Energy and Climate Change
The Secretary of State was asked—
If you will allow me, Mr Speaker, may I take this opportunity to congratulate my right hon. Friend the Member for Hastings and Rye (Amber Rudd), the new Home Secretary, on her appointment, and also of course our new Prime Minister, the former Home Secretary? I wish them both great success. I also welcome the hon. Member for Brent North (Barry Gardiner) to his place; I think this is the first time we have had an exchange over the Dispatch Box. I wish the hon. Members for Wigan (Lisa Nandy) and for Southampton, Test (Dr Whitehead) very good luck in their futures, too; I have enjoyed our exchanges.
Owing to our geology, deep geothermal power is likely to make a small contribution to electricity supply. However, Cornwall is one area where the technology can work and I am pleased that this is part of the devolution deal for Cornwall. Deep geothermal heat has greater potential and we are supporting its development through the renewable heat incentive and through feasibility studies funded by the heat network delivery unit.
I thank the Minister for that response. Deep geothermal has the great benefit of being a baseload energy source that is not reliant on variable weather conditions, and, as the Minister points out, Cornwall is one place where great potential for geothermal lies. As she is aware, a scheme is being developed at the Eden project in my constituency. May I invite her to visit Cornwall to see for herself the huge potential that there is for geothermal development there?
I am grateful to my hon. Friend; nothing would please me more than a nice holiday in Cornwall right now. I am very pleased to hear that the EGS Energy and Eden project development is progressing well and, as he knows, it has the potential to produce power for about 4,000 homes and to make a very important contribution to the local community.
The truth is that the Ernst & Young renewable energy attractiveness index shows that the UK has fallen from the seventh most attractive country to invest in to the 13th. Following Brexit, that is only going to get worse, so what is the Minister doing to reverse that trend?
According to Bloomberg New Energy Finance the UK has been the fourth highest investor in clean energy globally for the past five years. Over half the total investment in the EU in 2015 occurred in the UK. We have a very proud record and we are set to exceed our own targets for generating renewable energy by 2020. That is a very proud achievement for this country.
Iceland has a fantastic football team, a free trade agreement of its own with China and is outside the EU. It is also the world’s leader in geothermal energy. Are we drawing on Iceland’s expertise to develop this industry in our own country?
If my hon. Friend is referring to the taskforce for the interconnector with Iceland, let me say that I am a huge fan of that, and there will be a statement shortly about the progress that he will be aware has been made between the leaders of the UK and Iceland. I seriously hope we will be able to make progress with all sorts of bilateral energy deals in the future.
Energy Infrastructure: Use of British Steel
Officials in my Department regularly meet developers to make clear the importance we place on sourcing UK content, including steel, in infrastructure projects. For example, EDF says it expects that a large proportion of the steel for Hinkley Point C sourced by its supply chain will come from UK companies.
I am grateful to the Minister for that answer. As she will know, the Corby steelworks plays a vital role in manufacturing steel tubes which can be used for fracking purposes. Does she agree it is very important that, wherever possible, we use British steel, not just because it supports the industry and the jobs it provides, but because the quality and safety of the product is far superior to that of foreign competitors?
I completely agree with my hon. Friend. I have had a number of meetings with the Department for Business, Innovation and Skills to discuss exactly this point. In its 2014 report “Getting ready for UK shale gas” Ernst & Young said there would be significant benefits for jobs and growth from a successful UK shale industry, including a projected need for over £2 billion-worth of steel.
15. The Sustainable Product Engineering Centre for Innovative Functional Industrial Coatings—SPECIFIC—national innovation centre in Neath Port Talbot relies on EU funding to use Tata British steel to develop buildings that are completely decarbonised. Such buildings lower household and business energy bills and help the UK to achieve its carbon reduction targets. Will the Minister support SPECIFIC in developing its use of British steel in its innovative projects, and replace any EU funds that might be lost as a result of Brexit? (905864)
My Department has been working closely with the Department for Business, Innovation and Skills to look at how we can help Port Talbot with its energy costs. We have already made announcements about how we are going to reduce the impact of carbon policies on the steelworks in Port Talbot, and we will continue to look at further ways of helping, including considering how energy-intensive industries across the board can reduce their electricity costs by changing the way in which they generate power.
Does my hon. Friend agree that British steel can be used in energy infrastructure projects not just in the UK but around the world? Last week on a visit to the Democratic Republic of the Congo with the International Development Committee, we saw the way in which Britain is leading in helping to provide energy infrastructure in that country.
