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Energy and Climate Change

Volume 604: debated on Thursday 7 January 2016

The Secretary of State was asked—

Fuel Poverty

A reformed domestic supplier obligation—ECO, or energy company obligation—from April 2017, which will run for five years, will upgrade the energy efficiency of more than 200,000 homes per year, tackling the root cause of fuel poverty. Our extension of the warm home discount to 2020-21 at current levels of £320 million per annum will also help vulnerable households with their energy bills. We intend to focus our efforts through ECO and the warm home discount more effectively on the fuel poor, and will be consulting on our future approach this spring.

I thank the Minister for her answer. Fuel poverty is a sign of inequality. New research by the national charity Turn2us has found that one in two low-income households are struggling to afford their energy costs, despite being in work. Many of these households rely on in-work social assistance. Has she or her Cabinet colleagues made an assessment of the effect of welfare reform on low-income households judged to be in fuel poverty?

I thank the hon. Lady for her question. My Department works closely with the Department for Work and Pensions to ensure that the support we give goes to the most vulnerable. Energy costs are always at the centre of our minds in this Government, in order to make sure we put as little pressure as possible on hard-pushed households, and that will remain so.

When Hastings, Motherwell and the rest of the United Kingdom vote to leave the European Union in the referendum, we will be able to abolish the 5% VAT on domestic fuel bills, which will really help those suffering from fuel poverty. Would my right hon. Friend welcome that?

My hon. Friend will be aware that this Government are always focused on ensuring that bills are kept down for householders in all constituencies. I would tactfully suggest that my right hon. Friend the Chancellor might have something to say about reducing VAT income on such a service.

Evidence has suggested that rural communities are disproportionately adversely affected by fuel poverty. One way of combating that is through the development of domestic energy syndicates and the collective purchasing of oil. What proactively could and should the Department be doing to support such initiatives?

The hon. Gentleman is right in what he says, and we do ensure that there is a focus, through ECO, on rural areas, which often face the largest problem with fuel poverty. My Department works closely with various community energy schemes to ensure that we assist them, be that in group buying or in setting up their own renewable energy schemes, and we will continue to do so.

That’s fine by me, Mr Speaker.

Does my right hon. Friend agree that renewable energy sources are two to three times more expensive than fossil fuels and therefore the more renewables we use, the more fuel poverty we will create?

The explanation should be intelligible to the people beyond, and the explanation is that the middle initials are T. C. My apologies to the hon. Gentleman, who seems duly delighted.

I do not share my hon. Friend’s view. I think it is essential that energy supplies are a mix, and that means a combination of fossil fuels, for now, and renewable energy. Investing in renewable energy is an essential part of energy security, as well as of decarbonising and meeting those targets.

Paris Climate Conference

3. What assessment she has made of the implications for her policies of the outcomes of the COP 21 climate conference in Paris. (902820)

18. What assessment she has made of the implications for her policies of the UK’s contribution to achieving the goals on limiting global warming set out in the Paris agreement on climate change. (902835)

We are currently considering the implications of the Paris outcome domestically and with our EU partners. Our 2050 target of at least an 80% reduction in emissions from a 1990 baseline is already set in statute. We are committed to meeting it, and I look forward to setting out this Government’s proposals and policies for meeting our carbon targets later this year.

The floods over the past few weeks are a reminder of the effects of climate change and, as we have known for a while, these extreme weather events are here to stay. Given the Government’s proclaimed UK ambition at the Paris climate change talks, why at the same time were they undermining policies on, for example, subsidies for renewables and low-carbon technologies?

I do not accept that we are undermining those policies. What we are trying to do is get the right balance to support policies—to support renewable energy—while also looking after bill payers and ensuring that not too much is added to their bills. I also remind the hon. Lady that the UK is responsible for 1% of the world’s emissions, and the success at Paris was that we were dealing with nearly 100% of the world’s emissions. That is where we will get the real difference and change on carbon emissions.

I hope the Secretary of State will agree that delivering the Paris climate agreement requires a cross-departmental and economy-wide approach. If that is the case, will she explain why there appears to be absolutely no mention of climate change in the remit of the National Infrastructure Commission? Will she urge her colleagues to remedy that, and confirm that the urgent need for rapid decarbonisation will be a non-negotiable criterion for every single one of its projects?

I thank the hon. Lady for bringing up the National Infrastructure Commission. I have had a preliminary meeting with the head of it, and know that it will shortly be consulting on which projects to prioritise. The project that it has already said it will be looking at in our sector—interconnectors and systems operations—will be important for delivering on our decarbonising future, and will play an important role in achieving cross-party consensus on making the much-needed investment in infrastructure.

The Secretary of State will be aware that the legally binding UK commitment is about 30% to 40% faster than that signed up to by the rest of the EU in Paris. Indeed, some countries in the EU, such as Austria, have increased their emissions by something like 20% since 1990. What discussions does she plan to have with her colleagues in Europe on getting their processes up to the same level as those of the UK?

My hon. Friend raises an interesting point. The fact is that the UK is leading in this area in terms of not only our ambition through the Climate Change Act 2008, but the structure of the delivery of our decarbonising—the five-year review and the transparency of the regime. I will be having conversations with my colleagues in Europe to ensure that they too step up and participate in the important effort-sharing decision that will take place this year.

