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Energy and Climate Change

Volume 607: debated on Thursday 24 March 2016

The Secretary of State was asked—

Indebted Prepayment Customers

The Government want energy bills to reduce for all consumers, and one of the best ways to achieve that is by switching supplier. However, the hon. Member for Coventry North East (Colleen Fletcher) has raised an important point by highlighting the barriers that indebted prepayment customers face in doing so. The Competition and Markets Authority’s report on provisional remedies rightly includes a recommendation that Ofgem should take steps to address those barriers, and I will consider the issue carefully following the publication of its final report.

The Competition and Markets Authority’s proposal regarding a safeguard price control for prepayment customers is welcome and will go some way towards redressing an inherent unfairness that affects the most vulnerable people, but the authority and the Government should go much further. Will the Secretary of State commit to ensuring that prepayment customers are prioritised during the smart meter roll-out?

I share the hon. Lady’s support for the CMA’s proposal for the most vulnerable customers, a larger proportion of whom are on prepayment meters, and we welcome that approach to ensure that we look after those people. On smart meters, while some energy companies are prioritising prepayment meters, we are not obliging them to do so because the roll-out of smart meters is so inherently important to managing people’s bills.

Will the Secretary of State tell the House, so that I may inform the 9,255 of my constituents who have prepayment meters, why her Department will not bring forward its fuel poverty strategy for another two years?

The Department and the Government take fuel poverty very seriously and we take steps to address that issue. We are reforming the renewable heat incentive and the energy company obligation to focus more on those most in need, who are those in fuel poverty. I ask the hon. Lady to reassure her constituents that we are absolutely committed to doing that and that we will continue to address the issue.

The CMA report exposes one of the biggest scandals of this generation: the £1.7 billion that customers are being overcharged. The recommendations in the report will not kick in until 2018, by which time people will be overcharged by £2.4 billion a year. The Secretary of State must oblige energy companies to roll out smart meters now, especially if the Government are to achieve their own recommendation of all households having smart meters by 2020.

I reassure the hon. Lady that rolling out smart meters is an obligation on energy companies, which are being regulated by Ofgem to ensure that every household has a smart meter by 2020. The CMA’s recommendations observe that competition is the best way to deliver lower prices. We are making sure that more competition enters the market so that customers such as her constituents can have access to that and to cheaper bills.

Prepayment customers are among the most vulnerable in our society. They have fewer tariff options and find switching more difficult. What steps is my right hon. Friend taking to remove barriers such as debt issues so that it is easier for these people to switch and get a better price?

My hon. Friend is absolutely right. The CMA investigation represents the biggest investigation into the energy market since privatisation, and the Prime Minister promoted it by referring the market to Ofgem and on to the CMA. The CMA has focused specifically on indebtedness. We will look at its recommendations to ensure that the most vulnerable customers also have the option to switch and are not excluded from competition within the market.

But the CMA found that 70% of customers were being overcharged, while those on prepayment meters represented only 16%. It found that there had been overcharging of £1.7 billion a year since 2012, rising to £2.5 billion in 2015. A cap is available for those on prepayment meters, but what about the rest of the 70% of customers who are being overcharged? What will happen for them, apart from urging them to switch?

It was, of course, disappointing that the Labour party opposed referring the energy market from Ofgem to the CMA. It is the CMA that has come forward with the recommendations, which I think is a welcome development. The right hon. Lady asks what can be done for other customers. The answer is that more competition in the market will allow people to switch so that her constituents will be able to have access to cheaper bills. I hope she will welcome the reform in the market that has allowed more competition to develop, resulting in lower bills for her constituents and everybody else.

Order. The right hon. Lady certainly should not accuse anybody of misleading the House—[Interruption.] Order. I do not require any advice from other Members. I am perfectly capable of dealing with these matters. If the right hon. Lady wants to insert the word “inadvertently”, that would make it moderately less disorderly, although she still should not chunter from a sedentary position in evident disapproval of the stance taken by the Secretary of State. That is rather beneath the dignity of a distinguished former Minister.

I welcome the action that the CMA recommended for prepayment customers, but I urge the Secretary of State to heed the words of my hon. Friends who urged her to go further. I am sure that she is as angry as I am about the treatment of these customers. I am sure she is also as angry as we are about the treatment of 70% of customers who have been overcharged to the tune of £1.7 billion a year. The Energy and Climate Change Committee said that the Secretary of State’s

“Sudden and numerous policy announcements…lack of transparency…insufficient consideration of investor impacts…Policy inconsistency and contradictory approaches”,

coupled with the

“lack of a long-term vision”,

have raised the cost of investing in UK energy by £3.14 billion a year. Given that she is costing bill payers almost twice as much as the big energy companies, will she refer herself to the CMA?

Let me start by answering the key point that the hon. Lady makes about the 70% of consumers who are not on prepayment meters and are overpaying. The central way to address the 70% is to make sure that there is more competition in the market. When we came into office in 2010, there were six suppliers; there are now 31 new independent suppliers. Switching times are now down to 17 days and, with Ofgem’s guidance, we hope to move to same-day switching by 2018. All those measures will enable consumers to access a competitive market.