My hon. Friend is exactly right. A good example of my own efforts to improve the use of UK steel has been to urge the Offshore Wind Industry Council to do more to promote UK content. The UK is one of the biggest deployers of offshore wind to date and we can certainly hope that, once we start building our export markets, British steel will form a part of those exports.
The Minister will be aware that the two Liberty steel plants, including Clydebridge in my constituency, will be heavily involved in the supply of turbine casings for tidal lagoon projects and tubular steel structures for offshore wind turbines. The renewables industry can provide a huge market for steel produced in Britain, which represents a huge opportunity for British businesses. Will the Minister commit to revisiting the Government’s approach to the subsidy of such renewables?
On the subsidies for renewables, we have made it clear that we must balance the need to keep costs down for consumers with the need of new technologies to be subsidised in order to deploy and keep their costs down. On offshore wind, we have made it clear that we see huge potential for the cost trajectory to go down. The offshore wind industry already has a target of 50% UK content, and I am certainly encouraging it to be more ambitious. That would absolutely include the use of British steel.
Hinkley Point is expected to be one of the largest construction projects this country has ever seen, and it will require more than 200,000 tonnes of steel. Does my hon. Friend agree that this will provide a huge opportunity for the British steel industry?
Yes, and I would expand that to include opportunities for the supply chain right across the UK. The Government are working with the industry to develop a demand model that will provide a capability and capacity picture for the UK against the demand. Part of the aim is to identify the forward requirement for the components, which will include steel. We are working closely with new nuclear developers to create that supply chain right across UK businesses.
Energy Market Competition
3. What her policy is on the proposals of the Competition and Markets Authority on increasing competition in the energy market. (905850)
The Government welcome the Competition and Markets Authority’s final recommendations, which represent another step towards a competitive and effective energy market that works for all consumers, but it is key to understand that it is also the responsibility of energy suppliers to take action in response to the CMA’s recommendations, and we are meeting representatives of all the big six suppliers to urge them to do that.
I congratulate my hon. Friend on answering all the questions this morning and wish her the very best of luck with anything that might happen later. Does she agree that it is only by having greater competition in the market that we can drive down prices, especially for those living in fuel poverty?
My hon. Friend is absolutely right. I invite any of my hon. Friends on the Front Bench to jump up and answer any of these questions, should they wish to do so, but I am quite used to being the last person on the battlefield; I know my place.
The Government have taken a great deal of action to boost competition and to make switching easier for all consumers, and we have absolutely recognised that vulnerable consumers need additional help to engage with the energy market. To help to address that, we have provided about £3 million over the last three years to fund face-to-face support through the Big Energy Saving Network as well as £1 million of funding for this winter and £1.5 million of funding for a programme administered by National Energy Action over the next two years. This is a top priority for my Department.
I thank the Minister for her kind comments this morning. I, too, enjoyed our exchanges—and the chocolate peanuts.
The CMA’s final report has been characterised as blaming sticky customers for not switching and condoning penalties on them if they continue not to switch. Does the Minister agree with that analysis?
I also enjoyed the chocolate raisins.
The evidence is clear that customers on expensive standard tariffs could save £325 by switching to the cheapest fixed deal. I do not think that the CMA is blaming consumers; it is recognising a slight inertia or unwillingness to switch. We are trying to urge people to switch. Between January and March this year, almost 2 million energy accounts were switched, over half of which moved to new suppliers, so the push to switch is actually getting through and we are seeing some progress.
I congratulate the Minister on all that she has done to encourage competition, which helps consumers to get a price that is better for them. That is in stark contrast to Opposition Members who often scaremonger about capacity markets driving prices up and scare my constituents into worrying about whether they can pay their bills.
My hon. Friend is exactly right. People all too often fail to recognise that the energy trilemma consists of keeping the lights on, keeping bills down, and decarbonising. He is right that the capacity market is there to ensure the security of supply and that is the payment we make to keep the lights on.
I echo the remarks made about the right hon. Member for Hastings and Rye (Amber Rudd) and wish her well in her new role as Home Secretary. I am glad that the Minister is here, because if she had not been, these questions may have been a little more rhetorical than usual.
The previous Prime Minister said in 2012 that he would legislate to ensure that all consumers were on the lowest tariff. We have had four years since then, and an extensive CMA report has come up with recommendations that are a little underwhelming in their scope. Does the Minister think that that will be enough to ensure that energy customers get the best possible deal?
That was a fair question. The CMA has carried out a detailed piece of research and we are committed to implementing all its recommendations as soon as possible. We have also made it clear that if we do not see change, we will take further steps. The hon. Gentleman is right. We will implement the CMA’s recommendations. We will see costs come down, competition go up, and better remedies for people on prepayment meters, but we will also be alert to other opportunities to get costs down for consumers.