17. The Secretary of State’s words are one thing, but credibility with the public is another. Wirral constituents are worried about both jobs in renewables and our real commitment as a country to the agreement we made in Paris. Will she be absolutely clear on whether she will do any more to protect work in the renewables sector that affects my constituents? (902834)

I know that the hon. Lady will be concerned about offshore wind, as it is so close to her constituency. I hope that she will welcome the fact that DONG Energy has publicly stated that it intends to invest a further £6 billion in the UK by 2020, which is encouraging news for her constituents who are so close to its important offshore wind development. What she can take from this is the fact that, having signed up to the Paris agreement and with the UK’s commitments on this basis, we are seeing more investment, from which her constituents will benefit as well.

If Paris had happened a year ago, would the Secretary of State still have made the same announcements that she has made in the past six months, adversely affecting onshore wind and solar energy, which has impacted badly on jobs and investor confidence?

I do not accept the hon. Gentleman’s interpretation of the announcements that I have made. We have set out a clear path to getting a balance between ensuring that we continue to support renewable energy and ensuring that we get the investment we need, and also that we look after people’s bills. Paris has been a great triumph; let us not knock it. Let us recognise the fact that it starts to bring other countries up to the high standards that the UK has placed on it, and that it will encourage further investment.

On the decision to pull £1 billion from carbon capture and storage, the Prime Minister said to me at Prime Minister’s questions:

“You have to make decisions about technology that works and technology that is not working.”—[Official Report, 16 December 2015; Vol. 603, c. 1548.]

How was that assessment made, given that the competition had not yet been completed?

We do not rule out carbon capture and storage in the future. This Government have made substantial investments through our entrepreneur fund in early-start carbon capture and storage. We have industrialised carbon capture and storage projects operating and testing in Teesside. The fact is that the decision was made not to have a £1 billion investment. It was a difficult decision made in a difficult spending round. None the less, we recognise that carbon capture and storage will still have an important future in a low carbon economy.

The Prime Minister said that CCS was not working, but the Secretary of State says that it will work, so one of them is clearly wrong. In his list of technology that was working, the Prime Minister included small-scale nuclear reactors. Where is that technology working, and if it is working as the Prime Minister has claimed, why does it require £250 million of taxpayers’ money?

I think I can bring together some of the hon. Gentleman’s questions by highlighting the investment that we are making in innovation, which is an area in which we think there can be great steps forward in renewable energy. We can help to develop important new renewable energy technologies. For instance, in Paris, under “mission innovation”, various countries came together and agreed to double their investment in innovation, and I believe that carbon capture and storage and small modular reactors will benefit from that investment.

Now that DECC has accepted that the energy reset has pulled us further away from achieving the fourth carbon budget by some 54 million tonnes of CO2, meaning that we are on track to fall short of it by some 10%, or 187 million tonnes, and now that it is predicted that we will also miss our 2020 EU renewables target, will the Secretary of State explain precisely what steps she will take in the remainder of this Parliament to make good the Prime Minister’s boast that the UK is “leading the way” in work to cut emissions?

I do not accept the hon. Gentleman’s depressing interpretation of our progress towards our important targets. Our EU renewables targets are difficult to meet, but we have exceeded the interim target. We know that we need to make more progress, which is why I am working with other Departments across Government to ensure that action is taken on heat and transport.

It was recognised in 2011 that there was a problem with the fourth carbon budget, and we now need to ensure that we put in place the policies necessary to meet it. Be in no doubt that we remain committed to achieving that.

Paris Agreement on Climate Change

5. What discussions she has had with her ministerial colleagues on the financial implications of the UK’s commitments under the Paris agreement on climate change. (902822)

The hon. Lady will be aware that the cost of UK action to reduce emissions is already committed to through the setting of our carbon budgets. The Paris agreement will help to ensure that all other countries are also acting. That will help to ensure that climate change is effectively addressed, help level the playing field, reduce the costs of climate action such as on technologies, and provide much greater opportunities for UK business in low carbon transformation.

I thank the Secretary of State for her answer, but does she accept that the estimates suggesting that the UK is on track predate the cuts to DECC’s budget and are out of date, meaning that meeting the 2°C target will require further Government support, particularly for low carbon generation and carbon capture and storage?

I do accept that the Government need to put in place more policies to ensure that we meet our carbon budget, which we have just referred to. I point out to the hon. Lady that the Paris climate change agreement is not as ambitious as what we already have in place through the Climate Change Act, which is legally binding and is delivered in our carbon budgets.

The Secretary of State rightly says that the Paris climate change agreement is not as ambitious as the Climate Change Act. The national action plans agreed to in Paris commit the world to no more than 2.7° C of warming. Will she outline what steps she has taken and what conversations she has had with her EU ministerial counterparts to increase the EU’s ambition for those nationally determined plans before the next stock-take in 2018?

The hon. Lady raises an important point. The current proposals from Paris would actually only achieve an increase of no more than 2.7 °C. Not only are we ambitious to ensure that we reach a maximum of 2 °C, but we would like to see the rise restricted further. There will be conversations in the EU this year to ensure that we meet the EU renewables targets, and we have the “effort share” discussions ahead of us. The real triumph of the Paris agreement is that it involves not just the UK and the EU but the whole world. The largest emitters, such as China and India, are also participating.

