Consideration of Lords message
After clause 79
Onshore wind power: circumstances in which certificates may be issued after 31 March 2016
I beg to move, That this House agrees with Lords amendment 7A.
With this we will consider the following:
Lords amendments 7B to 7S.
Lords amendment 7T, and Government motion to disagree.
Lords amendments 7U to 7W, 6A and 6B, 8A to 8C and Lords amendment 2A.
I must draw the House’s attention to the fact that financial privilege is engaged by Lords amendment 2A. If the House agrees it, I will cause an appropriate entry to be made in the Journal.
To deliver on our manifesto commitment, the Government remain determined to bring forward the closure of the renewables obligation to new onshore wind in Great Britain. This commitment is based on plans that were signalled well before the general election last year, and that should not have come as a surprise to hon. Members or to industry.
Back in March 2015, my right hon. Friend the Member for West Suffolk (Matthew Hancock), then Minister for Energy and Climate Change, stated in this House:
“We have made it absolutely clear that we will remove onshore wind subsidies in the future”.—[Official Report, 6 March 2015; Vol. 293, c. 1227-28.]
Prior to that, in December 2014, the Prime Minister, speaking of wind farms, stated in the House of Commons Liaison Committee:
“we don’t need to have more of these subsidised onshore. So let’s get rid of the subsidy”.
We have been absolutely clear all along. The Government’s policy is to bring forward the closure of the renewables obligation to new onshore wind.
To protect investor confidence, the Government have proposed a grace period for those projects meeting certain conditions as at 18 June last year, as outlined in the statement by my right hon. Friend the Secretary of State for Energy and Climate Change on that date. The grace period provisions are intended to protect those projects that, at 18 June last year, already had relevant planning consents; a grid connection offer and acceptance of that offer, or confirmation that no grid connection was required; and access to land rights.
As my hon. Friend said before setting out that list of warnings, and as we discussed in Committee, the proposals were in our manifesto, which commanded the support of the British people. Does she agree that we are again on thin ice, with the other place trying to interfere with the Government’s agenda, which has already been voted on by the British people?
Yes, my hon. Friend is exactly right. This is a manifesto commitment. Peers should listen to the manifesto commitment of this Government and respect it; that is normal practice, as I understand it.
The Government have taken action on a key concern raised by industry about an investment freeze. The clauses are therefore intended to ensure that projects that meet the core grace period criteria, and which were intended to be able to access the grace period as proposed, are not frozen out of the process. Since proposing this measure, the Government have continued to receive representations from industry suggesting that it supports and welcomes the proposals to address the investment freeze. The Government have also put in place a provision to ensure that an existing grace period for delays caused by grid or radar works will continue to apply.
We now need to get on and complete this Bill. As the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell) said in Committee, speaking for the Scottish National party:
“We agree that swift passage of the Bill with clear and consistent RO grace period provisions is needed in order to provide certainty to investors in the onshore wind sector as quickly as possible. The renewables industry fears that the longer legislative uncertainty over RO closure persists, the greater the risk of otherwise eligible projects running out of time to deliver under the proposed grace periods.”––[Official Report, Energy Public Bill Committee, 2 February 2016; c. 217.]
He is right.
In addition, these clauses give the Secretary of State a power to make regulations that would prevent electricity suppliers in Great Britain from using Northern Ireland renewables obligation certificates relating to electricity generated by new onshore wind stations and any additional capacity added to existing wind stations after the onshore wind closure date. This is a backstop power that would be used only if Northern Ireland did not close its RO to new onshore wind on equivalent terms to Great Britain.
Since our last debate on this issue, I am pleased to say that the RO in Northern Ireland has closed to large-scale new onshore wind stations with a capacity above 5 MW with effect from 1 April 2016. The Northern Ireland Executive are currently consulting on closing to stations at 5 MW and below.
On the response of the Northern Ireland Executive, we are going into Assembly elections in Northern Ireland, so will the Minister confirm that this is almost too late for the present Northern Ireland Executive? She wants the Bill to be rushed through and completed, but we will not have a running Executive in Northern Ireland until at least a fortnight after the Northern Ireland Assembly elections.
I do not agree that we are rushing the Bill through; there has been an enormous amount of time for consultation and discussion. As I said, the Northern Ireland Executive are consulting on closing the RO to stations at 5 MW and below. I can assure all hon. Members that the Government continue to engage with Northern Ireland with a view to effecting closure on equivalent terms to Great Britain.