I am glad that the Minister says that the Government will remain vigilant on this matter. The CMA found that 70% of customers of the big six domestic suppliers were on the more expensive standard variable tariff. Will she set a target for reducing that so that we know what success looks like and to determine whether the further action that she mentions is required?
As I have just explained, we do not want to set a specific target. However, we are successfully providing support to organisations that then go on to help people to switch. I love the idea that if anybody listening to this really wants to help their grandparents, neighbour or whomever, who may not have the confidence to switch themselves, they could go and help them switch, possibly saving them several hundred pounds. Instead of setting targets and blaming people when they are not met, we need to persuade people of the advantages of switching.
I pay tribute to the right hon. Member for Hastings and Rye (Amber Rudd) and congratulate her on her appointment as Home Secretary. Under her charge, the Department of Energy and Climate Change played an important role in securing the Paris climate agreement, and she was a strong and enthusiastic champion for it. Only two weeks ago, some might have suspected that today she would be more likely to be standing at the Dispatch Box saying goodbye to me, but in this place we are beginning to learn to expect the unexpected. She was always courteous and often actually helpful in our exchanges, and we wish her well in her new role.
The CMA report states for the past five years the big energy companies have been overcharging customers by more than £4,657,000 every single day. Can the Minister name any other swindle of such enormous magnitude where the Government would simply say, “It is the customer’s fault. People should have shopped around and switched to another provider”?
I am grateful to the hon. Gentleman for his question, but I completely refute the suggestion that the Government are saying it is the customer’s fault. We have been clear that we support the CMA’s recommendations; some huge changes are being undertaken. We are rolling out smart meters; simpler tariff rules are coming in; we will enable newer suppliers to pitch cheaper deals to inactive consumers; and there will be improved accuracy of quotes on price comparison websites. A range of remedies are being undertaken, and in no sense is there inaction on the part of this Government.
The hon. Lady said that she was going to be meeting the industry and the big six. The Government’s own figures state that in England 2.38 million households are living in fuel poverty. Her Department could today take action to force—not to talk to, but to force—energy companies to pass on changes in wholesale prices immediately to customers through their tariff structures. In that way, customers would benefit directly from the drop in wholesale prices. Why is she failing to do this?
I am afraid that just shows that the hon. Gentleman does not really understand how the energy market works. His party’s proposal to cap energy bills to consumers was a grave mistake, because we have seen wholesale prices come down and all consumers have benefited from that. I say again that this Government are absolutely committed to getting bills down for consumers at every opportunity, to implementing the CMA’s significant reforms and to looking at what else is available to be done.
EU Referendum: Climate Change Commitments
The UK’s climate change commitments are grounded in the UK’s Climate Change Act 2008, which commits us to a reduction in emissions of 80% by 2050, from 1990 levels. Our membership of the EU has no impact on our commitment to this Act, as hon. Members will have seen in our decision to accept the Committee on Climate Change’s advice on the level of the fifth carbon budget just two weeks ago.
I thank the Minister for her answer, but she will know that the Committee on Climate change has said that tackling climate change is going to be more difficult outside the EU. The vote to leave does not give the Government a mandate to undermine the global transition to clean energy, so will she confirm that the UK will maintain its commitment to meeting our 2020 clean energy target, which was agreed as part of the EU’s climate and energy package?
In my view, leaving the EU will not make a difference to the innate cost of energy or the challenges for the energy sector. Most of our transactions for electricity generation are home-grown. There is a global market for gas. We have very good connections with European and non-European countries on interconnection, and we will continue to make commercial arrangements that are to the advantage of both the UK and those partners in energy.
I congratulate my hon. Friend on her ability to do the work of four Ministers with such panache. She will know that normally economists disagree about everything, but one of the few things they are agreed about is that the best way to achieve an objective such as that set by the Climate Change Act 2008 is through a price mechanism. However, if subordinate targets are set, that inevitably means a less efficient and more costly route. When we leave the EU, will we therefore be able to scrap unnecessary targets while maintaining that final target, and thereby reduce the cost to consumers of reducing emissions by 80% by 2050?
My right hon. Friend is right to point out the importance of keeping costs down while we decarbonise. The Department has always made it clear that every opportunity to decarbonise at the lowest cost to consumers will be taken. It is my view that leaving the EU will enable us to do that to an even greater extent than we have in the past.
