Draft Public Service Pensions Revaluation (Prices) Order 2016
(8 years, 2 months ago)
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The Chief Secretary to the Treasury (Greg Hands)
I beg to move,
That the Committee has considered the draft Public Service Pensions Revaluation (Prices) Order 2016.
It is a great pleasure to serve under your chairmanship today, Mr Bailey—for the first time, I believe. Allow me to go through the background and the purpose of the order, which I will do in a little detail, if I may beg your forbearance.
In the previous Parliament, the coalition Government took the Public Service Pensions Act 2013 through the House. That was a very important Bill that provided the necessary legislative framework to implement Lord Hutton’s recommendations following his independent review of public service pensions.
Lord Hutton’s report set out recommendations for public service employees to continue to have access to good quality, sustainable and fairer defined benefit pension schemes. One of his key recommendations was that the Government should replace the existing final salary pension schemes with a new career-average scheme and then, when everything was ready, move existing members to the new scheme for future accruals.
The Government accepted Lord Hutton’s recommendations as a basis for discussion with trade unions and employers. Following those discussions, the Government entered into proposed final agreements with the unions, all of which required the introduction of new career-average pension schemes. With the exception of the new career-average section of the local government pension scheme, which had been introduced a year earlier—an important detail I will come to—those new schemes were introduced in April 2015, with most members moving from the final salary schemes to the career-average schemes.
Although I am sure members of the Committee are well aware of the differences between final salary and career average, I will briefly explain them for the record. Under a final salary scheme, a member is paid a pension that reflects their salary towards the end of their career and their length of service. Under the new career-average schemes, a member of the scheme is paid a pension that reflects their earnings over their whole career.
Each year, members earn a pension amount calculated as a proportion of their salary. The rate at which that builds up annually is driven by the accrual rate. The better the accrual rate, the higher the proportion of their salary that builds up each month. Those new pension amounts are added to those built up in earlier years and all are then revalued to ensure that the total of those pension pots maintains a value relative to a particular metric.
The particular rate of revaluation in each scheme is carried out in line with the revaluation metric set out in the scheme design and delivered in scheme regulations. Those metrics were finalised in the published agreements, reached following discussion between schemes and the relevant trade unions. It is the metric of prices revaluation that we are here to discuss today.
Some schemes have regulations that require the accrued pension pots to be revalued in line with earnings, such as the schemes for the armed forces and firefighters. With the rest, their regulations requires them to be revalued in line with prices, or prices plus some percentage.
It is worth setting out some of the background to explain why there are such differences. The Government’s starting offer for the scheme design, called the reference scheme, was an accrual rate of one sixtieth, with earnings revaluation. The uniformed services received better starting accrual rates, to reflect the younger normal pension age of their schemes.
The Government agreed, with the TUC, to enter into scheme-specific discussions with the unions representing the respective workforces, to ensure that the final designs reflected the unique nature of those workforces. However, to maintain control of costs and to protect taxpayers, the Treasury set out a cost ceiling process, whereby a scheme improvement in one area of design would result in a compensatory reduction in value of another area of scheme design; in other words, they are all designed to balance out the different considerations to arrive at something that would be within the cost ceiling.
Almost all schemes, with the exception of those for the armed forces and for firefighters, agreed to move away from the Government’s preferred revaluation metric of earnings and towards a prices metric. Some schemes went for plain prices, others went for prices plus a constant—prices plus x%. At that time, the Government’s preferred prices metric—this is what we are debating—for welfare and public service pensions uprating was the September consumer prices index, as it is today. In exchange for a lower value revaluation metric linked to prices, those schemes gained a faster, or better, accrual rate. This means that schemes, in discussion with the unions, agreed to have less annual uprating of pension pots in exchange for earning more pension each year. I will come back to the practical impacts of this shortly.