COP 21 Climate Conference

7. What steps her Department is taking in response to the outcome of the COP 21 climate conference in Paris. (902824)

My hon. Friends will be aware that the agreement reached in Paris in December was an historic step forward. Almost 200 countries committed to climate action, which, for the first time ever, they all agreed to review every five years and to be held accountable for. There will now be follow-up work in the UN to agree the detailed rules and prepare for the five-year reviews.

Does my right hon. Friend agree that the deal in Paris sees the world signing up to the approach to tackling climate change adopted by the UK? Is she confident that her approach will ensure that we meet the goals agreed in Paris?

My hon. Friend is right. The UK can take pride in the structure that was put together in Paris because it mimics in some ways the Climate Change Act that we put in place so many years ago. The five-year review, the transparency and the need to come back all the time with an improved offer are the right way to go, and I am confident that we will be able to deliver on that. I am excited about the prospect of talking further to my international partners to make sure that we have in place the right system for delivering that over the next few years.

Does my right hon. Friend agree that ensuring that all countries which have signed up to the agreements submit regular and full updates, and that data on progress are crucial so that we can see which countries are sticking to the agreement?

My hon. Friend raises an important point. Transparency in these reviews is essential and it is something that the UK fought hard for during the Paris negotiations to ensure that when other countries come back with their five-year reviews, they have made them clear in a way that we can examine so that we can be certain that the carbon emissions are being reduced.

New figures from the Department have shown that renewables were the biggest source of electricity in Scotland last year. The industry is a real Scottish success story and will play a significant part in helping to meet the targets set in Paris. Will the Secretary of State show her Department’s own commitment to this vital sector by accepting the case for the inclusion in the grace period for the renewables obligation of projects which have attracted significant investment and achieved all the technical requirements to meet the Government’s cut-off date of 18 June 2015, including the Binn eco farm in my constituency?

The renewables industry, the solar industry and onshore and offshore wind are indeed a great British success story, and other countries wanted to talk to us about them. There is a great opportunity for exports for business. I am happy to say that a number of Ministers spoke to me about this in Paris and I think there will be great opportunities. As regards individual wind farms or proposals, I must ask the hon. Lady to write to me separately so that I can look at those, but I gently remind her that the Government are committed to making sure that we deliver on our renewables target while ensuring that we keep bills down. That will always drive us to make sure that we get that balance.

Anaerobic Digestion and Biogas Sector

First, may I say how delighted I am to see my hon. Friend fully recovered and back in his place?

We support AD and biogas through the feed-in tariff scheme, the renewables obligation and the renewable heat incentive. The Government have provided £124 million of support under the renewables obligation, £53 million under the renewable heat incentive, and enough support under the feed-in tariff scheme to deploy 161 MW since 2010. These technologies can make a valuable contribution to our decarbonisation targets and we will continue to support them.

I thank my hon. Friend for her kind remarks. I recently met Salterforth resident Peter King, along with representatives of Kirk Environmental, at my Earby advice surgery to discuss anaerobic digestion and biogas. Does my hon. Friend agree that, compared with wind or solar, biogas has significant benefits in delivering predictable and consistent amounts of renewable energy into the network?

Indeed. There are real benefits for the UK in having a wide range of renewable energy sources, but my hon. Friend is right to point out that as the sector develops in the UK, biogas technologies could bring additional benefits, including providing baseload energy, injection into the gas grid and potential use as transport biofuels.

In her letter to other Departments on 29 October the Secretary of State—whom I congratulate on stressing in her letter the importance of reaching EU renewables targets in perhaps more recalcitrant Departments—she indicated that the highest potential for additional renewable heat is from biomethane injection into the grid, but she also said that we will face a shortfall against the part of that target that is related to the heat sector, even if support for her proposed measures was agreed by the Chancellor in the comprehensive spending review. Now that she has a reduced amount of money for the renewable heat incentive up to 2020, does she consider that that amount will enable us to reach our heat targets by 2020 and, if not, what new proposals will she bring forward to make sure that there is investment in this sector that can enable us to reach that target?

The hon. Gentleman is right to point out that we had a good settlement in the comprehensive spending review. We were very pleased with the commitment to enhancing—increasing—the renewable heat incentive each year between now and 2021, and we are making good progress towards that. He will realise that the fourth carbon budget is for 2023 to 2027. He would not expect us to be meeting it today, but we are putting plans in place and working towards that progress as we speak, and we will continue to set out plans during this year.

Despite more effective use of packaging, better date labelling and programmes by the supermarkets to distribute and sell food, we still generate substantial quantities of food waste. Does the Minister agree that using this resource to generate electricity is better than sending it to landfill?

I completely agree. In fact, just recently I went to see a proposed new project in my own county of Northamptonshire that is looking to use landfill to create a renewable heat scheme. Some fantastic new ideas are coming forward, and my officials and I are always very keen to hear about them and support them where we can.

