman’s right hon. Friend Lord Hutton’s report on public service pensions was adopted by the Government in 2013 and set out the direction of travel for all public sector pensions. We are in close discussion with the NDA on how we can implement that, bearing in mind the particular sensitivities of Sellafield and other nuclear sites. I am very happy to meet the unions to talk about it, as I have previously.
Our energy security relies upon an energy mix. We therefore support shale and feel that the right way to approach it is to have a planning process that councils adhere to. We stand ready to help councils when they need it, and I hope that we will have the opportunity to do so.
Given the concerns expressed today about the sustainability of the UK’s future energy markets, and also the investment required in renewables, what meetings has the Secretary of State had with smaller marine and tidal developers, particularly in the north of England, such as Solway Energy Gateway?
I wonder whether the Secretary of State has heard the rumour from No. 10 that, in its desire to cut the cost of politics, especially when we are reducing the number of MPs, her Department will be merged with the Department for Business, Innovation and Skills. As a champion of cost saving, would she recommend that move?
David Attenborough, a former Cabinet Secretary and the Secretary of State’s predecessor have proposed a 10-year investment plan to make renewable energy cheaper than coal. The plan would see big increases in research and development, with the same spirit and ambition as the Apollo space missions of the 1960s. Will the Secretary of State do all she can to get this proposal on the agenda for this December’s climate change talks in Paris, or is she brave enough to disagree with Sir David Attenborough?
Notwithstanding the fact that the oil and gas industry is currently facing serious challenges, the southern North sea has the twin advantages of significant untapped gas reserves and a low cost base. Can the Secretary of State confirm that she will be bringing forward policies as quickly as possible that will meet the nation’s requirement for more gas and protect and create jobs?
I can assure my hon. Friend that we are doing everything we can to improve exploration of the further potential in the North sea, and he is right to point to the gas reserves in the southern North sea. Of course, the beauty of this is that gas is the cleanest fossil fuel, so it can also help to meet our decarbonisation objectives.
This week I had a meeting with Sustainable Energy 24, a community benefit society established to deliver solar panels on public and community buildings in my constituency. It told me, in relation to the cut in the feed-in tariff and the ending of pre-accreditation:
“It is hard to see how any community energy group can continue on this basis.”
Can the Secretary of State tell me why the impact on community energy companies was not considered ahead of the consultation and provide reassurances that the consultation response will address that very important issue?
I can assure the hon. Lady that community energy is a very important part of our energy sources. We have already contributed £25 million to supporting community energy projects. We will look carefully at the impact on community energy while working out what is the right price to support solar while looking after bill-payers at the same time.
By far and away the most dominant low-carbon technology is nuclear, yet these programmes require cross-party consensus. Is my right hon. Friend as concerned as I am that the leader of the Labour party has come out against nuclear power, because if that becomes policy it will make it impossible for us to meet our climate change commitments?
My hon. Friend is exactly right to point out that nuclear needs to be part of the energy mix. In fact, 20% of our electricity comes from nuclear, even today. We have ambitious plans for further nuclear and we sincerely hope that we will be able to rely on the Opposition to support us in that.