Since 1990 the UK has decreased emissions by a third more than the EU average. We have now set a target for 2030 that implies a decrease of about double that which the EU put into the Paris INDCs—intended nationally determined contributions. Does the Minister agree that the real concern about Brexit might be that we will no longer be able to influence the EU to make more progress in decarbonisation?
I am entirely clear: European countries remain our friends and great allies, and we will continue to work with them. Leaving the European Union does not mean that we are suddenly leaving Europe in any sense, so it is my expectation and anticipation that we will remain closely aligned on global issues such as climate change, and that we will continue to play a leading role in the world’s attempts to tackle that great threat.
EU Referendum: Policy Implications
At the heart of our energy strategy is the need to encourage new investment in the UK’s energy system, so my Department will continue to take action to deliver secure, affordable and clean energy for hard-working families and businesses. This work is already under way. Since the referendum we have accepted the recommendations of the Committee on Climate Change for the level of carbon budget 5. We have published details of our upcoming capacity market auction and confirmed that our contracts for difference allocation round will go ahead later this year.
In fact, the UK Government’s failure to attract investment to the energy sector has already undermined energy security and sustainability for generations to come, and the Brexit vote has plunged the sector into further insecurity. What are the Minister’s plans to ensure the future of green energy following the leave vote?
I do not recognise at all what the hon. Lady says about our failure to attract international investment—that is clearly not the case. We are attracting a huge amount of investment in offshore wind. We have the successful turbine blade plant that is being created up in Humber by Siemens, we have DONG Energy, and we have various international developers that are putting in bids and building new offshore wind facilities in the UK. Onshore wind in the UK has been a huge success story. Some 99% of all our solar installations have taken place since 2010 and I have already cited statistics about our share of the investment going into renewables, so, I am sorry, but I do not recognise what the hon. Lady says.
I congratulate my hon. Friend on confounding the doom-mongers. Does she agree that COP 22 in Marrakesh in November will be a wonderful opportunity for the UK to showcase its world-beating edge in renewables technology and our industrial base?
I could not agree more; my hon. Friend is exactly right. The UK is leading on the deployment of renewables—we are getting down the cost of those technologies through our policies—and through our commitment to decarbonisation and tackling climate change, and to showing the rest of the world how much we want to lead in this area, which we will continue to do.
Policy favouring small modular reactor technology offers affordable innovation in low-carbon energy, which is important in these days, as well as equally important manufacturing opportunities. Trawsfynydd in my constituency offers the ideal site for SMRs and, indeed, advanced reactor technology. Does not the Minister agree that the DECC process to select an SMR technology for generic design safety assessment should move forward with greater energy and a focus on a realistic shortlist of organisations?
Yes, I agree that we need to move forward with this. The Government have recognised the potential of small modular reactors, and we have announced that we will invest at least £250 million over the next five years in an ambitious nuclear research and development programme that includes the competition the hon. Lady mentions. We have committed to publishing an SMR delivery road map in the autumn to clarify the UK’s plans for addressing the siting issues that she mentions, as well as regulatory approvals and, vitally, skills issues.
The best way to deliver lower energy bills for businesses and households is to have a robust and competitive energy market. There are now over 40 energy suppliers in the domestic retail energy market, which is up from 13 in 2010, and independent suppliers have over 17% of the dual fuel market. Competition is improving, but we are not complacent, and we look forward to implementing the recommendations from the Competition and Markets Authority’s final report on the issue.
As a method of controlling its energy costs, CEMEX, which operates a large cement plant in my constituency, has adopted an alternative fuel, called Climafuel, which is derived from household waste and has the benefit of making use of material that would otherwise go to landfill. That is a great example of the circular economy. What steps can my hon. Friend take to encourage other energy-intensive industries to consider the use of alternative fuels?
I really welcome the initiative by CEMEX in my hon. Friend’s constituency. My Department is working closely with the Department for Business, Innovation and Skills, as well as with the energy-intensive industrial sectors, including the cement sector, on ways in which companies can reduce their emissions while maintaining their competitiveness, and the use of alternative fuels is an important part of that.
The CMA has said that the energy sector for larger businesses is competitive, but it has put forward some strong and sound remedies for microbusinesses to prevent automatic roll-overs without a business’s consent and to improve online quotations, competition and the service available to microbusinesses.
The Government have guaranteed an electricity price of about three times the wholesale price to EDF so that it will build a nuclear white elephant at Hinkley Point C. How on earth will that help consumers—businesses or households—to reduce their energy bills?