For the avoidance of doubt, pensions that are in payment and that are not subject to the revaluation orders we are debating today will continue to be indexed in line with the September CPI figure, although that will mean that those pensions in payment will be frozen this year. What is the purpose of today’s debate? The Public Service Pensions Act 2013 requires the Treasury to choose prices and earnings figures on an annual basis. On 2 February the Government announced that those public service schemes that rely on the measure of prices will continue to use September’s consumer prices index as the measure of prices revaluation. This means that a figure of minus 0.1% is to be used for the prices element of revaluation. At the same time the Government announced that the earnings measure would be the annual change in whole-economy average weekly earnings, non-seasonally adjusted and including bonuses and arrears, up to September 2015. This means that a figure of 2.0% is to be used for the earnings element of revaluation.
Where a negative figure is to be used for revaluation, as is the case here, the Public Service Pensions Act 2013 requires the order to be subject to the affirmative regulation procedure. As the prices order is negative, it is therefore the purpose of today’s debate to agree this draft order so that it can come into effect from 1 April 2016. In many ways, I view this debate as being about not whether the prices figure should be negative or positive, and whether that change is minus 0.1% or, indeed, some positive figure, but whether the Government have chosen the right prices metric for revaluation.
As I said, the metric we have chosen is the September consumer prices index. September CPI, as we all know, is the Government’s preferred measure of prices and is used for the indexation of public service pensions in payment, for the uprating of benefits and for the additional state pension. The September CPI figure was the measure used to revalue the career-average local government pension scheme last year when it was introduced a year earlier than the other schemes, setting an important precedent. Members may ask whether we could have chosen another measure, because CPI in September was negative this past year. It is true that we could have chosen another month’s CPI figure. We could, for instance, have chosen June’s or August’s CPI, which would have meant that the revaluation figure was 0%. However, that would create significant uncertainty for members, for schemes and for taxpayers. I will explain this in a bit more detail.
I shall talk first about creating certainty for members. Choosing September’s annual CPI figure is in line with the provisions that were agreed on behalf of members by their unions. It provides certainty for members by continuing to choose the Government’s preferred measure of prices, rather than picking and choosing a different month based on the view of the Government of the day. Although I cannot commit future Governments to a decision, our decision sets a clear precedent that September CPI will be the figure used for prices revaluation, whether that figure is high, low or negative.
Mr David Winnick (Walsall North) (Lab)
Would it be right to come to the conclusion that the people who are adversely affected by what is being proposed are low paid and, therefore, on very small incomes?
Greg Hands
That is not uniformly the case. I will go on to explain the three schemes that are affected: the local government pension scheme, many of whose members have been high earners in their careers; the civil service pension scheme; and the judiciary pension scheme. Although there are low-paid workers in some of those schemes, I do not accept that they are uniformly lower-paid workers; indeed, there will be some fairly high-paid workers in those schemes.
Returning to my point, scheme members want to be treated fairly and consistently, and the order we are debating today delivers that. There should also be certainty for schemes themselves. Not choosing September’s CPI figure would create uncertainty for schemes. If a consistent measure of CPI was not used, schemes would find it difficult to determine what the correct measure of prices revaluation should be, both when assessing the cost of the scheme and when setting employer contribution rates.
It would not be unusual for a scheme actuary to place an uncertainty figure in the valuation if we decided not to use the standard September figure, particularly if it was considered that there was doubt about whether a consistent prices metric would be used. That would have the potential to put upward pressure on employer contribution rates, and affect the amount of money that employers have available to employ staff.
Furthermore, choosing a correct and stable measure of prices ensures fairness across schemes. That is a crucial detail. It would be unfair for those schemes that chose faster revaluation, instead of a better revaluation rate, to benefit from both fast accrual and a more generous revaluation metric than the one that they decided upon. That goes back to my point about the balance in each of the schemes that was arrived at after consultation and negotiations with the relevant trade unions.
Graham Stuart (Beverley and Holderness) (Con)
Does my right hon. Friend agree that those who are tempted to suggest that we should give flexibility to the Government so that we can have a more generous position in this year should bear in mind that overall it would be unwise to trust Government to choose between various measures? Ultimately, we would expect their choice to be at the expense of the people, rather than that of the Treasury. Therefore, I applaud him for suggesting that we have total consistency and accept that consistency will apply even if the September figure goes peculiarly upward in future.