The hon. Lady’s comments regarding the Energy and Climate Change Committee are a random selection of some of the Committee’s thoughts. I do not share its views. In fact, I have been advised by a number of people who have attended the Committee and by major investors that they take great comfort from the clear direction that has been set out from the Government Benches for future energy policy.

It is extremely disappointing that after this lengthy investigation, the Secretary of State has decided to blame customers for not switching and to let energy companies off the hook, so perhaps I will try another one. The CMA inquiry has also found that price comparison websites are taking tens of millions of pounds a year in commission from the biggest energy companies. In 2014 alone, they were paid £24 million. Following her announcement that she will not hesitate to take forward the CMA’s recommendations, does she plan to implement the recommendation to allow the same websites to now deliberately hide the cheapest deals from customers?

The hon. Lady has misunderstood me. There is no blame on customers and no blame is being apportioned. We are saying that the CMA has provided a wake-up call to the energy companies, which now need to take action to address competition within the area. We are confident that its recommendations will be key to delivering the competition and low prices that Labour so clearly failed to deliver before 2010.

We already have a price comparison website to which we refer people. The “be an energy shopper” website will then give customers a choice. I urge the hon. Lady to take a look herself and perhaps consider switching.

Onshore Wind

2. What estimate she has made of the number of onshore wind applications made since June 2015. (904291)

My hon. Friend will be delighted to know that we are delivering on our manifesto commitment to end new subsidies for onshore wind and to change the law so that local people have the final say on onshore wind farm applications. As of 14 March, 64 onshore wind farm applications above 1 MW had been submitted across the UK since 18 June 2015, only five of which were in England.

As the director of the national anti-wind farm campaign, I obviously declare an interest. What impact is this change to the subsidy regime having on ensuring that emerging generation technologies can come forward, which ultimately is what the subsidies are intended to encourage?

My hon. Friend is exactly right. The Government want to promote a wide range of energy sources, including renewables, to help us to meet our de-carbonisation targets, while keeping the lights on and bills down. For example, the Chancellor announced in the Budget our intention to hold three contracts for difference allocation rounds over this Parliament, allocating £730 million of annual support over the three auctions for new and emerging technologies such as, very importantly, offshore wind. As he rightly points out, however, as the cost of technologies comes down, we will make sure that subsidies do so as well.

Does the hon. Lady agree with me and many of my constituents that it flies in the face of Ministers’ claims to be the greenest Government ever when local people have a veto on onshore wind, but that when it comes to fracking, particularly for my constituents in Lancashire, local views are not heard or represented?

The hon. Lady is of course completely wrong, because all shale applications are subject to the local planning system, so communities absolutely do have a say on every planning application for hydraulic fracturing.

In my constituency, we have had many applications for wind turbines, both on land and in the sea. As an alternative, SeaGen has a marine project harnessing tidal wave power. When it comes to alternatives that protect the environment, does the Minister agree that such projects should be given prominence?

The hon. Gentleman is exactly right that there are huge prospects for marine and tidal technologies, but they remain very expensive. The Government have supported some demonstration projects and are looking closely at all the possibilities. As they become good value for bill payers, we will bring forward proposals for how we can support them further.

Does the Minister expect the number of onshore wind applications to fall in the coming year, and what impact will that have on renewable wind’s proportion of the electricity mix?

I can tell the hon. Lady that a lot of onshore and offshore wind projects are in the pipeline, so we expect renewables’ share to increase in the coming years. She will be aware that we have announced further CfD auctions specifically to support offshore wind, so we expect further increases in the deployment of offshore wind as the costs come down. That is an absolutely key requirement. As the costs have come down significantly, I certainly expect that it will be possible to deploy onshore wind farms, if communities want them, and without bill payer subsidy.

We need to speed up a tad, and I am sure that we can be led in our mission by the hon. Member for East Worthing and Shoreham (Tim Loughton).

Energy-saving Products: VAT

3. What assessment she has made of the implications for her Department’s policies on energy efficiency of EU proposals to increase the level of VAT applicable to energy-saving products. (904292)

The UK has applied a reduced rate on 11 different types of energy-saving materials since 2001. That remains in place and unchanged—and that is where we want it to stay.

For 13 years, Gordon Brown laboured to reduce VAT on energy-saving materials in the face of EU opposition, even getting President Sarkozy onside in 2007, but to no avail. With VAT on installations set to increase to 20% after the European Court of Justice judgment, does the Minister agree that the most likely route to allow the British Government to incentivise energy saving in the interests of British consumers and the planet is to vote leave on 23 June?

Let me take issue with my hon. Friend’s first point, which was that there will be no changes. If he checks the Finance Bill, which is published today, he will see that VAT is not rising as had been foretold. One reason why is the Prime Minister’s VAT action plan: he was able to go to Brussels and negotiate a better relationship so that countries can have their own VAT rates stayed. It seems to me that that is a very good example of the EU working for this country.