Shale Gas Drilling

9. What steps she is taking to prevent shale gas drilling at the surface in areas of the greatest environmental value. (902826)

First, I commend my hon. Friend for the personal commitment he has shown to researching best practice in this area. I can assure him that the Government are committed to protecting our most valuable spaces from surface drilling of wells for fracking. On 4 November, we set out how we plan to do this via petroleum exploration and development licences. We will issue a response to our industry consultation as soon as possible.

I very much welcome the Minister’s comments. The Task Force on Shale Gas has called for a single regulator and increased levels of independent monitoring. Does the Minister agree that this would improve public confidence and provide further protection, particularly for our most sensitive areas?

The task force’s 2015 report says that the regulatory regime is currently fit for purpose, but my hon. Friend rightly points to its proposal that if the shale gas industry does develop the Government should consider creating a bespoke regulator. I can absolutely assure him that we will keep the regulatory regime under review to make sure that it remains fit for purpose. On his second point about independent monitoring, I entirely agree, and that is why we are already grant-funding baseline monitoring in North Yorkshire and Lancashire.

Does the Minister accept that there is widespread opposition to fracking in all parts of Britain? Will she congratulate, as I have, the residents of Calow in Bolsover for refusing to allow a drilling operation and getting it stopped not only by the local authority but by her own inspectorate?

It is quite extraordinary that Opposition Members continually talk about the potential for shale gas as if it is some kind of disaster. The hon. Gentleman comes from a very honourable and long-standing mining area. Mining has a legacy that we will be dealing with for many years to come. The shale industry, on the other hand, offers the opportunity to create a new home-grown energy source that is vital for our energy security into the next decades.

When will the Secretary of State produce some legally enforceable protection against surface-level fracking in our national parks and sites of special scientific interest?

I hope that the hon. Lady heard my initial comment, which was that we have been able to put forward our proposal to restrict surface drilling in any of our most protected areas, not limited to national parks but including many other valuable spaces, through licensing. As things stand, we are waiting for our report in response to the industry consultation that closed on 16 December, and we will make our announcements very soon.

National Grid

As more domestic, community and business generators come on stream, the demand for grid connection is increasing, as the hon. Lady rightly points out. Accommodating this is the responsibility of the network companies, overseen by Ofgem. Network companies publish long-term plans setting out how new generation and demand will be managed. She might like to take a look at National Grid’s annual electricity 10-year statement as a good example of this.

Let us face it: National Grid is notorious for stifling new energy projects at birth in rural Wales. Given that the draft Wales Bill proposes devolving generating stations up to 350 MW but not transmission, how will the Minister work with the Welsh Government to ensure that that is not an empty promise?

I can absolutely assure the hon. Lady that the Government are committed to the Welsh devolution Bill, as set out in the Silk commission, and that is going through. Specifically, Ofgem, through the electricity distribution network price control, has approved about £24 billion of investment in the distribution network for between 2015 and 2023, and about £1.7 billion of that is for the distribution company responsible for north Wales, including the hon. Lady’s constituency.

Does the Minister share my concerns that, in the short to medium term, our energy security may be put at risk if the capacity market that is being put in place to bring forward new gas capacity not only fails to do that, but makes current gas capacity, such as that provided by the Glanford Brigg power station in my constituency, no longer worthwhile and results in it coming off-stream?

We have just completed the second capacity market auction and achieved a very competitive price for consumers; as the hon. Gentleman will know, it is a top priority for this Government to keep the bills down. At the same time, we have ensured that National Grid has the tools at its disposal to be able to ensure energy security, which is our overriding concern. I do not share his concerns. We are reviewing the capacity market to make sure we bring on new gas, but there are no concerns about energy security.

Small-scale Solar Sector

Solar is an enormous UK success story that this Government continue to support. As my right hon. Friend the Prime Minister said yesterday, 98% of all solar deployment has taken place since 2010. In December, we announced that the feed-in tariff scheme would remain open and continue to support small-scale solar up to a value of £35 million of subsidy, potentially delivering an additional 1.2 GW across 220,000 installations by 2019.

I thank my hon. Friend for that answer. I had the opportunity recently to meet a company in the solar sector industry in my constituency, ESP Energy in Dorrington, and I was very impressed with its technology, innovation and job creation. Will my hon. Friend assure me that the Government will do everything possible to continue supporting this very important energy source?

As my hon. Friend will know, it is a key priority to keep consumer bills down, so there must always be a balance between supporting a superb UK industry and making sure that consumer bills remain affordable. We will continue to support the further growth of the sector, but not at any price. The changes we have made to the feed-in tariffs seek to maintain the solar industry, which in the medium term can continue to reduce its costs and therefore move towards a subsidy free deployment.

Will the Minister update the House on what steps she is taking to ensure that the rate of VAT on solar installations does not rise, as proposed, from 5% to 20%, which could add £900 to an average solar installation?

The right hon. Gentleman is exactly right to raise that very important point. He will know that it is the result of proceedings by the European Commission, which believes that our VAT rates on solar installation should be higher. Her Majesty’s Revenue and Customs is looking closely into the issue and consulting on it. Once we have taken into account the outcome of that consultation, we will have to look further at the regime.