Greg Hands
Although I cannot go down the same road as my hon. Friend does about trusting the Government, I can say that his point about consistency is right. If there is any sense that the Government were able to move around between different months, according to political whim or motivation, that would introduce a huge amount of uncertainty into the schemes and open up the Government to lobbying. It would also probably open up all of us to being lobbied to choose one month or another. That might end up coming at the cost of the general taxpayer as well as creating instability in the scheme. Consistency is extremely important.
That leads me to the third area: certainty for taxpayers. To depart from what was agreed would also be unfair on the taxpayer. It is possible to argue that revaluing by 0% does not cost much, and that would be right. It would not cost that much, for now. But what about the future? If in the far future there were to be significant deflation, the cost of not revaluing negatively could be far greater. It is unfair in principle that members should be able to benefit only from the upside of inflation, while being shielded from the downside.
To illustrate my argument, I can share with Members a quote from page 72 of the report from the independent review of public service pensions undertaken by Lord Hutton:
“If there is no mechanism for reducing pensions in payment to maintain their real value then there is asymmetric sharing of risk between members and government, since government bears the risk of high inflation and members benefit from periods of deflation”.
Furthermore, many other taxpayers are in defined contribution schemes. The value of defined contribution schemes, of course, goes up and down based on the prevailing economic circumstances at that time and the valuation of bonds, stocks and whatever else might be put into that scheme. Members of the public who are not lucky enough to be in one of the highly valuable public service pension schemes for our highly valued public sector workers, but who face uncertainty from their own defined contribution schemes, should not be expected to subsidise public servants in this way from a potential negative revaluation drawn on by deflation. the arguments for continuing to use existing Government policy on the preferred measure of inflation for this order are clear and compelling.
I want to move on briefly to the effect the measure has on particular workers, perhaps answering some of the points raised by the hon. Member for Walsall North. The only schemes which will actually be negatively revalued directly under the terms of the Public Service Pensions Act 2013 are those for the civil service, local government and the judiciary. However, you will be interested to know, Mr Bailey, that as the ministerial pension scheme relies on the provisions of this revaluation order, a Minister’s career average pension pot will also be negatively revalued. I am not looking for sympathy for myself and the Treasury Whip, but it is worth pointing out that there are knock-on effects beyond this immediate order.
I now return to the main question about the three pension schemes. To give a worked-out example, a local government worker who earns £21,000 a year will earn around £530 of pension this year. That pension pot will be revalued by minus 0.1%, which means a reduction in the nominal value of that pension pot of less than 50p. Even with a comparable pension pot from the previous year—remember that the local government pension scheme was introduced a year early—the total reduction would be less than £1. A civil servant earning £26,000 a year will earn around £600 of pension this year. That pension pot will be revalued by minus 0.1%, which means a reduction in the pension pot of around 60p. So this is not an attack on public sector pensions or on lower paid public sector workers, nor should it be portrayed as one.
In conclusion, the Public Service Pensions Revaluation (Prices) Order 2016 is an important aspect of the move towards more sustainable and fairer pension schemes for public service workers and for taxpayers. As Lord Hutton has said, these recommendations provide a balanced deal. It will ensure that public service workers continue to have good pensions and that taxpayers can have confidence that the costs are controlled. Revaluing in line with scheme agreements that have already been made is an important part of the deal and I look forward to the debate.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
It is a pleasure, Mr Bailey, to serve under your chairmanship. I thank the Chief Secretary for his opening words outlining the background and the reasons we are here today. The new public servants’ pension schemes introduced from April 2015, in the most part, under the Public Service Pensions Act 2013, provide for pension benefits based on career average revalued earnings, rather than final salary, following Lord Hutton’s report and the negotiations thereafter. A feature of CARE schemes is that an individual builds up benefits in each year of service based on a proportion of earnings and that the earning factor is revalued each year until retirement. The Minister is right that different accrual and revaluation rates were agreed as part of the negotiations for the different schemes. In the schemes for civil servants, local government and the judiciary, the earnings factor is revalued by prices. Similar is true for NHS, teachers’ and police pensions, but they feature a small uplift percentage, in line with the agreement reached, and variations in the annual accrual rate. For firefighters and the armed forces, he is right that the revaluation rate uses average earnings.