Since our last debate on this policy in this House, the Government have introduced two further small changes to the Bill. These will provide for the provisions on the early closure of the RO to new onshore wind in Great Britain, the related grace period provisions, and the backstop power relating to the RO in Northern Ireland to come into force on the date that the Bill receives Royal Assent. Amendments 6A to 6B, 7A to 7S, 7U to 7W and 8A to 8C adjust the early closure date, previously 31 March 2016, to the date of Royal Assent. These changes are made in various places throughout clauses 79, 80 and 81, and to both the grid or radar condition and the investment freeze condition.
I was very clear in our last debate on this issue, as was the Under-Secretary of State for Energy and Climate Change in the other place, Lord Bourne. The Government do not intend to backdate these provisions.
Before I speak to Lords amendment 7T and the Government’s motion to disagree, let me again say that the Government remain committed to delivering our manifesto pledge to end new subsidies for onshore wind. The final policy, which was agreed at our last debate in this House, strikes the right balance between protecting consumer bills and addressing the concerns of the industry.
The Government do not agree that it is appropriate to include the provision in Lords amendment 7T. The Government want this part of the Bill returned to the state in which it left this House last month. The amendment inserted into the Bill in the other place would allow projects that did not have formal planning consent as of 18 June last year into the RO beyond the early closure date. That would include projects that had an indication from a local planning authority that they would receive planning consent, subject to a section 106 or section 75 agreement being entered into. It would also include projects where the local planning committee was minded to approve the planning application before 18 June 2015, but planning permission was not issued until after that date. To be clear, those projects did not have planning permission as at 18 June last year, so they do not meet the grace period criteria proposed by the Government.
Mr Speaker, 18 June was set out as a clear, bright line, and we have continued to maintain that it is important as a clear cut-off and statement of intent to industry. Tampering with such an integral part of the early closure policy at such a late stage in its development simply will not do. Such a change would lead to an increase in deployment—an increase that runs counter to the intent of the early closure policy. The Government have a mandate to protect consumer bills from rising costs, and we must continue to maintain the clear, bright line that is so carefully set out in the Bill’s provisions.
The hon. Gentleman will be aware that the amendment is likely to reduce the predicted savings from early closure by something in the region of £10 million per annum, which is a significant figure, given that early closure of the RO is expected to save around £20 million a year in a central scenario, and as much as £270 million a year in the high scenario.
Does the Minister agree that this was one of the most popular policies in the pretty popular manifesto we put to the electorate? We therefore need to get on with implementing it, and the other place should recognise that this issue arose out of the election.
My right hon. Friend is exactly right: this is a key, popular manifesto commitment, and we are determined to implement it, as we promised the voters of this country we would last May.
Let me turn briefly to amendment 2A, which was agreed in the other place. The amendment simply seeks to ensure that the function of determining whether an oil field project is materially complete can be transferred to the Oil and Gas Authority. That function sits outside chapter 9 of the Corporation Tax Act 2010 but elsewhere within part 8, so it does not fall within the definition of “relevant function” under clause 2(6) of the Bill. It therefore cannot be transferred from the Secretary of State to the OGA by regulations made under clause 2(2). The amendment simply removes the reference to “Chapter 9 of” from the reference to part 8 of the 2010 Act in clause 2(6), ensuring that this important function can be transferred to the OGA. The amendment is purely technical, and seeks to put beyond doubt that all key oil and gas taxation functions can be transferred to the OGA once it becomes a Government company, as we have always intended.
The amendments we have received from the other place make a number of changes to the Bill. In most instances, as the Minister mentioned, those relate to the commencement of the closure of the RO. That is essentially because of the Bill’s progress through Parliament and the potential charge of retrospectivity against the Bill. It is good that the issue has been rectified, and that the Government have confirmed that they do not intend to backdate the closure of the RO.
However, those changes point to the issue raised in amendment 7T, with which the Government have a motion to disagree. We need to be clear that the amendment is not saying that changing the closure date for the RO for onshore wind is wrong, although I continue to contend that it is. Contrary to the impression the Minister has given this afternoon, developers of projects did not realise that the closure date would be earlier than previously thought. Indeed, the so-called warnings before the general election, which she mentioned, were not about the early closure of the RO, but about future funding for onshore wind in general. Developers of projects knew that the RO would come to an end in March 2017, and many had spent several years—a long period—in the development process before the warnings were issued, and before the policy was put forward in the manifesto and, subsequently, the Bill. Having planned on the basis of the notion that the RO would come to an end, they found out very late in the day that the goalposts had been arbitrarily moved, and that their investment was lost overnight as a result.