I am sure that the hon. Gentleman knows that we get about 16% of our electricity every day from nuclear. He will also know that our nuclear plants are all due to be retired by at least the end of the 2020s. Therefore, new nuclear forms a core part of how we replace our electricity supplies. Hinkley is a good deal for consumers. Of course, the mark-to-market costs change according to the wholesale prices, but the price of the electricity coming out of Hinkley by the mid-2020s is guaranteed, and that is very important so that we provide certainty. The Government do not take the view that we will just see what happens; we have to plan for the future. Why? Because electricity security is not negotiable.
Northern Ireland households and businesses face the highest electricity bills in the whole United Kingdom. Businesses still face some of the highest energy costs in Europe. What discussions has the hon. Lady had with the Minister responsible for enterprise, trade and industry to ensure that everything is done to drive these costs down for Northern Ireland customers?
The hon. Gentleman is right to raise this issue. My Department and others frequently consult Northern Ireland Ministers to ensure that all the benefits that can be passed on to Northern Ireland consumers are being passed on. I welcome his contribution to the debate.
I am always happy to abide by your ruling, Mr Speaker.
One year ago, DECC’s estimate for the total lifetime cost of the nuclear power station at Hinkley Point C was £14 billion. Recently, that estimate was revised to £37 billion. Following the referendum vote, the Government’s expert adviser has said that Hinkley C is extremely unlikely to go ahead. Does this mean that the Minister now does not have to worry about justifying the extra £23 billion cost to the Treasury, or does she just feel that she does not need to explain about the additional burden on taxpayers?
Perhaps the hon. Gentleman has misunderstood. The cost of the project has not changed. The difference is because of wholesale prices. As there is a fixed price agreed for consumers, when forecasts and current wholesale prices change, so will the difference between the fixed price and the wholesale price. To be clear, the cost of the project has not changed. It remains a good deal for consumers—[Interruption.] The hon. Gentleman is chuntering at me from a sedentary position, but let us be clear: we cannot just wait and see. We have to make investment decisions and stick by them. We cannot simply magic electricity out of thin air; we need to invest, make decisions, and be committed to them.
9. What progress her Department has made on working with the major energy suppliers on the smart meter roll-out to ensure maximum benefit to consumers. (905857)
Good progress has been made to date on the roll-out of smart meters, with more than 3.6 million meters installed across the country. There is evidence that these consumers are already saving energy. Research by British Gas shows that smart meter customers have reduced their energy consumption by an average of about 3% for both gas and electricity.
Having recently installed a smart meter, I can confirm that it is a very useful tool in managing energy consumption. Will my hon. Friend join me in encouraging my constituents to contact their energy supplier to explore how these very useful little gadgets can save them some money?
Yes. I can also tell my hon. Friend that they are very useful when going away for the weekend, as a parent, because if your electricity use suddenly goes up dramatically, you know the kids are up to something.
My hon. Friend is exactly right. We need to encourage consumers to have smart meters installed in their homes to make sure that they can enjoy the benefits that he sets out. I encourage his constituents, and all our constituents, to find out more about the benefits of smart meters, and to request an installation or visit the Smart Energy GB website.
Many of my vulnerable constituents are on pre-payment meters, so smart energy meters present them with a terrific opportunity to get better value for money. Does my hon. Friend agree that smart meters have a terrific role to play for pre-payment customers?
My hon. Friend is exactly right. Smart metering will transform the experience of pre-payment customers. Topping up pre-payment meters should become as easy as topping up a mobile phone. I welcome the fact that a number of energy suppliers are already offering or trialling pay-as-you-go services for their customers.
May I welcome the Secretary of State to her new post? She has done some very good work despite, as she knows, my disappointment with her views on Brexit. May I urge her to think again about smart metering being rolled out to every home in the country? May I also remind her that the research and innovation behind smart metering happened partly because of university co-operation across Europe? Contracts are already being withdrawn from British universities because of Brexit.
I am sorry to disappoint the hon. Gentleman, but I am not actually in a new post; I am in my old post. Secondly, I do not recognise any damage to our smart metering roll-out as a result of contracts not being awarded to universities. I have not seen any evidence of that. Thirdly, it is our continued plan that all households and businesses should be offered a smart meter by 2020.
Smart meters can reduce our energy usage, but there were 43,900 excess winter deaths last year and a “Panorama” investigation revealed that more than 9,000 of them were directly related to living in cold and poorly insulated homes. Will the Minister explain why there has been an 80% drop in the installation of major energy efficiency measures in British homes over the past four years, and will she agree to have urgent talks with Lord Adonis to ensure that energy efficiency is a top priority for the National Infrastructure Commission?