Turning to the most affected schemes, the local government pension scheme had 1.8 million active members in England and Wales in October 2015. At the end of March 2015, the UK-wide civil service pension scheme had 493,000 active scheme members. Section 9 of the 2013 Act provided for the Treasury to make orders that specify the percentage change in prices or earnings for the purposes of revaluation by reference to the general level of prices or earnings estimated in such a manner as the Treasury considers appropriate. Today’s draft order fulfils that requirement in relation to the period 1 April 2015 to end of March this year. The figure specified is indeed a decrease at minus 0.1% and this order is subject to the affirmative procedure because the value is negative.
When the 2013 Act went through Parliament, the former Member for Kilmarnock and Loudoun raised the concerns of trade unions and others that negative growth would allow for negative revaluations. The then Treasury Minister, the right hon. Member for Bromsgrove (Sajid Javid), said:
“It is important to note that the clause theoretically allows for negative revaluations. It is extremely rare for negative growth to occur. For example, CPI, the Government’s preferred measure of prices, has never been negative.”––[Official Report, Public Service Pensions Public Bill Committee, 13 November 2012; c. 308.]
The concession made was that any such order would be subject to the affirmative procedure and that Parliament would have an opportunity to debate the measure, yet such an order has been brought before the House in the first year of the scheme. Not only has it come before the House, but it comes without any proper impact assessment. The implications of the change were unclear for those who have may retired within the last year. If I understood the Minister’s opening comments correctly, the change may not apply to those receiving pensions in payment who have retired in the last year and their pensions will be frozen. It would be helpful if he could reconfirm that and confirm whether any amendment to legislation is required to make it clear for the future.
The Minister also talked about how the Government came to decide on the use of the September 2015 CPI. He is right that the Treasury has a choice in this matter and will know that the year-to-date CPI figures were negative only in April, September and October. It is also the case that pensions in payment and the additional state pension are frozen rather than subject to negative revaluation, so will he explain again why the Government preferred to allow for a negative revaluation rate for active schemes rather than a nil adjustment—a point raised by Lord Whitty and others —when most observers would say that that appears far more consistent?
If the Minister has indeed decided that the change will not apply to those who have received pensions and have retired in the last year, will there be any impact and have any of those who have retired had the option to take any form of lump sum? Would there be any tax implications as a result? Has he taken legal opinion on that point, and if so what was the outcome? Does he have an estimate of the savings that he believes Government Departments will accrue as a result of the decision to apply a negative revaluation rate?
How has the decision been communicated? Will statements be sent out to scheme members, and if so when does the Minister expect that to happen? It would be helpful to hear what impact he believes the negative rate will have on confidence in the new pension scheme arrangements, and what capacity he believes is in place for any queries that people may rightly have when they receive their statement of accrued pension benefits and see that the figure has gone down. The Minister will know that MyCSP’s administrative difficulties were recently the subject of a National Audit Office report. Will it answer any queries that may come in on this matter, and will it have the capacity to cope with them? Finally, what assessment has the Treasury made of whether applying a negative revaluation rate rather than a nil adjustment will breach the cap?
Greg Hands
Let me see whether I can respond to the large number of reasonable questions that the shadow Minister asked me. The first thing to say is that she is right that this matter was debated during the passage of the 2013 Act, and it was pointed out that CPI could go negative in exceptional circumstances. Negative inflation is certainly not totally without precedent. It was useful that that debate was had and that Parliament approved the Act and many of the measures, including those that are now in the order. It approved the idea that if there were to be a negative revaluation, it would have to be brought to the House under the exceptional procedure, recognising that it would be an exceptional event.