Nor is the amendment in any way contrary to manifesto commitments; it is not about the principle of the early closure of the RO, but about the grace periods that follow from that closure process. It is not saying that there should not be grace period exceptions for schemes that, for various reasons, might fall foul of the new, arbitrary cut-off date. By highlighting a small number of projects that have fallen foul of the cut-off date for very specific reasons, it is saying that grace-period schemes should be built on a reasonable level of equity and fairness, and should work within an understanding of proper reasons for exemption; they should not simply impose a few extended, but nevertheless still arbitrary, cut-off dates for projects.
Lords amendment 7T highlights a particularly egregious inequity in the grace-period scheme. This involves schemes that have, even according to the new guidelines laid down in the Bill process, done the right thing throughout by seeking and securing local support. As the Government said earlier in the passage of the Bill, it was to be the sine qua non of permission for the development of any onshore wind in the future that local communities should have the final say in decisions; schemes, it was said, should obtain support, perhaps through local planning approval, and should not, for example, seek to win an appeal on the basis of national determination, having been turned down at local level.
The schemes covered by the amendment fit exactly that description. They have determinedly gone through the local process and engaged with it, rather than standing back and waiting to progress through an appeal. They have won local community support, in each instance through the granting of a planning decision by the local authority. The only issue is that, having gone through that often lengthy process of local consultation, they find that the successful, locally supported outcome has, at the stroke of a pen, effectively been turned into refusal. That has happened because the final planning certificate has not arrived by the cut-off date because of issues relating not to the permission, but to details of section 106 agreements on community benefit or similar issues, or to section 75 agreements in Scotland—that is, issues that arise not as part of the agreement process, but because the agreement has been reached. As these schemes could not produce a final, formal planning certificate by the arbitrary date of 18 June, the scheme as a whole was lost.
Here is the timetable of one such scheme, the Twentyshilling Hill wind farm in Dumfriesshire. The planning application was initially made on 15 March 2013 —a long time ago. It was approved by a planning committee, subject to a section 75 agreement, on 16 December 2014. It was not the fault of the wind farm applicant that the council took a few months to settle the section 75 application. Even so, the application was agreed on 17 June—again, before the cut-off date. However, despite the agreement being public and on the council website, the final certificate did not arrive until 1 July, making it null and void in the Government’s eyes, as the Minister has stated.
In retrospect, it might have been wiser for those and other developers not to take too much time on, or give too much attention to, local agreement, but to instead precipitate an appeal that they might have won. Indeed, when developers have done just that and the appeal decision has arrived after the cut-off date of 18 June 2015—we heard of such instances during the passage of the Bill—it has been accepted because of a provision relating to the grace period. The projects are deemed to have been okay all along and are allowed to proceed. That is frankly perverse, and it falls seriously short of the test of reasonableness and equity that ought to inform any grace period arrangement.
Lords amendment 7T relates to a small number of cases and seeks to restore a semblance of equity to the process. It is based on the principle that the Government themselves promoted as the basis for decisions on onshore wind applications. It is a principle for the future that, incidentally, Labour supports.
I shall explain the equity. If a local planning committee found in favour of a planning decision before 18 June, and the decision was arrived at via a process of consultation and community acceptance of the application, it should be covered by the grace period provisions. This small amendment would affect only about half a dozen schemes. In the overall scheme of things, it would make an insignificant inroad into levy control framework financial provisions, as far as the RO is concerned. It would, however, place a much-needed patch of equity on the grace period structure, and perhaps point the way to addressing seriously a future issue. That issue is this: are the Government intent on ensuring that onshore wind will be built in the future—it is, after all, the cheapest and most cost-effective renewable available—if local communities support the proposals, or do they intend to use national clout to override local wishes in pursuit of an overall closure of onshore wind, at least in England?
Accepting the amendment and finalising the Bill in this way would go a long way to restoring a principle that was supposedly central to the process for the future, and it would demonstrate to local communities that they really will be able to decide and not have their local wishes snuffed out by a fiat from the centre.
I hope that the other place will not delay this Bill further, because many people and parties in this House, and in the other place, wish it to go through to provide measures to help our oil and gas industry, which is struggling with the collapse in the world oil price and the consequent threat to jobs and prosperity that we would like to help alleviate.
I have two main reasons for strongly supporting the Government. First, they are absolutely right to say that our energy is too dear and that their measures are a contribution to tackling the problem of very expensive energy. A tragedy is unfolding in several of our industries, most recently in the steel industry, where the consequences of very high energy costs compared with those of our competitors around the world are manifest, especially the impact on output, profit, loss and loss of jobs. We desperately need to do more to tackle the problem of very expensive energy, so I admire the Government’s urgency in tackling one of its sources. The subsidy withdrawal is entirely appropriate.