I agree with the hon. Gentleman that fuel poverty in this country has to be tackled, and that is an absolute priority for my Department. He may be aware that we have launched our consultation on the energy company obligation to ensure that we refocus it on the fuel-poor and do everything we can to ensure warmer homes.
Retail Energy Market: Switching
I am happy to tell my hon. Friend that switching was at a four-year high in 2015, with 6.1 million electricity and gas switches across the UK. That is an increase of about 15% since 2014. Some 2 million further gas and electricity switches have already taken place between January and March of this year, with 52% of those customers moving to newer suppliers.
Will the Minister confirm that the Government are specifically ensuring that those who are in most need or who are financially challenged, including those in my constituency and across the UK who are in need of lower energy bills, are benefiting from an efficient and easier switching regime?
Yes, I can assure my hon. Friend that the Government are acting to do just that. In fact, customers on expensive standard tariffs could save £325 by switching to the cheapest fixed deal, which is why we continue to encourage customers to switch through our big energy saving network initiative.
When trying to compare tariffs, most of them remain incomprehensible, which particularly affects my most vulnerable constituents, including the elderly, the disabled and those with mental health issues. What measures will the Minister take specifically to support the most vulnerable?
The hon. Lady is exactly right that this is a very important area. I reiterate that over the past three years the big energy saving network has reached about 350,000 vulnerable consumers, helping them to reduce their bills by switching. Last year we ran a successful national TV and press advertising campaign, Power to Switch, and more than £38 million was saved by 130,000 households switching energy supplier. We continue to support good organisations such as Citizens Advice, which often hosts such initiatives and works face to face with vulnerable consumers to help them with the process of switching. I urge people who are struggling with fuel bills to give it a try; it really is not too difficult.
The UK’s system of carbon budgets provides the long-term certainty that businesses need to invest in our low-carbon economy. The Government announced last month that we would accept the advice of the Committee on Climate Change on the level of the fifth carbon budget. That announcement has been widely welcomed by the business community.
As my hon. Friend would expect, we are already busy working on that plan with other Departments, businesses, consumers and civil society. For example, we are already in discussion with the CBI, the Aldersgate Group and Energy UK among others to arrange specific stakeholder events, ensuring that our emissions reduction plan is built from the ground up, with input from a range of stakeholders.
Westinghouse nuclear fuels is the second largest employer in Fylde and produces nuclear fuel for 15% of the UK’s electricity production. What assurances can the Minister give that this Government will continue to support the UK’s domestic nuclear fuel industry and take us to a low-carbon future?
Nuclear power is a vital part of our work to build a secure, affordable and clean energy system to keep the lights on in the decades ahead. The Westinghouse facility in my hon. Friend’s constituency has a crucial role to play, providing the fuel that powers our nuclear fleet, as well as employment to many in his constituency.
EU Referendum: Investment in Power Sector
16. What assessment she has made of the potential effect of the outcome of the EU referendum on levels of overseas investment in the UK energy sector. (905865)
The Government have engaged extensively with investors since the EU referendum, sending a clear message that the UK remains open for investment and business. I am very clear that the UK is an attractive environment for investment in energy. My Department will continue to take the steps needed to deliver secure, affordable and clean energy for families and businesses across the UK.
As one former leadership contender to another, I commiserate with the Minister over the events of the past week and wish her well in the reshuffle today.
The manufacturers organisation the EEF told the Environmental Audit Committee, which I chair, that the decision to cancel the carbon capture and storage competition in the autumn statement came as a huge shock and damaged investor confidence in the industry. We also heard from Siemens, which has invested £160 million in the wind industry in Yorkshire, that the referendum result means it is facing a whole new set of unanswered questions. What steps is the Minister taking to bring confidence to investors in low-carbon industries?
In fact Siemens has recommitted to its investment in Hull, which is great news for that area. I had a meeting a few days ago—it seems like a year ago—with the Offshore Wind Industry Council to talk about confidence in investment. Its members all remain committed to the UK, and EDF has reaffirmed its commitment to the UK.
Specifically on CCS, as I have said many times in this Chamber, we remain committed to looking at what our future strategy for CCS will be. The fact that the competition did not make the cut in terms of taxpayer value for money at the last spending round does not mean that we are ruling out CCS. We believe that it continues to play an important role in the future of our decarbonisation strategy.
The recent EU referendum result has of course created widespread insecurity in this market and, indeed, the wider economy. There is now an increasing number of possible options from the Brexit negotiations, each leading to a number of regulatory and market options for the UK’s relationship with the EU, with each of these having differing implications for the investment in and trade of energy. What steps has the Department already taken to guarantee that overseas investment in our energy sector is protected, whichever of the outcomes is taken?