I would like to follow up on that. It is just two days since the Government accepted the amendment that I and my hon. Friends the Members for Wigan (Lisa Nandy) and for Salford and Eccles (Rebecca Long Bailey) tabled to the Budget resolution. The Chancellor was the first in history who had to accept an Opposition amendment to his own Budget, and that was within a week of its delivery. Now we discover that the Finance Bill makes no provision whatsoever regarding VAT on energy-saving products. In fact, it is worse than that, because my hon. Friend the Member for Salford and Eccles has just received a written answer from the Financial Secretary stating that the Government are “still considering” their policy, and that the lower rate of VAT will continue only “in the meantime”. Will the Secretary of State tell us whether there is a now a U-turn on the U-turn?

Thank you for that advice, Mr Speaker.

Let me point out to the hon. Gentleman that while it might be only two days since the amendment was moved, Government Members have been aware of the problem and have been engaging with Brussels, as was declared previously at the Select Committee, so we are clear that this approach is in the interest of the industry. I welcome the hon. Gentleman’s rather belated support for it.

Gas-fired Power Stations: Capacity Mechanism

5. What steps she is taking to ensure the effectiveness of the capacity mechanism for new gas-fired power stations. (904296)

New gas is already coming forward. Since 2010, six new combined cycle gas turbines have been commissioned, representing over 8 GW of capacity, but we will need more new gas as we close our coal-fired power stations as part of our decarbonisation objective. We have announced changes to the capacity market to buy more capacity, and to buy it earlier, thereby ensuring security of supply during the transition, as well as promoting investment in new plant such as gas.

Given that Rugeley power station, which is coal fired and based in the constituency of my hon. Friend the Member for Cannock Chase (Amanda Milling), is scheduled to close, may I suggest that Rugeley would be an ideal site for a new gas power station?

I pay tribute to my hon. Friend the Member for Cannock Chase (Amanda Milling) for her excellent work in representing those affected by the closure of Rugeley. The decision on how to use the site is obviously a commercial issue for ENGIE, but I encourage the company to discuss its plans with the Planning Inspectorate, which can clarify the process for building a new gas plant, and particularly how long it might take to do so.

Yesterday marked the end of an era with the sad closure of Longannet power station. I put on record our thanks to the countless folks who worked there and kept the lights on in Scotland for over 40 years. When does the Minister expect new CCGT gas in Scotland to replace Longannet?

I, too, wish to express enormous gratitude, on behalf of Conservative Members, for all the work that has been done at Longannet over the past 47 years. It certainly is the end of an era. It is astonishing that the plant was expected to last for only about 25 years, and the extension of that to 47 is pretty impressive.

As I have said, the capacity market needs to buy earlier and buy more capacity at a time when wholesale prices are so low and various plants are struggling, partly to ensure that new gas is available. The location of the combined cycle gas turbines will, of course, be a matter for individual developers.

It will be a matter for developers, but one of the biggest hurdles to new CCGT in Scotland, and one of the reasons for the early closure of Longannet, has been the imposition of transmission charges, along with the additional costs that are levied on generators in Scotland, primarily owing to their location. Margins are tight, and they are getting tighter. Can we remove this barrier to new gas generation?

It is extraordinary that the hon. Gentleman should say that, because Scottish consumers are huge beneficiaries of locational charging. He needs to look at the situation in the round. Scottish consumers benefit from being part of a Great Britain-wide energy market. Had the Scots voted for independence, today would have been the day when they were on their own. Issues such as the price of energy and the locational pricing would have worked very much to their detriment without that GB-wide market.

I thank my hon. Friend the Member for Stafford (Jeremy Lefroy) for raising the possibility of a gas-fired power station at Rugeley B if the existing power station is closed. Existing infrastructure with national grid connectivity and a highly skilled work force could be used in that event. What measures are being taken to encourage the development of gas-fired power stations on sites such as Rugeley B, where energy generation has been taking place for decades?

My hon. Friend has done a great job in promoting that idea, and, while I do not want to stray into the realms of telling a private company what to do, we would be very pleased if this company looked into the opportunities for establishing a new gas plant. The capacity market auction will give certainty to potential providers of new gas plants, and should lead the company to consider those opportunities very seriously.

Is it not very odd that the Tory Government never seem to talk about the 40 million tonnes they are importing from countries abroad that they cannot even trust? Rather than keeping the British pits open, this Tory Government have presided over even more coal imports. Which of the power stations will use that coal? They will not be using gas. There will have to be power stations to use that coal. Where are they going to be?

I am sure the hon. Gentleman will be pleased to know that a new opencast coal mine has recently started producing—

The hon. Gentleman must surely acknowledge that the time for deep coal mines is over, because of the health implications and the carbon implications.

The hon. Gentleman must be aware that my Department is committed to moving away from coal, through gas, to a clean energy future.