One of the problems with wind energy—this makes it a very high-cost way of offering generating capacity—is that back-up capacity needs to be built to generate the power by some other means, because there will be times of the day, days of the week and weeks of the year when there is no wind. At such times, we are entirely reliant on the back-up power, and that requires a full range of back-up. There will always be extra costs involved with such an unreliable renewable source of energy.
On cost grounds, it is vital that we make rapid progress. I think that good notice was given—the election was notice enough, I would have thought. It was a prominent and popular policy. None of us was shy about debating it and we got a lot of support from many people.
The second main reason why I think the Government are right to take this action is that wind is so intermittent and unreliable. Therefore, if there is too much wind, the problems of managing and balancing the system become that much greater. As the Member of Parliament who represents the control centre on Bearwood Road in Wokingham, I am only too well aware of how its task is made much more expensive and complicated the more interruptible and unreliable energy there is on the system. The Government’s measure will be a welcome check on that. It will help it to manage the system better and to provide more reliable power for industry.
If there is too much unreliable power on the system and that power goes down, it is industry and commerce that will take the hit. They will be asked to forgo the use of power when there is no wind, but when we are desperately trying to compete in a very competitive world, surely it is important not just to keep the lights on in people’s households, but to keep the factories turning over.
For those two powerful reasons—there are many others, but I will not detain the House with them— I strongly support what the Government are doing. I urge the other place to recognise how important it is for our national energy security and for the sake of the prices charged to our consumers, and, above all, to remember that it was an election pledge.
As is so often the case with learning about the workings of this place, sometimes I do not know whether something is a formal rule or a convention. I had assumed that “ping-pong” was a mere colloquialism, but I was surprised to learn from the Order Papers online that it is the formal name for this process. I was never very good at ping-pong when I was younger—I kept taking my eye off the ball, which could also be said of the Government, whose dogmatism in pushing this issue and continuing with ping-pong means that they are taking their eye off the bigger picture. I agree with the right hon. Member for Wokingham (John Redwood) that the bigger picture for the Energy Bill, at every stage of the process, has been the establishment of the Oil and Gas Authority.
If we simply accept the Lords amendments, which I support, we could finish our deliberations on this Bill and be done with it. They are balanced and sensible and would deliver the pragmatic response that it is beholden on the Government to deliver.
Sometimes it is better to know the answer to a question before asking it. A number of my colleagues are meeting constituents down from Scotland who suffer from motor neurone disease. Given the hugely debilitating impact that that illness can have on people, and given the impact that Westminster can have on welfare, it is important that a number of our folks are there.
I started by saying that at one point in my youth I was guilty of taking my eyes off the ball. With these diversionary tactics, Conservative Members are well and truly taking their eyes off the ball. We could discuss who is here. It is disappointing that there are not many Members in the Chamber, and I am not sure proportionately how many Tories are present. I could do some back-of-a-fag-packet sums—that might appeal to them—but instead I shall persevere.
We are talking about 90 MW of onshore wind. The Minister said in Committee on 2 June that
“it is absolutely our intention to give local communities the final say on wind farm developments.”––[Official Report, Energy [Lords] Public Bill Committee, 2 June 2015; c. 76.]
Six of the seven schemes that have received planning consent are in Scotland. The committee dates were 24 November 2014 for West Benhar in North Lanarkshire; 11 December 2014 for Twentyshilling in Dumfries and Galloway; 3 June 2015 for the Chruach extension in Argyll and Bute; 15 September 2014 for the Barlockhart Moor extension; 27 January 2015 for Poniel in South Lanarkshire; 24 February 2015 for Crookedstane in South Lanarkshire; and 5 June 2015 for the Melton Common wind cluster in Hull. Those were all before the Government’s cut-off date of 18 June 2015.
As the hon. Member for Southampton, Test (Dr Whitehead) suggested, if we are to put local consent at the heart of this issue, we must respect the outcome and will of local councils that decided to proceed with these schemes, but which through no fault of their own—or indeed of the developers—were not granted planning consent and a decision notice until after this decision. For the Twentyshilling Hill wind farm, evidence to the Committee from the provost and chair of the Royal Burgh of Sanquhar and District Community Council, and the chair of Kirkconnel and Kelloholm Community Council stated:
“Our two Communities number nearly 5000 inhabitants, and, since the closure of the coal mines nearly 50 years ago, have stumbled from crisis to crisis. Despite the problems affecting our area, we are not dependent communities, and both Kirkconnel and Sanquhar can boast good public initiatives and an earnest desire to improve our lot through self-help. Windfarm monies will, at least allow local people the ability to take decisions which will improve the area in which we live.”