20. My constituency has a number of thriving solar businesses, some of which I have worked with during the recent changes to feed-in tariffs. As the Government look to the industry to expand, and in response to a query from Solar UK in Battle, will the Minister explain how she will support the development of energy storage solutions for existing and future solar systems? (902838)

My hon. Friend is exactly right to point out the huge potential for energy storage to enhance the value of solar PV installations. My Department has provided more than £18 million of innovation support since 2012, to develop and demonstrate a range of energy storage technologies. We are also investigating the potential barriers to the deployment of energy storage, focusing in the first instance on removing regulatory barriers, and we plan to hold a call for evidence on that specific area this spring.

The Minister is in danger of sounding complacent on this subject. Many small and medium-sized enterprises in my constituency fear the end of solar. Has she had a chance to consider the Solar Trade Association’s £1 rescue scheme, and what is her response to it?

As my right hon. Friend the Secretary of State and I have made clear on so many occasions, there is a fine balance. As the costs of a new technology come down, as they very much have in the excellent UK solar industry, so we must focus on the need for people in this country to be able to afford their energy bills. Fuel poverty is an enormous problem, but we do not want to over-subsidise, so it is a fine balance. We think that our response to the consultation in December provides that fine balance: giving a 5% investment return to solar installations is fair to consumers and fair to the industry.

24. EU minimum import prices on Chinese, Taiwanese and Malaysian photovoltaic cells inflate the cost of an average solar installation by £385. The Minister is working to extract the UK from that, but will she update the House on her progress and set a date by which she hopes to end these price controls? (902842)

I certainly agree with my hon. Friend that the MIP is an unwelcome drain on the UK solar industry. My right hon. Friend the Secretary of State made that point in her letter to the Trade Commissioner in November. I also agree that it would be fairer and simpler to remove the MIP while the current expiry review is under way. Unfortunately, however, the decision to launch an expiry review is one for the Commission, not for member states. Anti-dumping and anti-subsidy regulations require the Commission to maintain existing trade defence measures while the expiry review takes place, so it could be some months yet.

Last year, the Solar Trade Association estimated that 27,000 workers would lose their jobs as a result of the Government’s proposed 87% cut to the feed-in tariff. Following a public outcry, including from Members on both sides of this House, the Department reduced the cut to 64%, saving about 8,000 jobs. I am sure the Minister would like to take the credit for that, but what is her message to the remaining 19,000 solar workers who face redundancy this coming year as a result of the tariff cut?

UK solar is a huge success story. It has grown rapidly since 2010, with enormous support from energy consumers in the UK. As we have said time and again, there is a balance. We absolutely welcome the jobs and growth that have been provided in the sector, but we cannot continue to support jobs just through bill payer subsidies. That would not be fair. Our measures will ensure that there is good potential for the industry to continue to grow and for jobs to continue to be supported, while at the same time making sure bills remain affordable.

Energy Tariffs

The Government are making it quicker and easier for energy consumers to switch supplier and move to the best-value tariffs. We have delivered a national switching campaign and worked with industry to cut the time it takes to switch to 17 days, and we are now working with Ofgem to move to reliable next day switching. We are also working with industry to develop an energy-switching guarantee, which will be launched later this year.

Does my right hon. Friend agree that it is particularly important for vulnerable customers to be able to find the best-value tariffs? Will she say a little more about what the Government are doing to spread that message and to ensure that such consumers get the best deals available? Does she agree that carers’ organisations and children’s centres, which support vulnerable younger families, may have a role to play?

Yes, I do agree with my hon. and learned Friend. It is absolutely essential that we improve access for vulnerable people to the switching that can provide such great benefits. It is no good people being able to benefit from a saving of about £200 on their energy bills unless they can actually access it. We launched the big energy saving network and put in £2 million to make sure that vulnerable people, who particularly need the improvement that this can deliver to their energy bills, can access it. One of the ways in which that can be done is through citizens advice bureaux, but in addition we will look at his other suggestions.

But the Competition and Markets Authority has identified something I have been speaking about for quite a long time: that that sticky customer base is not being served well by energy suppliers. The CMA has said that about 70% of customers on the standard variable tariff are paying over the odds, so has the Secretary of State looked into the suggestion I have made in the past year and previously that we need to protect those customers as well, and that a default or protection tariff could ensure that suppliers provide tariffs that are fair to their customers, and particularly those ones?

The right hon. Lady makes an important point and the suggestion about the CMA is helpful—it has just begun to include in its consideration vulnerable customers on pre-payment meters. We are interested in the recommendations it will make—we hope—in the next few months, to ensure that we look after those vulnerable customers who are unable to switch. We have said previously that we will take seriously and act on the CMA recommendations to ensure that we look after those customers who have not engaged in switching but should do so. We look forward to seeing the CMA suggestions for remedies.

I welcome the concern expressed by Members on both sides of the House for consumers and best value. Last month, the Secretary of State agreed to hand out hundreds of millions of pounds in new public subsidies to diesel and coal power generators through her capacity market scheme. Will she tell the House by how much family energy bills will rise as a consequence?

The capacity market is specifically designed to ensure that energy security is not negotiable. The Government take energy security very seriously. Because of the lack of investment in energy infrastructure over the past decades, we needed to ensure that the capacity market is in place to ensure that we do not have any problem at all with energy security. Diesel will form a part of the future, but only in very small amounts. Let us remember that it is there as back-up and will be switched on occasionally when it is needed. The addition of the capacity market to people’s bills will be a matter of a few pounds.