The Secretary of State has produced no impact assessment to accompany her proposals to bring forward the first year of the application of auctions to the capacity market, but all estimates confirm that the auction will have to clear at a far higher price than has hitherto been the case if any new capacity is to be produced by means of this device, with a consequent huge cost to bill payers—an extra £20, according to some estimates. What does the Minister think the additional cost to customers will be, and can she look me in the eye and tell me with reasonable conviction that she is sufficiently certain that the auction will lead to substantial long-term capacity agreements for new plant to make that huge cost anywhere near justifiable?

I can absolutely look the hon. Gentleman in the eye and tell him that bringing forward the capacity market a year early—I am trying to make serious eye contact with him; I am not looking away for a moment—is absolutely in the interests of consumers. He will know that, with wholesale prices where they are at present, old plants are struggling to continue. By bringing forward the capacity market, we are giving them the certainty they need to ensure security of supply. If you like, this is an insurance policy on security of supply, and it is absolutely in the interests of consumers.

Low-carbon Economy

My Department is committed to providing investors with certainty, and I set out a clear vision for this Government’s energy policy last November in order to achieve just that. In the past month, we have provided certainty on the capacity market, on contracts for difference auctions over the next four years and on taxation for the UK’s oil and gas industry.

As a result of changes in Government policy, Greater Manchester Community Renewables has had to scale back its solar PV project from 20 sites to four, meaning that 16 schools have missed out on solar panels and the local economy has missed out on more than £1 million of investment. It is estimated that there are 8 MW of stalled schemes in Greater Manchester, equating to about £10 million of investment. Is this not an indication that Government policy is in fact leading to a fall in investor confidence?

I do not share the hon. Gentleman’s interpretation. In fact, we have seen increased investment this year in solar and other renewables. We have changed the subsidies on solar, so solar will go forward only where it is well sited and makes a good return for the investors. That is what we have to do as a Government, because we want to strike a balance between supporting renewables and managing consumers’ bills.

Investors in low-carbon energy need clarity and confidence about the energy strategy for the next decade and beyond. The Chancellor could have provided that clarity by setting out the funding in the levy control framework beyond 2020 in last week’s Budget, as 15 of his Conservative colleagues reportedly urged him to do. Does the Secretary of State agree with them that he should have done that, as it would have improved confidence in low-carbon energy?

The hon. Lady will be aware that what the Chancellor did set out in the Budget was certainty on the amount and timing of contracts for difference, which was very welcome for the investment community. There will be further announcements on the levy control framework, but let us bear in mind that the LCF was the first of its kind and that it runs until 2020-21. We have said that we will set out how much will be available in future, but for now the hon. Lady will just have to be a little more patient.

Last September, the independent Committee on Climate Change warned that the Government’s stop-start investment profile was undermining investor confidence and increasing the cost of low-carbon generation. The Secretary of State ignored it. Last month, the Energy and Climate Change Committee reported its concern that increased policy uncertainty was leading to increased risk premiums for investors, which will result in consumers paying more in the long run. Can the Secretary of State look me in the eye and explain exactly how she thinks this ties in with the Prime Minister’s insistence that his Government are safeguarding the interests of future generations?

I can assure the hon. Gentleman that I am quite capable of looking him—and indeed the whole shadow Front Bench—in the eye. I can also assure him that we are absolutely focused, as are the Prime Minister and the Chancellor, on delivering for the future generation and looking after bill payers. This is about getting the right balance and supporting renewable energy until it can stand on its own two feet.

Zero Emissions

7. What steps her Department is taking to enshrine the commitment to net zero emissions made at the Paris climate change conference of December 2015 in UK law. (904299)

As confirmed last Monday during the Report stage of the Energy Bill, the Government will take the step of enshrining into UK law the long-term goal of net zero emissions, which I agreed in Paris last December. The question is not whether we do it but how we do it.

I am sure we all welcome that change of heart from the Government thanks to the campaign waged by my right hon. Friend the Member for Doncaster North (Edward Miliband), but how does the Secretary of State think the Government’s antipathy towards the renewables industry—and the fact that she has a Minister who is actively campaigning for Brexit—will help to achieve that target?

There has been no change of heart. I was at the Paris climate change talks and we fought for a high ambition. We ran the high ambition coalition meetings and we are absolutely committed to delivering on our existing commitments and to looking further ahead. This Government are committed to that and we believe we can do it better by staying within the EU.

After we passed the Climate Change Act 2008, we hoped that other EU countries would follow with similar commitments: none did. Indeed, many countries, including Austria, Holland and Ireland, have made no emissions savings since 1990. We saw the result of that in the Paris COP 21 when the EU submission was significantly lower than the UK’s targets. Can the Secretary of State look me in the eye from her position and tell me that we will not be acting unilaterally this time?

Order. May we have an end to this rather tedious business of requests for looks in the eye? I say that in the context of answering the hon. Gentleman because the Secretary of State’s responsibility is to address the House. If she looks at anybody, she should look at the Chair. She certainly should not be looking behind her at the hon. Gentleman, a very agreeable sight though it may be.

Thank you for that guidance, Mr Speaker. May I point out to my hon. Friend that a positive element of the Paris deal is that other countries are now making commitments? I know that he is concerned that other EU countries are not making the same commitments as us, and it is correct that our Climate Change Act is one of the most ambitious, but I am proud of it and other EU countries are beginning to emulate it, although there is more work to do.