Twentyshilling Hill wind farm has the potential to offer life-changing improvement to the lives and living conditions of the populations of Upper Nithsdale. That is local empowerment. We are talking about local consent and support, and Twentyshilling Hill wind farm has unmistakeably got the support of the communities in which it will be set. For the sake of a few points of dogmatic principle from the Government, we are seeing that taken away through no fault of the community or the developer, but purely to persevere unnecessarily. I urge the Government to put their eyes back on the ball and allow the Energy Bill to proceed. If we go back and forth with ping-pong we risk delaying that further.
The hon. Gentleman is generous in giving way. Let me make a point that I also raised in Committee. I accept that there may not be time for this with some of these schemes, but on a point of principle, if the Scottish Government and the SNP wish to continue these schemes in Scotland, why will they not pay for them themselves?
Because there is no mechanism. We discussed that in Committee, and the hon. Gentleman voted against the mechanism that would have allowed that to happen. I do not see how that question focuses on the issue. If we want Scotland to receive support for such projects, that could have been provided.
There were two different aspects, and we had a number of debates. The hon. Gentleman asked how we would do something, but we cannot do it—pure and simple. Let me return to the nub of the matter. People would like pragmatic government, but we are seeing dogmatic government that dismisses the views of communities.
It is a pleasure to listen to a message from the other place and to disagree with it wholeheartedly. A few hours ago the German Government decided that they want to withdraw subsidy from onshore wind schemes, for exactly the same reasons that we in this country are doing so. In previous debates and in Committee, I described my campaign to get this clear manifesto pledge from my party. I will not go through that again—I had only half an hour last time to describe the process and some of the things that I was after, and we are time-limited today—but it all stemmed from the Kelmarsh decision in my constituency.
Members in this place understand how important it is to represent their constituents, but I wish to tell some of those in the other place that it was not only one small village in my constituency that was affected by an onshore wind decision—Hanging Houghton, Brixworth, Draughton, Maidwell, Hazelbeach, Kelmarsh, Yelvertoft, Winwick, Crick, Lilbourne, Badby, Kislingbury, Guilsborough, Watford, West Haddon, East Haddon, Ravensthorpe, Great Oxendon and many more villages in my constituency were all affected by proposals for unwanted onshore wind farms. That is why at the end of the previous Parliament, a letter to the Prime Minister was signed by 101 Members of Parliament in order to get this change. There was a long battle across the Floor of the House about whether we should be subsidising onshore wind, and a clear manifesto pledge by the Conservative party to stop funding it.
The hon. Members for Aberdeen South (Callum McCaig) and for Southampton, Test (Dr Whitehead) have highlighted small factors within the grace period, but this is a clear manifesto pledge and principle that people in my constituency wanted and expected me to fight for. I will not listen to those in the other House who are determined to bring party politics into this.
There are no Lib Dems in the Chamber today—there are too many anyway, but none of them is here today. Those Lib Dems who fought to reform and get an elected Chamber up the other end of the corridor are now using that Chamber to abuse the democratic process of this country. They know full well what they are doing. When Lord Wallace of Tankerness decided that he wanted to interpret the Conservative party manifesto, it was interesting that many Liberal Democrats who supported him had been defeated by people who supported that manifesto. They lost their seats partly because in their communities they could not defend the onshore wind turbines that the Conservative party had made a clear commitment to get rid of.
I know the hon. Gentleman said that he had a bit of trouble with conventions, and so, obviously, do some Members of the House of Lords. I am trying to remind them of a long-standing tradition and convention in this place, which is that when a party has a manifesto commitment to enact legislation, that legislation should not be overturned by those who are unelected down the other end of the corridor. If we consider who tabled the amendments and voted for this message to be sent to the Commons, we see a whole list of former MPs who lost their seats because of the manifesto that they are now trying to overturn from an unelected place.
I was involved with this manifesto pledge through to the point of delivery, and I sat on the Energy Bill Committee. I am pretty sure that I know what our manifesto pledge was, as did those who voted for it in my constituency—it was on my leaflets and plain for all to see. I wish to send a message to those down the other end of the corridor that they are dabbling with democracy. They are not just fighting for the principle of a grace period for six wind farms; they are determinedly fighting against a clear manifesto pledge by a governing party.
I wonder whether the hon. Gentleman had in his election leaflet details of the grace periods that would have been put in place as a consequence of the manifesto commitment. If those details were not in his leaflet, does he agree that the question of grace periods is not about the manifesto commitment, but about how that commitment might be made more palatable, as far as the transition is concerned? That is what we are debating today.
That is the sort of thing that I probably would have had etched into a stone for people to laugh at. The hon. Gentleman knows the answer. Of course, I did not have anything about grace periods in my local campaign leaflet that I sent to my constituents, because I thought that people would understand exactly what we meant when we said that there was no subsidy for onshore wind. I did not think that it was necessary to dance on the head of a pin for the sake of a simple party political point.