Seema Malhotra
The words that were used were that it would also allow for parliamentary scrutiny, but the Minister has introduced the order without any impact assessment. What extra information will he provide?
Greg Hands
It is clear that today’s debate allows for parliamentary scrutiny, but the hon. Lady asks about an impact assessment. The impact will be fairly clear, and I will give some more examples.
To illustrate the amounts that we are talking about, let us compare workers in two different schemes, the local government scheme and the NHS scheme, both earning £26,000 a year. The local government worker will have earned about £40 more in their annual pension than the NHS worker, because of the trade-off between the revaluation and accrual rates. Because the revaluation rate will lead to a less favourable calculation for the local government worker but a more favourable one for the NHS worker, the local government worker’s pot will be reduced by 50p next year, whereas the NHS worker will get £7 more. Someone in the teachers’ scheme who is on £26,000 will also get about £7 per annum based on the revaluation. On the question of pensions in payment, there is a statutory link, so public sector pensions in payment will be frozen for the year without the need for new legislation or a further order.
The hon. Lady asked about the three months of negative CPI. I come back to the five main reasons why we have chosen to use the September CPI figure. First, we should set a precedent of using the CPI month that is most frequently used across Government. Secondly, in terms of the risk sharing, not only should scheme members benefit from the upside risk of revaluation but they should not be shielded from the downside risk. The third reason is consistency. Choosing a figure that is different from the September CPI figure would introduce the idea of significant policy discretion, going back to the point raised by my hon. Friend the Member for Beverley and Holderness, which would open up scope for lobbying and negotiations in an area where one wants a long-term degree of certainty. I think that would be a very unhelpful and unfavourable development.
The fourth reason is that this figure honours the pension settlement. Many of the schemes reached agreement through negotiations with the unions on the basis of CPI-linked revaluation. Choosing the correct CPI figure helps to deliver on that settlement. The final point is about fairness across the schemes. Schemes that choose faster revaluation instead of a better revaluation rate should not be able to benefit from both fast accrual and a more generous revaluation.
Mr Winnick
The Minister has been telling us that it does not make that much difference and that the impact will be minimal. He said in an aside that ministerial pensions would also be affected. As he said, we will not be in great tears about that. Is it not a fact that in practice the CPI does not take into account housing costs, while RPI, which was used previously, did? Although the Minister minimises the impact through the figures he has given, the fact is that those on low income will undoubtedly find their income that much less, taking into account housing costs and the rest. I am not satisfied by any means that this measure is neutral and that it does not matter at all to the people to whom I have referred.
Greg Hands
Let me seek to answer that point. The Government announced in June 2010 that CPI would be used as the most appropriate measure of general level of prices for most benefits and the indexation of public service pensions. There was a legal challenge to that and the decisions of both the High Court and Court of Appeal ruled in the Government’s favour, finding that CPI was appropriate for both benefits and pensions uprating.
The third point I would make—
Greg Hands
Let me answer the first question. The hon. Gentleman will have a longer memory than I have, but RPI has also gone negative in the past. It is not impossible that exactly same phenomenon could happen with RPI, his preferred measure of inflation.
Richard Graham (Gloucester) (Con)
I think I am right in saying that RPI was negative in 2008, during the great recession. It is a constant hazard of recessions that there will be those negative indicators. Am I not also right in thinking that the main reason why CPI was chosen over RPI was precisely that the vast majority of pensioners are not still paying off their mortgages, whereas those people who are have predominantly not retired?
Greg Hands
My hon. Friend is right. For all kinds of good reasons the Government made the decision to move this whole sector of public pensions and benefits from RPI to CPI. I think he is right that at that time RPI had gone negative.
If I could answer the final couple of points from the hon. Member for Feltham and Heston—
Greg Hands
Shall I deal with these two and come back to the hon. Lady if I have not answered satisfactorily?
Greg Hands
Thank you. All scheme members will receive annual benefit statements setting out the revaluation amount. I am confident that members will understand that, where the unions and Government agreed the terms of the scheme, this agreement must be upheld.