Since 2010, the Government have presided over a sharp reduction in the number of households receiving energy efficiency measures. Does the Secretary of State agree that meeting a net-zero emissions target will require a step change in the Government’s energy efficiency polices? If so, when might we see that?

I wonder whether the hon. Gentleman is aware of the EU directive coming in in 2020 to make all new houses nearly net-zero. We will be sticking to it, which will be a helpful addition to ensuring that new houses do not have the same problems that some have at the moment.

Fuel Duty

10. What discussions she has had with the Chancellor of the Exchequer on the effect of the level of fuel duty on climate change. (904302)

Questions on the level of fuel duty are principally a matter for the Treasury. However, reducing emissions from vehicles is an important part of this Government’s approach to tackling climate change, and we are carefully considering how best to deliver that in a way that is affordable for consumers.

I do not often argue for price increases, but fuel is now cheaper than at any time since 2009—less than £1 a litre in most places—which is having a terrible impact on the environment. More cars on the road means more air pollution and, indeed, more accidents. Should we not be thinking very carefully about that?

I reassure the hon. Gentleman that we always think very carefully about such issues. Conservative Members believe it is right to protect family incomes and that it is welcome that the cost of fuel is down. However, we do not take it for granted that we can make changes to important vehicle emissions, so we are also investing in electric vehicles. For example, we have committed £600 million up to 2021 to support the uptake and manufacture of ultra-low emission vehicles, which is projected to save 65 million tonnes of carbon.


11. What assessment she has made of the effect on the feedstock supply chain of her Department’s proposals to improve the sustainability of the use of biomass in the heat and electricity sectors. (904304)

May I gently point out, Mr Speaker, that as my right hon. Friend the Secretary of State and I are mothers, we have eyes in the back of our heads and are able to make eye contact right around the Chamber?

As my hon. Friend the Member for Selby and Ainsty (Nigel Adams) knows, mandatory biomass feedstock sustainability criteria came into force under the renewables obligation from 1 April 2015 and under the renewable heat incentive from 5 October 2015. The criteria will ensure that biomass is sourced from sustainably managed forests and provides a minimum 60% life-cycle greenhouse gas saving over our average fossil fuel mix.

I am grateful for that reply and congratulate the Minister and her Department on the UK’s sustainability criteria for solid biomass being among the most robust in the world, but why is the Department holding back from further deployment of this affordable, reliable source of low-carbon power?

On 17 March, the Chancellor announced that the overall budget for three CfD auctions in this Parliament will total £730 million of annual support. That is for pot 2, which includes biomass, combined heat and power, advanced conversion technologies, and anaerobic digestion. We see the use of biomass in coal conversions as a transitional technology, helping us on our path to a low-carbon economy. We have already made significant commitments to the sector, supporting 1.6 GW of biomass conversions.

I recently met a group of EU foresters—it was a very unusual meeting—at a symposium in Milverton in my constituency to discuss sustainable forestry. They expressed concerns that our growing biomass industry is putting pressure on many countries further afield to supply wood, possibly causing deforestation. Will the Minister assure us that sustainability is a key part of encouraging this exciting new biomass industry?

My hon. Friend enjoys that kind of meeting very much. I can absolutely assure her that we keep the whole question of sustainability under review. She will be interested to know that analysis of the 2013-14 sustainability data that companies report to Ofgem under the renewables obligation shows that all the reported biomass achieved the greenhouse gas saving target and met the land criteria, two years before they are mandatory. But we do keep this under review.

Shale Gas

12. What steps she is taking to prevent protected areas from being adversely affected by the development of shale gas. (904305)

Shale gas could become a valuable new industry and it is in the strong interests of the UK to explore its potential. However, we are determined to protect our most valuable spaces, and therefore it is our intention to ban surface-level drilling in the most precious areas, including national parks and sites of special scientific interest. We have also regulated to make sure hydraulic fracturing cannot take place at less than 1,200 metres under protected areas.

I thank the Minister for that reply. Although I am sure it will allay the concerns of some, does she believe that more can be done to extol the positive virtues of shale gas, including, for example, the new jobs and security of energy supply it will bring?

My hon. Friend is right to point out that there are lots of benefits of shale gas. The first is energy security, as we could be importing about 75% of our gas by 2030. The second is jobs, as the industry could mean jobs and opportunities for the UK, with a report by Ernst & Young estimating that a thriving shale industry would create up to 64,000 jobs. The third is benefits to communities, as those hosting shale developments will see a direct share of the benefits through an industry-funded package, and the shale wealth fund will mean that up to 10% of the tax revenues from shale gas deliver investment directly to local communities.

Renewable Energy: Subsidies

13. What assessment her Department has made of the potential effect of changes to subsidies on the predicted deployment rates of renewable energy by 2020. (904306)

The Government announced a package of proposed cost control measures last year to tackle the projected overspend on renewable support schemes. As the costs of technologies come down, as they have, it is right that subsidies do so as well. We are fully committed to supporting renewable energy, but will do so at least possible cost to consumers and businesses.