I end where I began. My constituents are desperate for the measure, and they are desperate for the measures to help the oil and gas industry. They are surprised that Liberal Democrats down the other end of the corridor are willing to play politics with the elected Chamber on a point in a manifesto on which they were heartily defeated. My constituents are annoyed by the fact that the matter has not become law already.
It was a great pleasure to serve on the Bill Committee. I hope that the House will not mind if I return briefly to the point made by the hon. Member for Aberdeen South (Callum McCaig), because it is important to set the record straight. Before I give my reasons for supporting the Government, let me say that my recollection—I am happy for this to be clarified—is that in the Bill Committee, SNP Members tabled amendments to give them the power to keep the projects open but, when asked, they did not confirm that they would put up the money to support those projects. The justification that they gave related to the nuclear industry. As I recall, they said that it was quite fair for them not to have to pay for the projects because they have to pay for the nuclear industry, which they do not agree with. Thereafter, I asked them whether they would want to be cut off from the electricity supply that comes from the nuclear sector in this country, and the answer was no. As always, they want to have their cake and eat it—rather like the Mayor of London, although they do not make their arguments with as much grace as he does. The hon. Member for Aberdeen South has tried his best today, and I see that he has got some extra support to back him up.
My two reasons for supporting the Government are clear and along the lines of the points made by my right hon. Friend the Member for Wokingham (John Redwood). The first relates to the simple principle of democracy and the position of my constituents, whom I have been sent here to represent. Overwhelmingly, my constituents support our policy on onshore wind, and they want it to be enacted in good time. Since I attended the Bill Committee, I have been out and about in the constituency, and the matter continues to come up. I recently addressed a meeting of the Stour and Orwell Society, a fine and upstanding group of ladies and gentlemen who are committed to preserving and protecting the natural beauty and heritage of the countryside in South Suffolk, particularly in the peninsula where the River Stour meets the Orwell. For anybody who wishes to come and visit, it is a fine place and it is not particularly blighted by large constructions that will be affected by these changes. Overwhelmingly, the position of the constituency is that it supports the changes.
My second point relates to the Oil and Gas Authority, and it has been alluded to by my right hon. Friend and others. I simply want to say that we should not delay a Bill—[Interruption.] Does the hon. Member for Southampton, Test (Dr Whitehead) wish to intervene?
Absolutely. If the hon. Gentleman is willing personally to provide £10 million so that the taxpayer and electricity customers do not have to be so encumbered, I am sure that we can find a way.
We have a clear position. The Bill has not changed in respect of the fundamental decision to establish the Oil and Gas Authority. At one point on the day of Second Reading, the price of a barrel of oil was $27.70. It is now around the $40 to $44 mark, so there has been some stabilisation, but that word has to be used carefully in view of what is happening around the world. Ambrose Evans-Pritchard had an excellent piece this week on continuing stability in Kuwait, and we see today in the FT that Saudi Arabia is starting to borrow from the markets. The price may go up, or it may go down again. The key point is that the outlook is uncertain. Enacting the Bill, with this new and respected regulator, will add stability and credibility to the sector at an important time. It is not a magic wand, and it will not immediately heal the problems that undoubtedly exist in this industry, which is vital for the United Kingdom, but it is a key part of our energy policy and proposition. That is why the Bill should become law as soon as possible.
This is basically about our national interest, which has, for many decades, been tied to North sea oil and to the energy sector. That is true not only of Scotland; in the East Anglian economy, a significant amount of output and a significant number of jobs come from the oil sector. I encourage all hon. Members to support the Government on this matter. Our reasons are clear. This is about supporting the energy sector and respecting the democratic will of the people of the United Kingdom.
I think we all hoped that the Energy Bill would by now have completed its progress through Parliament. It is a shame that it has not, especially because the closure of the renewables obligation for onshore wind was a clear manifesto commitment by the Government before the last election. That was a popular pledge, especially in my constituency, where opposition to wind farms in the Mendips and at Pilrow is widespread. It is difficult to explain to my constituents that that manifesto commitment, which the Government have a clear mandate to deliver, has not been enacted because of the intervention of the unelected Members of the other place.
That is especially true, as has been noted by a number of my hon. Friends, because the Opposition has been abetted in the House of Lords by a party that was roundly rejected in Somerset, in the south-west and across the country. Not one of its elected Members has come to this Chamber today to justify the actions of their unelected colleagues in the other place. The illiberal undemocrats have a great deal to answer for. I want to congratulate the Secretary of State and the Minister of State on their forbearance in seeing the Bill through Parliament. I understand that the other day, the Secretary of State spent some time at the Bar of the other House eyeballing those who were delaying the legislation. Sadly, they had their way, and we are here yet again to debate it.