I believe that we will see huge opportunities in leaving the European Union. As is always the case in the United Kingdom, we will take great steps to ensure business confidence and ensure that those who have invested in this country will be able to use our very sound contract law and investor base to be able to continue to fruition with their projects.
I am sure the Minister will agree that the EU exit vote has caused uncertainty. I am sure that this new and slightly unexpected Government, with the paint still drying on the signs, will want to boost investment and development in the energy sector. Will the Minister tell us how the Government will create incentives for investment and boost consumer confidence?
I think the hon. Lady will accept that my concern about investor confidence led to a very significant move on my own part to make sure that we had certainty in the UK. The new Government will absolutely be keen to reassure investors and to make sure that this remains a very strong place to invest.
The most effective way for energy consumers to make sure that they are on the best value tariff is to shop around. I encourage all consumers to engage in the market and to make use of the Ofgem-approved price comparison websites that are readily available. We have taken action to make it simpler and quicker to switch supplier, and we are working with Ofgem to move to reliable next-day switching.
My hon. Friend is right to say that we need to make sure that people are aware not just of the benefits of switching, but of how easy it is to do. We are taking steps to raise awareness through the big energy saving network, Big Energy Saving Week and the Power to Switch campaign. We are also working to improve the switching process for customers. We launched the energy switch guarantee last month to give consumers confidence to switch, and we are working with Ofgem to deliver next-day switching.
Security of Electricity Supply
Our top priority is to make sure that families and businesses have secure energy supplies, and therefore to ensure that National Grid has the right tools in place to manage the system. Our energy security has been strengthened by reforms of the capacity market, including holding an auction this coming winter for delivery in 2017-18.
The capacity market is the most cost-effective way to make sure we have the infrastructure to cope with unexpected demand peaks. In May, we committed to buying more capacity and buying it sooner. New build capacity is eligible for 15-year agreements, providing a secure revenue stream and thereby encouraging new gas infrastructure.
Yesterday I launched a new all-party parliamentary group for marine energy, to promote the fantastic potential from our tumultuous seas of energy, whether tidal, stream or wave. Does my hon. Friend agree that when the Hendry review comes out in November this year, the Government should respond as fast and as positively as possible to make us a world leader in what could be one of the great sources of energy in the world?
We certainly recognise the potential that tidal lagoons could bring to the UK, which is why we have commissioned this independent review. We are absolutely committed to providing clean, affordable and secure energy that we can rely on now and in the future. This review will report in the autumn and will help us to determine what role tidal lagoons could play in that.
Strong protections for sensitive areas are already provided by the existing regimes. Those regulations ban fracking in national parks, areas of outstanding natural beauty and other sensitive areas to a depth of 1,200 metres. In response to our consultation on 28 June, we have confirmed that fracking will not be permitted from wells drilled at the surface of our most valued areas, including sites of special scientific interest.
I am grateful for the Minister’s response. Petroleum exploration and development licences have been granted in areas with green-belt and nature conservation status in my constituency. Can she reassure me that her recent announcement about protection from surface drilling will extend to the green belt and sites of special scientific interest?
I can reassure my hon. Friend that the planning process will take into account all issues related to sensitive areas. I can also tell her that fracking will not be permitted from wells drilled at the surface of areas such as national parks, the broads, areas of outstanding natural beauty, world heritage sites, sites of special scientific interest, Ramsar sites and Natura 2000 sites.
As things stand, I am delighted that the hon. Member for Brent North (Barry Gardiner) and I are able to take forward the enormous job of the Department of Energy and Climate Change. I am quite sure that there will be further announcements later that we all look forward to hearing.
Some 23,000 businesses in the UK have solar panels on their roofs. If proposals in the current review of business rates go ahead, instead of paying £8 per kW, those companies could end up paying between £43 and £61 from next April. Up until last week, the Minister’s Department did not even know about that. Will she find out why her officials have been sleeping on the job, and speak to Ministers in the Department for Communities and Local Government to get this mess sorted out?
T2. I have never known my hon. Friend to sleep on the job and I wish her well in the reshuffle. On the north side of the River Mersey, Fiddlers Ferry power station has closed down, while on the south side we have the blight of the new wind farm being built. Will my hon. Friend reassure my constituents in Frodsham and Helsby that the scientifically significant Frodsham marshes will not be blighted if fracking goes ahead? (905874)
We have more than 50 years of drilling experience in the UK, as well as one of the best records in the world for economic development alongside protection of the environment. All onshore oil and gas projects, including shale gas, are subject to the planning system, which addresses impacts such as traffic movements, noise, working hours and so on. National planning guidance states that any new development must be appropriate for its location and must take into account effects on health, the natural environment and general amenity, as well as any adverse effects from pollution. I hope that I can reassure my hon. Friend that his constituency will be protected.