I regularly meet the great number of businessmen and businesswomen in my constituency who are engaged in the renewables industry. Does the Secretary of State agree that we must support this kind of innovation and entrepreneurship in the renewables industry?

My hon. Friend is absolutely right about that, and the entire purpose of subsidies is to give new industry and innovations in the renewables industry a good start. Subsidies are not intended to be permanent; they are about getting these things started and giving them a good start so that they can then carry on and deliver secure renewable energy, subsidy-free.

Retail Energy: Switching Suppliers

14. What assessment she has made of recent trends in the rate of switching in the retail energy market. (904309)

My Department has taken action to make it simpler and quicker to switch supplier. I am happy to tell my hon. Friend that the number of households switching supplier is increasing—in 2015, it reached a four-year high. The latest figures released by Ofgem show that 6.1 million domestic energy supply accounts were switched in 2015, which is a 15% increase on the 2014 figure.

I thank my right hon. Friend for that reply and for her assistance in my work with the Behavioural Insights Team on trying to create the receipt of the winter fuel payment letter as a switching point for those who are retired. What further steps are she and her Department going to take to ensure that older citizens in this country are encouraged to switch, because they have traditionally been the hardest-to-reach group?

My hon. Friend is entirely right to focus on that older group, who sometimes are more resistant to switching. I thank him for the help he has given through his work with the Behavioural Insights Team and the Department on ways to encourage more elderly people to switch supplier through our communications to those eligible for winter fuel payments. The Competition and Markets Authority made proposals just last week that are designed to encourage all consumers to switch, including those over 65. The Government have committed to appropriate implementation of the recommendations, following publication of this report in full.

Oil and Gas

Last week, the Chancellor announced a £1 billion fiscal package to reduce the additional taxes historically imposed on the North sea as well as to introduce targeted measures to encourage investment in exploration, infrastructure and late-life assets. That builds on the Prime Minister’s January announcement of a £20 million package of new investment in exploration, innovation and skills; a new interministerial group; and funding for the £250 million Aberdeen city region deal.

I appreciate the Minister’s answer. Oil & Gas UK, the industry body, has said that we need a fourfold increase in exploration to ensure that the 20 billion barrels that are still there are recoverable. The extra funding for the seismic surveys has been most welcome and we appreciate it. Will the Minister expand a little on what other action the UK Government will take to increase the confidence in the industry and to encourage further exploration?

The industry is vital for the UK, and we will continue to support it in every way we can. I have already mentioned some of the measures. Perhaps I will just reiterate that, in setting up the Oil and Gas Authority on Sir Ian Wood’s recommendations, we are establishing an authority that is welcome by the industry, that will improve the economic recovery of the sector, and that will ensure that we do not move to early decommissioning, which is all very good news for the North sea sector.

Tidal Lagoon Energy

16. What progress has been made on the independent review on tidal lagoon energy announced in February 2016. (904311)

My Department has made good progress in setting up the review team and we will shortly be announcing the name of the individual who will lead the independent review. The review is on track to start this spring and, we hope, complete in the autumn.

It has now been six weeks since the Department announced the independent review into tidal lagoon energy, and it is two weeks since the Minister assured me in Westminster Hall that the make-up of the review was being considered “right now”. Why, six weeks later, has the review not started? Although I appreciate that the Department is probably very genuine in its desire to get this work done, we need the work done urgently.

I appreciate completely the urgency of the situation. However, we want to get this right, so we have gone ahead in the Department with preparing for the review. It is a question of appointing the independent reviewer who will lead that and agreeing the formal terms with them. The hon. Lady should be in no doubt that we appreciate the urgency of this matter, that we are serious about the review and that we will move with all due speed and keep her posted.

Energy Storage Devices

17. What progress she has made on developing a legislative and regulatory framework for energy storage devices in the UK energy market. (904312)

Energy storage has been identified as one of the eight great technologies in which the UK can genuinely lead the world. More than £80 million of public sector support has been committed to UK energy storage research and development since 2012. Last December, my Department published the document, “Towards a smart energy system”, and we are urgently investigating the potential barriers to deployment of energy storage. We will be issuing a call for evidence in the very near future.

I welcome that statement from the Minister. However, regulatory barriers, some minor, are having a chilling effect on the roll-out of innovative energy storage technologies. Can the Minister give the House an assurance that the Government are approaching the removal of these barriers with the degree of urgency that is required if we are to remain a world leader in this field?

Yes, I can absolutely give the hon. Gentleman that assurance. Very recently, I held a roundtable meeting with players in the storage sector and heard at first hand exactly where they think the challenges lie. I can absolutely assure the hon. Gentleman that my Department is working very hard to try to ensure that we remove barriers in the easiest and quickest way possible.

Topical Questions

Since we entered government in 2010, we have more than trebled our renewable electricity capacity. A total of £52 billion has been invested in renewables, and more than 99% of solar capacity has been installed. In 2010, renewables provided just over 7% of our electricity needs. That went up to nearly one fifth of the UK’s electricity needs in 2015, and we are on track to deliver 35% by 2020-21, exceeding our ambition of 30%.