It is important that we do not allow the closure of the renewables obligation for onshore wind to be cast as anti-green. The deployment of onshore wind has been widespread, despite strong opposition in this place—with my hon. Friend the Member for Daventry (Chris Heaton-Harris) in the vanguard—and in communities across the country. As a result of £800 million of subsidy, there are 490 operational wind farms and just under 5,000 operational turbines, so the measure is not anti-wind or anti-green.
The Government need to deliver their manifesto commitment to ensure that bill payers are not expected to foot the bill for the excessive deployment of this type of generation. Let us be clear. The Government are well on track to achieve 30% of electricity generation from renewable sources by 2020, and we should congratulate them on that. They are serious about decarbonisation and serious about security of supply, but they are also serious about keeping bills down. A line must be drawn somewhere, and the Government’s decision on the matter is, in my view, entirely reasonable.
Let us reject Lords amendment 7T and stop the onshore wind industry impeding the progress of a Bill that, principally, establishes the OGA, with all its important functions in reinvigorating the UK’s oil and gas industry, safeguarding hundreds of thousands of jobs, contributing billions to our economy and protecting an essential component of not only our energy security but, I argue, our national security. It is high time that we moved on with the Bill, and that the Lords accepted the will of this elected Chamber. It is time that we focused our energies not on onshore wind, but in using the Government’s subsidy structure as a lever to encourage the technologies, such as offshore wind and new nuclear, that we envisage will be part of our energy mix for the next 20 or 30 years.
My hon. Friend is making a powerful and well-informed speech. Does he agree that although we are ending the subsidy for onshore wind, there will still be a role for it? We must continue to make sure that, while it is not subsidised, onshore wind does not lose out in comparison with the strike prices granted to other technologies.
I accept my hon. Friend’s point to a degree. This is not the end of onshore wind in that onshore wind is not being banned, but is simply being told that it is time to find its own feet and to go it alone, where it can be sited in a permissive planning environment. I regularly drive up the M5 past the onshore wind turbines at Avonmouth, and one might argue that they are entirely reasonable in that industrial setting. Provided turbines can be sited in a permissive place and they do not require any further Government subsidy, they may of course continue. However, it is important that the subsidy ends and that it does so with the passage of the Bill.
It is also important to note that the Energy and Climate Change Committee has recently begun pre-legislative scrutiny of the next energy Bill. There is a great deal in it that is quite exciting, in my view, so let us get this one done and get on with that one.
It is a pleasure to take part in this debate, in which there have been interesting speeches by Members on both sides of the House. On ending the subsidy for onshore wind, the whole aim of subsidy regimes for renewable technologies is to encourage costs to fall and to drive them down over time to the point at which they no longer need a subsidy. The Government put that in their manifesto.
I think a lot of this is down to Labour Members, because they would not listen to communities, such as my own, which felt that wind farms were being imposed on them that blighted their view of the landscape. The sense of a loss of control, even more than the imposition of the turbines themselves, created a great deal of resentment. We have ended up in a position in which the party that won a majority at the general election stood on a manifesto promise to end this subsidy.
The Government have made provision to ensure that onshore wind, where it goes ahead, has the support of the local community. I have said previously in the House, so I will not go on about it at too much length, that that issue should have been sorted out. If it had been sorted out sooner, we might not have had the backlash that has found its form—not least through the agency of my hon. Friend the Member for Daventry (Chris Heaton-Harris)—in saying, “We feel that this subsidy regime is imposing these turbines on us.” The permissions, not the subsidy per se, was the central issue, but we are where we are.
Further to my intervention on my hon. Friend the Member for Wells (James Heappey), I want to make this point. Given that we now have an energy market in which the price producers charge for energy is far less than that at which anyone can afford to commission new production, we have a rather artificial market. I hope and expect we will make sure—I know Ministers are looking at this—that future regimes, for contracts for difference or whatever else, do not artificially block onshore wind from getting access to the market because of how pricing within that market operates. It is perfectly possible to ensure that there is no subsidy for onshore wind while ensuring that onshore wind alone is not deprived of access to the mechanisms that drive new commissioning for every other technology. I hope that Members on both sides of the House can agree to that. As long as communities have the final say on whether new wind farm capacity is brought into their area, and as long as onshore wind is treated no differently from other technologies, including fossil fuels such as gas, that is the situation we need to bring about.