T4. The Swansea Bay tidal lagoon project is hugely important not just to Swansea and south Wales but for potentially similar projects in Newport. When will the Minister have news of the independent report, and what is the timetable for making the decision? (905876)
The hon. Lady will be aware that Charles Hendry was appointed to look into the whole case for tidal lagoons and the contribution they could make to our future energy security, but also, importantly, the cost trajectory. His report will come out later this year. I cannot put a specific time on that, but we are acting just as fast as we possibly can.
Good progress continues to be made on Hinkley Point C. When I visited the site a few months ago, it was very apparent that a huge amount of work is already going on. As my hon. Friend will have seen, EDF has reaffirmed its full commitment to the project following the result of the referendum on 23 June.
Does the Minister agree that scrapping the Department of Energy and Climate Change could only be taken as a signal that the new Government attach less significance to these important issues?
T5. I have just been sent a report from Southend-on-Sea citizens advice bureau calling for a fair deal for prepayment meter users, who seem to be getting a second-class service. Given that they are the most vulnerable people, will my hon. Friend see to it that her Department looks again at the system? (905877)
I completely agree that prepayment meter customers get a rough deal, with a far smaller choice of tariffs and suppliers than customers who pay by other methods. That is why we are supporting recommendations by the Competition and Markets Authority to make it easier for prepayment meter customers to switch supplier, and to introduce a safeguard tariff cap for those customers until competition in that segment of the market significantly improves.
May I too wish the hon. Lady well in the reshuffle? We worked closely together on early intervention policy, and I know how committed she is to that.
My constituent Margaret Graham recently attended my surgery. She was at her wits’ end over protracted dealings with her energy supplier, npower, which has continually failed her since it made a huge error resulting in a very large overpayment. Since my intervention it has apologised and offered £150 in compensation, but this has been going on since 2013. Can the Minister assure me and the House that energy companies will treat their customers fairly and with respect, and does she agree that they should be held fully to account for their failings?
T6. I congratulate my hon. Friend on fielding all the questions over the last hour, and on the manner in which she has conducted herself over the past week. I believe that she has done herself a great deal of credit, and I add my voice to those wishing her well later today. Following the historic vote by the British people to leave the EU, the UK once again has full control over our VAT. One way we could help households across the UK with high energy bills would be to cut VAT on energy. Will the Minister support calls for such a move? (905882)
I am grateful to my hon. Friend, and to prove that collective responsibility has once again taken effect, I reassure him that VAT is a matter for the Treasury. I agree about the need to reduce the number of households in fuel poverty, which is why we are consulting on proposals to focus more of the energy company obligation on those most in need. We have laid regulations that will ensure continued support for more than 2 million households through the warm home discount.
The Minister suggested that there has been no loss of confidence in investment in clean energy as a result of the vote to leave the EU. Will she explain why the Swedish firm Vattenfall is reviewing its investment in the UK, which will put £5.5 billion of investment in offshore wind at risk?
I made it clear that continued, enormous investment is coming to the UK from offshore and onshore investors. I am not aware of the hon. Lady’s particular point, but the UK remains an attractive place to invest. The Government are doing everything they can to ensure that we get even more overseas investment in our energy infrastructure.
The capacity market is incredibly important for ensuring secure energy supplies. We recently announced that we will bring forward an earlier auction for 2017-18, to secure more capacity. We hope that that will enable us to get over this short-term issue where wholesale prices are so low that the viability of power stations is at risk. By having that capacity mechanism firmly embedded in our energy supply, we believe that we will bring forward new, attractive gas investment through longer-term contracts that will benefit the UK energy consumer.
The Government have estimated that the capacity auction this winter could put £36 on customer bills. Given that today the Minister has talked about keeping down customer bills, how does she think that that auction will affect those bills?
Our central assessment is that the impact on bills could be up to £28, but our impact assessment also shows that if we did nothing, further power station closures could add a further £46 to consumer bills. We believe that this auction is good value for consumers, and it provides the energy security on which we all rely.
I personally believe there will be huge opportunities. We now have the chance to negotiate free trade deals with the rest of the world. We have the opportunity to determine policies for energy without the need to constantly look for EU state aid. The opportunities for the future are enormous, and I look forward to being able to promote UK plc in the world.