It is astonishing that the Secretary of State comes to the House and repeatedly says that the Government want to put as little pressure as possible on hard-pressed households, and yet is spectacularly unable to answer a very simple question about how much that will put on family energy bills. In just one day in December, she agreed to subsidise high-polluting diesel generators to the tune of £175 million, paid for by increasing family energy bills. Will she answer this question: are those companies expected to make returns of more than 20% at the expense of bill payers?

What is astonishing is the hon. Lady’s lack of understanding of the fact that the capacity market is needed because of the Labour Government’s woeful under-investment in infrastructure. We are left with the consequences and need to ensure that energy security is completely reliable. The capacity market is essential to ensuring that that hole is filled. We are proud of the way in which it has delivered—the second auction has just completed. As I have said, it will cost a few pounds—under £10—and we will ensure that energy security will never be in question under this Government.

Smart Meters

I can assure the hon. Lady that good progress is being made. Energy suppliers have now installed over 2 million meters in homes and small businesses across Britain, ahead of the main installation stage starting later this year.

In September 2014, the Public Accounts Committee raised concerns about the roll-out of smart meters, but very recently, Alex Henney, a former Conservative energy adviser, warned the Secretary of State that the roll-out would at best be regarded as a waste of money and that it is “a ghastly mess”. Does she agree with Mr Henney, and what is she doing to resolve those problems?

I can say very clearly to the hon. Lady that I do not agree with that position. Smart meters will have a great future in this country. We discussed in earlier questions energy security and fuel poverty. Smart meters will be a very good way for people to reduce their bills and use less energy, therefore creating fewer carbon emissions. Smart meters are an important part of that.

I have no doubt that the introduction of smart meters will help customers to control their energy bills, but, just so that they are aware of the background, will the Secretary of State confirm that the UK is rolling out smart meters because of European Union directive 2009/72/EC?

My hon. Friend is right that the European Union has directives that give us guidance on this matter, but there is no question but that the initiative of smart meters is of huge advantage to UK customers. UK customers and consumers will always be put first.

Neart Na Gaoithe Offshore Wind Farm

15. If she will take steps to encourage companies associated with the Neart Na Gaoithe offshore wind farm to base their operations at Dundee port. (902832)

As my right hon. Friend the Secretary of State announced in her November speech, we are committed to the continued growth of UK offshore wind. Britain is already the world leader. This industry is a huge potential source of jobs and growth, and we will always focus on maximising UK content in the supply chain. The hon. Gentleman will appreciate that the decision on where one company’s operations will be based is a commercial decision for that company. However, my officials are working closely with the developer and the Scottish Government to maximise the use of UK content in this wind farm.

Does the Minister agree that, should the outstanding legal challenge be overcome, Dundee and its deep port are ideally placed to provide operations, maintenance and suppliers?

I absolutely agree with the hon. Gentleman. I am extremely keen on that. Recently, I visited one port in Scotland, Aberdeen port, to hear how it is trying to expand to accommodate not just the growth of offshore wind, but potential decommissioning in the future. It is vital that whatever our energy policy is, we focus as far as possible on maximising the UK content in the supply chain.

Oil and Gas Industry

The oil and gas industry is vital to our economy and provides more than 350,000 jobs. The Government are committed to supporting it. Our latest projections show that in 2030, oil and gas will still be a core part of our energy mix, providing nearly 70% of the UK’s primary energy requirements. Our commitment to the industry is the precise reason why we have established the Oil and Gas Authority, which is charged with working with the industry to maximise the economic recovery of the UK’s oil and gas resources.

The oil and gas industry has asked the Government for further tax reliefs to incentivise exploration activity. Professor Alex Kemp of the University of Aberdeen has described them as

“clearly necessary to exploit the remaining physical potential”

of the North sea. What consideration has the Minister given to a refundable tax credit for exploration?

The hon. Lady will be aware that the Chancellor has already improved the fiscal regime significantly to encourage further exploration in the North sea basin. Just before Christmas, we had a series of meetings with North sea basin participants, the Oil and Gas Authority and others to discuss what other measures could be taken. Further fiscal measures are certainly on the table, but so too are vital measures such as getting production costs down, making more efficiencies and sharing infrastructure. The OGA is absolutely focused on doing those things.

I am grateful to the hon. Member for Livingston (Hannah Bardell) for raising this question and to the Minister for her reply. I acknowledge the work that the Government have done in the sector, but will the Minister give me her assurance that in the lead-up to the Budget in March, she will leave no stone unturned in ensuring that this vital industry secures the support that it needs at this difficult time?

I am grateful to my hon. Friend, who has focused so much on this important sector. I assure him that we are totally focused on looking at what more can be done in all areas to support this vital UK sector.

Topical Questions

My thoughts are with all those who have been affected by the recent flooding. Energy security is our No. 1 priority. We are working closely with the energy industry to assess the range of potentially disruptive risks, including severe weather, put protections in place and improve the response to electricity disruptions. The industry worked to ensure that power was restored to customers who were disrupted by the recent storms as quickly as possible, in very challenging circumstances.