I agree that there are such issues. In his speech, my right hon. Friend did not reflect on the success of the Government. I know he is sceptical about both climate change and the Government’s approach to this over the years, but what is undeniable is the way in which the cost curve has accelerated downwards. We were previously in a situation in which clean energy was ridiculously more expensive than fossil fuels, which poison the air and also have climate risks attached to them. We have therefore seen a real driving down of that cost. Onshore wind is now in a position where it should be able to compete on a level playing field with new gas-fired power stations; we will not of course see any more coal-fired ones.
Whereas the price of offshore wind was £150 per MWh just a few years ago, we will now, as was announced in the autumn statement, see a ceiling of £104 or £105 per MWh. By the time we are into commissioning for the mid-2020s, we will be looking at a price of below £85 per MWh, which, as my right hon. Friend and other Members will know, is less than that guaranteed for Hinkley.
We are therefore moving to a world of renewables. As part of the reset, we will have an improved approach to encouraging storage and demand management. The roll-out of smart meters will be part of such demand management—I know that efforts are being made with National Grid to find the cheapest way to encourage major industries not to use energy at times when the grid is being pushed—as will interconnectors. We are therefore building the more intelligent system that will take cost out of the intermittent renewables sector at the same time as those renewables are cheaper in relation to their production costs, become more efficient and help us to meet our climate change objectives.
I am pleased to say that it is time we put this law in place and made sure that the Oil and Gas Authority can do its work. If there is an uptick in the oil price, as doubtless there will be, we will have an oil business in this country that is fit for purpose and efficient, and which can continue to deliver jobs in Scotland and elsewhere across the United Kingdom.
With the leave of the House, I shall respond to the debate. The Energy Bill will enact our manifesto commitments in two key ways. It will create the Oil and Gas Authority, which provides part of our continued support for North sea oil and gas. It will also implement the recommendations of the review by Sir Ian Wood, and we are doing everything we can to ensure the long-term survival and thriving state of this critical UK industry.
The North sea oil and gas industry has been the UK’s largest industrial investor for many decades and has paid billions of pounds in corporation tax on production. However, as the basin matures, oil and gas become more difficult to access. We cannot and must not accept any delay in completing the Bill, because we need to give the Oil and Gas Authority the powers it needs to maximise the economic recovery of the UK’s remaining oil and gas reserves. Industry and Government share the same ambitions and are working very closely together to manage the remaining resources effectively and efficiently.
I find it very disappointing that Opposition Members, who should know better, have suggested that by adding a mere £10 million extra per year to consumer bills, we can somehow achieve our aim of setting up the Oil and Gas Authority early. They should be ashamed of themselves. They should be supporting the Bill’s speedy conclusion to Royal Assent for the sake of the oil and gas industry they all profess to support so enormously.
On the delivery of the Government’s manifesto commitments on onshore wind, we promised to end new subsidies for onshore wind and to ensure that local people have the final say on where onshore wind is built. Opposition Members suggest that just because there is local agreement, it is fine to add to the bills of all consumers across Great Britain, but that is simply not the case. It is our duty as consumer champions—at least on the Government Benches—to keep down the cost to consumers, and that is what we will do.
Onshore wind has deployed successfully to date and is projected to meet our planned range of 11 to 13 GW by 2020, but we do not want to continue to provide subsidies where they are no longer necessary and where they are simply adding to the costs for energy consumers. We must seek the right balance between each of our three competing priorities: to keep the lights on; to keep bills down; and to decarbonise at the lowest possible price. Above all else, we want Members right across the Chamber to support these amendments so that we can get the OGA—
One hour having elapsed since the commencement of proceedings on consideration of the Lords message, the debate was interrupted (Programme Order, this day).
The Deputy Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83F), That this House agrees with Lords amendment 7A.
Question agreed to.
Lords amendment 7A accordingly agreed to.
The Deputy Speaker then put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83F).
Motion made, and Question put, That this House disagrees with Lords amendment 7T.—(Andrea Leadsom.)
Lords amendment 7T disagreed to.
Remaining Lords amendments agreed to, with Commons financial privilege waived in respect of Lords amendment 2A.
Motion made, and Question put forthwith (Standing Order No. 83H), That a Committee be appointed to draw up Reasons to be assigned to the Lords for disagreeing to their amendment 7T;
That James Cartlidge, Andrea Leadsom, Holly Lynch, Callum McCaig, Paul Maynard, Julian Smith and Dr Alan Whitehead be members of the Committee;
That Andrea Leadsom be the Chair of the Committee;
That three be the quorum of the Committee.
That the Committee do withdraw immediately.—(Julian Smith.)
Question agreed to.
Committee to withdraw immediately; reasons to be reported and communicated to the Lords.