At the last Energy and Climate Change Question Time, my hon. Friend the Member for Ashton-under-Lyne (Angela Rayner) asked the Minister about the planned rise in VAT on solar, and she told us that the Government had “no choice” but to implement the European Court’s decision. On Monday, when the Financial Secretary was filling in for the Chancellor, he told us that they had decided not to go ahead weeks ago. Did she inadvertently mislead the House, or was she not kept informed by her colleagues in No. 10—I mean No. 11?

I think we should just welcome the outcome. It is always unwise to underestimate my right hon. Friend the Prime Minister, who achieved a great victory for VAT and for solar at the Brussels meeting just 10 days ago.

T2. Does my right hon. Friend agree that the best way for consumers to get the best deal on their energy bills is for energy companies to take seriously the possibility that consumers will quickly and easily switch to other suppliers? Will she therefore confirm that the Government remain committed to driving down the time it takes for people to switch? (904317)

I very much agree with my hon. Friend that reliable switching between energy suppliers underpins a competitive energy market and, above all, puts consumers in control. That is why the time it takes to switch has already been halved from five weeks to two and a half weeks. We do not want to stop there, which is why we are working with Ofgem and the industry to deliver reliable next-day switching for consumers, with an aspiration to do this by 2018. We will introduce legislation to achieve that.

With fresh doubts over whether a new nuclear station will ever be built at Hinkley Point C, it appears that Britain’s energy security is now in the hands of the French and Chinese Governments. If the French Government decide not to offer up more money for the Hinkley project, will our taxpayers be on the hook or does the Secretary of State have a plan B?

I can reassure the hon. Lady that this proposal in Hinkley Point will be going ahead. I do not share her doubts. To further reassure her, let me tell her that although Hinkley Point is an important part of our low-carbon future, it is not the only nuclear initiative. If she had paid attention during the Budget, she might have heard the Chancellor announce further support for small modular reactors, which could also be an important part of a low-carbon future.

T3. The Government’s affordable warmth obligation has enabled thousands of low-income households to upgrade and replace their boilers, but there is no obligation on energy companies to upgrade the rest of the heating system, which is often required to make the new boiler work. That has left a pensioner in my constituency with no heating over the winter. Will the Secretary of State look into this and ensure that when energy companies are upgrading people’s boilers, they are following through and not leaving people short? (904319)

My hon. Friend raises an important point. My Department is absolutely committed to taking steps to support those in most need. Since April 2015, boiler replacements under the affordable warmth obligation to which my hon. Friend has referred have come with a one-year warranty, covering the function of both the boiler and the heating system that it serves. I would encourage all customers who have faced problems to register a complaint with their installer or energy supplier so that remedial action can be taken. I hope that that assists my hon. Friend.

T4. In 2012, the Prime Minister stated that “we will be legislating so that energy companies have to give the lowest tariff to their customers”.—[Official Report, 17 October 2012; Vol. 551, c. 316.]This has not been done. The Secretary of State has 11,287 constituents who are on prepayment meters, at a loss of £3.3 million to the local economy. If she is reluctant to legislate or to oblige energy companies to roll out smart meters rather than dumb meters, will she at least agree to total transparency in the energy sector? (904320)

The hon. Lady should know that there is no reluctance on the Government Benches to take action where required. It was this Government who took action in referring the energy companies to the Competition and Markets Authority and this Government who took further action with initiatives to help the poorest customers. We will be supporting the proposals from the CMA on prepayment customers, helping my constituents and the hon. Lady’s.

T5. I congratulate the Minister on the progress made steering us towards a low-carbon economy. For business, this makes absolute sense, with many companies addressing the issue head on. The value of the low-carbon economy is now £122 billion, but we still need to make progress in tackling energy efficiency for our homes. Will the Minister please give us an indication of whether she might consider reintroducing a zero-carbon policy for our houses? (904321)

I thank my hon. Friend for her comments and I draw her attention to two things. One is the Bonfield review, which we announced in June 2015 and which will report shortly. It is looking at consumer protection in energy efficiency matters, which is a really important element of ensuring that the energy-efficient items that are taken forward deliver what they set out to do. Secondly, as I told the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), the EU’s energy performance of buildings directive requires all new buildings to be nearly net-zero energy by 2020.

The Government have already offered ridiculously large subsidies to build Hinkley Point C. I bet the Secretary of State £100—proceeds to charity, of course—that that nuclear power station will not be built without even more public subsidy being offered. Will she take that bet?

Apart from looking people in the eyes, I am not in the habit of taking bets across the Chamber, but I am very happy to reassure the hon. Gentleman that I am completely confident that the Hinkley Point C project will go ahead, and it will not be the only new nuclear reactor commissioned under this Government.