Everyone in the Chamber will benefit this year from electricity generated by coal burnt in the Bassetlaw, West Burton and Cottam power stations. What contingency agreement has been reached with EDF to ensure that in 2026 and beyond, when we do not have enough power available, the decision to close coal-based power stations can be reversed?

Can I reassure the hon. Gentleman that we are moving to a consultation on ending coal-fired power stations by 2025? I am sure that he will want to participate in it. This Government are taking the long-term view on getting the right mix of decarbonising and having energy security. That is why we are making this plan well ahead of time—it is 10 years ahead.

T2. Given the revisions to the feed-in tariffs that will shortly come into force, has the Minister made any assessment of the likely effects on the solar industry, particularly in the south-west, where the sun nearly always shines? (902894)

Of course, my hon. Friend is absolutely right—the sun nearly always shines there. It is a great place for solar, which has been a spectacular success there. The tariffs aim to give generators with well-sited projects appropriate rates of return, so around 5% for solar. We believe that that will save bill payers between £380 million and £430 million a year by 2021, while at the same time enabling up to 220,000 new installations to be subsidised under the new feed-in tariff.

I welcome the Secretary of State’s update to the House on the actions taken in response to the floods. I particularly welcome the Prime Minister’s decision to set up a cross-Whitehall review of the Government’s approach to flood defences, which will consider the rising flood risk that climate change poses. We know now that the last review in 2014, which was also led by the right hon. Member for West Dorset (Mr Letwin), met just three times and did not publish a single finding. Will the Secretary of State confirm that she personally attends this committee? Will she tell us whether it has met yet, how often it plans to meet, which independent experts are on it, and what, this time, she expects it to achieve?

As the hon. Lady will know, the Government take very seriously climate change and its devastating impact in terms of the recent flooding. I can reassure her that the Department participated in regular meetings of Cobra on almost a daily basis to ensure that electricity sources were restored as quickly as possible. The review will take place, and we will keep a careful, watchful eye on ensuring that it does meet and that it looks carefully at what impact it has had.

T3. What steps are the Government taking to address the increasing shortage of skills in the nuclear industry? (902895)

We have already taken a lot of action to tackle the skills problem at all levels, from programmes to attract more schoolchildren to science, technology, engineering and maths careers to apprenticeships and training at all levels, as well as setting in train work to determine the scope for transfers of skills from wider sectors. My hon. Friend is right to highlight the need for more nuclear skills. Hinkley C alone will provide up to 25,000 jobs and 1,000 apprenticeships.

T4. The Department’s impact assessment suggests that 18,700 jobs could be lost as a result of the 65% reduction to the solar feed-in tariff. That affects jobs in my constituency. What loss in national insurance contributions and income tax will that mean for the Government, particularly in light of the £16 billion shortfall in tax receipts last year? What assessment has been made of the combined effect if Her Majesty’s Revenue and Customs presses ahead with the increase in VAT to 20% on domestic solar installations? (902896)

I can assure the hon. Gentleman that the Government remain committed to the ongoing success of the solar industry. As I explained in an earlier reply, we cannot simply keep jobs going as a result of subsidy, but our best guess is that our new feed-in tariff will support up to around 23,000 jobs in the solar sector. Of course, it is for the sector to bring down the costs as far as possible to reach a subsidy-free stage by 2020. We will do everything that we can and, as I have also said, if the VAT rate has to go up, we will look at what more we can do within the tariff to ensure that we do not penalise the sector.

I refer the House to my entry in the Register of Members’ Financial Interests. I am chairman of GLOBE International, which recently held a successful summit in Paris as part of the COP process. Does the Secretary of State agree that the world’s leading network of parliamentarians devoted to legislative leadership on climate change has a key role to play in ensuring that the intended nationally determined contributions—INDCs—turn from aspiration to reality? Will she meet me to discuss work between the Department and GLOBE, internationally and nationally, to ensure that that is achieved?

I am aware that GLOBE International is one of the largest forums for parliamentary engagement devoted to legislative leadership on sustainable development and climate change, and I recognise my hon. Friend’s important role in chairing it. I would, of course, be delighted to meet him to discuss how we can further promote parliamentarian international engagement on this important subject.

T5. I was absolutely delighted when the Minister said in June, at a renewable energy summit, that we were going to remove subsidies. When does she expect onshore and offshore wind subsidies to have disappeared completely? (902897)

Projects such as Gunfleet Sands, just off the coast of the hon. Gentleman’s constituency, provide enough clean electricity for over 100,000 homes following hundreds of millions of pounds invested by the developer, much of which was spent locally. I am sure he will have welcomed that. As we have made clear, however, we have to get the right balance between supporting newer technologies such as offshore wind and being tough on subsidies to keep bills as low as possible. We will always be working towards making technologies subsidy-free.

By far and away the dominant source globally of low-carbon electricity is nuclear power. In the EU, a third of electricity comes from that source and China has approximately 50 stations under construction. We also need small modular reactors. Will the Minister set out what her plans are in that regard and how the UK can provide leadership?