In terms of the savings accrued by Government Departments, if I understood the question correctly, no savings have been assumed, as is consistent with the scheme rules, whatever the prices are. The majority of these pensions will not come into payment, of course, for many years. This is about consistency with the proposed final agreement so that they are fair to workforces, schemes and the taxpayers. I will give way and, if I have not answered all the hon. Lady’s questions, I will come back.
Seema Malhotra
I want to probe the Minister further on a few points that he missed or on which I am not completely clear. I understand that pensions in payment are frozen but may I check that in the particular circumstance of those who retire in-year in any month from April onwards, they will not be subject to a reduction? The implications are clear, because that means that any pension paid to members who had retired in-year would be reduced effectively and may have resulted in an overpayment—an unauthorised payment, with tax implications. In this particular circumstance, which may be a slight anomaly, can the Minister provide an absolute guarantee that no legislative change is required and that those who have retired in-year will not be adversely affected? Have any of those who have retired taken any lump sum payments and, if so, are they potential overpayments or not subject to such overpayment under the current law? When will the Government send out statements? Will it be possible to respond to queries that will inevitably be sent to the mailboxes of Opposition Members and to the Minister and others about statements that appear to show that members’ accrued pension rights have gone down? Where will those queries be answered? Who will constituents call, and will there be capacity to respond?
Greg Hands
Let me try to answer those further questions. The annual benefits statements will be sent out in the usual way. I am confident that members of schemes will understand what has happened and they will be told about the September CPI figure. I am confident that such inquiries will be dealt with in the usual way. In terms of pensions in payment, I am prepared to reassure hon. Members that we will deal with this complex matter. It is a slightly anomalous matter, which may require a legislative amendment or a small change to the schemes, but I assure the Committee that members will not be adversely affected in the particular case of an in-year withdrawal from the scheme.
Detailed impact assessments were prepared for the new scheme designs and were published by each Department. They will have taken into account prices impacts. The order implements the prices elements of those schemes designs and therefore there is no need to conduct a separate impact assessment for the technical implementation of what has already been decided and laid out.
To revalue using the September CPI figure, which is the subject of the order, is a very important step for the Government to take to be consistent and to set a consistent precedent that will be easily understood. It was for the Government to choose a measure of prices for the purposes of revaluing the prices element of the new career-average public sector pension schemes. The Government have chosen the measure that was agreed with the schemes after negotiation with the unions, following the precedent set by last year’s revaluation of the local government pension scheme and also the measure used for indexation of public services pension in payment. I should also re-emphasise that it maintains the real value of these pensions, ensures that there is an appropriate sharing of risk between members and Government and, importantly, that it sets the right precedent for the future. I therefore urge the Committee to support the order.
Question put and agreed to.
Resolved,
That the Committee has considered the draft Public Service Pensions Revaluation (Prices) Order 2016.
Draft Renewables Obligation Closure etc. (Amendment) Order 2016
(8 years, 2 months ago)
General CommitteesRead Full debate Read Hansard Text
The Committee divided: - Ayes: 10 / Noes: 8 - Question accordingly agreed to.
The Minister of State, Department of Energy and Climate Change (Andrea Leadsom)
I beg to move,
That the Committee has considered the draft Renewables Obligation Closure Etc. (Amendment) Order 2016.
It is a great pleasure to serve under your chairmanship, Mrs Gillan.
The draft order closes the renewables obligation 12 months early to solar PV generating stations at 5 MW and below from 1 April 2016. It will apply to new generating stations and to existing stations that wish to add additional capacity up to the 5 MW threshold.
Solar PV is an important part of the low-carbon energy portfolio. It has seen strong growth in recent years, due in no small part to support from the renewables obligation and the feed-in tariff schemes. In many ways that progress is excellent news, making a valuable contribution to our renewable electricity generation. The amount of deployment, however, has also raised concerns about its impact on the levy control framework, the budget that caps the amount of support paid for through consumers’ energy bills. I am sure hon. Members agree that the Government need to act responsibly when there is a risk of exceeding such a budget. We have therefore introduced a number of measures to deal with the projected over-allocation of renewable energy subsidies. In those measures we have aimed to strike the right balance between the interests of consumers and the interests of developers.