T6. As the promoter of the Warm Homes and Energy Conservation Act 2000, I am naturally disappointed that, some 15 years later, fuel poverty has not been eliminated. I know that my right hon. Friend is genuinely determined to eliminate fuel poverty, but will she continue to consult widely on energy efficiency measures, so that we actually meet those targets? (904323)

I thank my hon. Friend for that question. He was an early campaigner on the issue. My Department is putting in place the measures needed to meet our ambitious target for fuel poverty, requiring us to bring as many fuel-poor homes as reasonably practicable up to the band C energy efficiency standard by 2030. As part of that, we have proposed reform to the energy company obligation so that we can support those most in need, and we shall consult widely in the next few months on our proposals to reform the scheme.

Would the Secretary of State like to reflect on her earlier answer to a question, in which she may have inadvertently misled the House by suggesting that Labour did not support the investigation by the CMA? We did support that investigation, but before it was announced we also acknowledged that the majority of customers were being overcharged. Will she, for the record, acknowledge that the CMA reports have now twice confirmed what Labour said—that the majority of customers are being overcharged for their energy?

Like the right hon. Lady, I would not want the House to be misled in any respect, so let us be clear. Labour supported the referral to the CMA in 2013, but then argued in 2014 that another investigation was not needed. It is that investigation that has delivered the results, which we will be legislating for, that will make the most significant difference for delivering lower bills for consumers.

T7. I know the Secretary of State is aware of the horrendous flooding in Irwell Vale in my constituency on Boxing day. With that in mind, will she say what steps her Department is taking to ensure security of the supply of energy to flood-hit areas in Lancashire? (904324)

I took part in the Cobra meetings over Christmas, and it was devastating to see the distress and the awful problems that that flooding caused. As part of the national flood resilience review, we are working with industry to assess flood risk for energy infrastructure, and will be looking at options to improve resilience wherever we can. In addition, the Environment Agency is reviewing its advice on flood risk, and we are working with energy companies to ensure there is an appropriate response to any revised advice.

Last Christmas saw the end of deep-mined coal in this country, and during the past year 32% of the coal imported came from Colombia. Is the Secretary of State happy that, when coalfield communities are still struggling, her Government’s long-term economic plan is being fuelled on the back of child and slave labour?

I am sorry that the hon. Gentleman takes that approach. He will be aware that domestic coalmining has been in decline for the past 60 years, that imports are a great deal cheaper, and that it is for private companies to decide to choose the cheapest options. The Government have done all we can to reduce the impacts of the most recent closures, by injecting up to £20 million to help the directors of Hatfield to manage the closure of the business and £17 million to help UK Coal deliver its two-year closure plan for Kellingley and Thoresby, and by agreeing to meet UK Coal’s concessionary fuel allowances.

I thank the Minister of State for the recent meeting she held with me in connection with the Able development in my constituency, which has the potential for 4,000 new jobs. Is there any news of the implementation of the memorandum of understanding with DONG Energy?

I am grateful to my hon. Friend for continually holding my feet to the fire on this matter. I have had a number of individual meetings with developers to press for UK content as far as possible in the offshore wind sector, and I am getting some very good responses. In particular, he will be aware that there is to be a strategy review of the east of England, which will include the potential for the development at Able. I am very positive about the prospects.

Is the Minister admitting, as she seems to be doing, that this Government are more concerned about bringing in coal from Colombia because it is cheap, even though it is produced by child slave labour? She has a chance to amend that.

Private companies in the UK choose their suppliers. It is not Government bringing in coal. The hon. Gentleman must understand that. This Government urge all private companies to look very carefully at their supply chain. They will choose cheaper imports, but equally, they have to stand up and be counted for their own policies on the conditions at suppliers. The Government do not purchase coal. The hon. Gentleman realises that.

Many people in Cheltenham share my wish to see a strong and vibrant solar sector. Reducing the solar feed-in tariff is no doubt necessary and appropriate, given the plummeting cost of solar, but what reassurance can the Minister provide that the new price will continue to sustain jobs in this important industry?

I know that my hon. Friend has been a champion of the solar industry in his constituency, where there are a number of businesses that thrive on the solar sector. I reassure him that we are still seeing high levels of solar installation, but they will not be as high as they were when the feed-in tariffs were delivering such a high yield. It is right to get a balance between supporting solar—supporting renewables—which delivers important jobs, and looking after the consumer.

I am sure the hon. Gentleman is aware that it is not for this Government to build Hinkley Point C; it is for EDF to build Hinkley Point C. That is why we have put the arrangement in place whereby we pay only when the electricity is generated. That is the sound arrangement that we have, and the plant is due to start generating that electricity, when we will start paying, in approximately 10 years’ time.

Will the Secretary of State confirm that in any assessment of the Hinkley Point project, she will look at the wider economic benefits to the south-west peninsula from what would be the largest civil engineering project?

My hon. Friend is right. There are wider benefits to Hinkley Point C going ahead—benefits in the form of low-carbon electricity, in meeting our targets, and in security, but he is right that there are also benefits in terms of jobs and developing skills. It is a great loss to this country that under Labour we did not develop more nuclear skills and nuclear reactors. We are putting that right.