My hon. Friend is absolutely right. Nuclear is an incredibly important part of our energy future and I am very proud that we have signed the first new nuclear deal in over 20 years. We believe small modular reactors will have an important part to play. I am delighted to say we are using part of our substantial innovation funding to make sure we bring them on as early as possible, but that will not be at the expense of existing plans for nuclear reactors. We will be aiming for a mix of larger nuclear and smaller nuclear.

T6. Earlier this week, the SNP Scottish Government agreed a support package to retain staff at Dalzell and Clydebridge steel plants. The package will include measures to address energy use and costs. Energy costs are a substantial expense facing business. What consideration has been given by the Secretary of State or her Cabinet colleagues to bringing forward a coherent strategy to address the high energy costs facing business across the UK? (902899)

We are well aware of the importance of keeping energy costs down to support businesses and households. My right hon. Friend the Prime Minister announced recently that energy-intensives would be given a specific support package. That has recently got state aid clearance and will be put in place as soon as possible.

T7. The Minister will be aware that just before Christmas the European Commission announced new import tariffs, backdated to May last year, on Taiwanese and Malaysian solar panels. That could result in many solar companies having an unwanted and potentially devastating tax bill. Will she take action to assure that that will not happen? (902900)

The hon. Gentleman is right to raise this matter. It is a real concern that, in spite of the fact that the cost of solar panels has dropped so dramatically, the cost in Europe remains higher than elsewhere in the world as a result of the import tariffs. As I mentioned earlier, my right hon. Friend the Secretary of State wrote to the Trade Commissioner explaining how very bad this is for the ongoing success of the UK industry. We will do everything we can to try to ensure the tariffs are removed as soon as possible.

T8. We were disappointed in the Humber last year not to be granted the national college for wind energy, especially in light of the fact that renewables are so important to the future of the area. Will Ministers agree to meet me and representatives of the local enterprise partnership to discuss what more can be done to promote a national wind college that might attract local funding? (902902)

Yes, I would certainly be delighted to meet the hon. Lady and colleagues. I can tell her that I recently had the huge pleasure of seeing the new Siemens turbine blade site in Hull, which is fantastic and so impressive. It is a real injection of enthusiasm, new jobs and apprenticeships in her area. We should do everything we can to promote the northern energy powerhouse that is taking off and doing so well.

Order. There is a veritable army of Opposition Members seeking to catch my eye, but as a practitioner of diversity and inclusion I say to the right hon. Member for Hitchin and Harpenden (Mr Lilley) that I do not want him to feel excluded. He wished to contribute earlier. If he wishes to contribute now, we will happily hear him.

The rate of fuel poverty across the UK is very high, which is why I welcome the Scottish Government’s £200 million warm homes scheme to help reduce bills for low-income households. Such households are more likely to pay their bills using prepayment meters, but these are more than £200 per year more expensive than the cheapest direct debit bill. What measures will the Secretary of State introduce to ensure that customers using meters have access to the lower energy prices available to those using other payment methods?

I am well aware of the issue of fuel poverty. In Paisley and Renfrewshire North, there are energy company obligation measures in place that I believe will help the hon. Gentleman’s constituents. By September 2015, some 119 measures per 1,000 households had been installed compared with the average of 77 per 1,000 in the rest of the UK. He can rest assured, however, that we are focused on making sure that bills stay low and fuel poverty is addressed, and the ECO system is one of the best ways for us to do that.

In Northern Ireland, one in five pensioners are defined as living in income poverty, and 62% of them are in fuel poverty. What discussions has the Secretary of State had with her counterpart in Northern Ireland to help address these issues?

I know the hon. Gentleman cares as much about this as we do. Keeping fuel poverty at bay and bills down are absolute priorities. On the statistics he mentioned, I will have to write to him.

Outside Hinkley Point C, for each of the five proposed new nuclear power stations the Government are considering, they are discussing having a single supplier for each one. This means that yet again they will be held hostage, with no guaranteed programme, high profits for suppliers and extortionate strike rates agreed, which will be picked up by electricity users. Should the Government not do the decent thing and rethink this “nuclear at all costs” policy?

The Government think that nuclear reactors are an important part of delivering a low-carbon future, but we also have a great opportunity to ensure we develop skills, as my hon. Friend the Minister mentioned. I will ensure that my Department considers the hon. Gentleman’s point carefully and gets back to him with some answers.

In her attempt to explain the hugely unpopular cuts to solar, the Secretary of State constantly pretends this is about reducing costs to householders, yet industry analysis shows that solar will cost half as much as Hinkley over 35 years and save consumers about £15 billion. How can she keep justifying such blatant double standards when it comes to nuclear power?

I am sorry, but the hon. Lady is not dealing with the facts. The solar changes will still deliver a 5% yield to those who put them up, but nuclear provides an important base-load, even when the sun does not shine or the wind does not blow. She can have her own views, but she cannot have her own facts.

With the Chinese economy hitting the buffers week after week, does it make sense to continue with this Chinese connection and nuclear power in Britain? Is it not time it was abandoned? The shine is being knocked off it every single day. Will the Secretary of State change her mind?

I can reassure the hon. Gentleman that we are ambitious for this country, we are confident in our regulation and we are open for business, and if the Chinese want to make a substantial investment in delivering new nuclear, we will take it and make a great success of it.