This time last year we were considering a similar order relating to the early closure of the renewables obligation scheme to large solar farms, those over 5 MW in size. Solar farms at that large scale were deploying much faster than previously expected. We were rightly concerned about the impact that that speed of deployment could have on the levy control framework. At the time it was decided not to extend the closure to projects at 5 MW or below, because the evidence suggested that the smaller schemes posed less of a risk to the levy control framework.
Hon. Members will recall, however, that in the debate last year it was made clear that the deployment of smaller scale projects would be closely monitored. If deployment were shown to be growing more rapidly than could be afforded, measures would be considered to protect the framework. The monitoring revealed that, if we did not act, up to four times more new solar capacity would be eligible for support this year and next under the renewables obligation than we had previously estimated, over the lifetime of the projects costing in the range of between £1.2 billion and £2 billion, in real terms at 2011-12 prices. I am sure the Committee agrees that in such circumstances the need for further action is essential.
In taking the action to complete the early closure of the RO to solar, we have aimed to strike the right balance between protecting bill payers and protecting developers who have made significant investments. That is why the draft order makes provision for a number of grace periods which mirror those offered as part of the large-scale closure. Stakeholders have welcomed that consistency.
One of the grace periods proposed was designed to protect developers that could show a significant financial commitment had been made on or before the date the proposals were announced. That required evidence that a planning application had been made, among other things. During the consultation, however, we received evidence that some developers were submitting invalid planning applications just to meet the deadline. We have therefore clarified the policy intent of the planning application requirement so that it is in line with what is considered a valid application in planning legislation throughout Great Britain.
When we closed the renewables obligation early to large-scale solar farms last year, we saw a rush of projects accrediting to beat the closure date. More than 1.5 GW of solar were accredited in March 2015 alone, covering an area equivalent to about 5,000 football pitches. This time around, because we had evidence to suggest that the costs of solar PV had fallen further and faster than previously anticipated, we proposed excluding new solar projects from our grandfathering policy if they did not meet the significant financial commitment criteria. That was necessary to avoid locking in possible overcompensation in the event of a similar rush of projects accrediting before the closure date. The change in policy will mean that if a banding review were to determine a lower level of support, projects that are not grandfathered would not maintain their level of support. That proposal was unpopular with developers, but it is necessary as a cost control measure.
We confirmed that change in policy last December, and at the same time we started to consult on the results of the banding review. We are currently considering the consultation responses. Subject to the outcome of that process, changes will be implemented later this year through a separate amendment to the Renewables Obligation Order 2015.
Our analysis indicates that the early closure proposed in the order will save between £60 million and £100 million a year from consumer bills. Total solar deployment under the levy control framework subsidy regimes will reach 12.8 GW by 2020, following the closure and the action taken in the recent feed-in tariff review. The electricity market reform delivery plan is our best estimate of what we need to hit our 2020 target and sets out an intention to deploy between 10 GW and 12 GW. So even with these changes, we are on track to exceed that range, which further underlines the need to take action to prevent further solar deployment under the scheme.
We have taken the opportunity in the order to remove an inconsistency between the Renewables Obligation Closure Order 2014 and article 91 of the Renewables Obligation Order 2015, which was drawn to our attention by stakeholders. We are making a technical amendment to make it clear that an operator of an offshore wind station benefiting from a closure grace period can apply to Ofgem for registration of offshore wind turbines until 31 March 2018. That does not change the policy intention.
The Government are committed to combating climate change, but in the most cost-effective way for bill payers. By summer 2015, the costs imposed on bill payers associated with support for renewable and low-carbon electricity generation were forecast to reach £9.1 billion in 2021, significantly above the target of £7.6 billion. If the costs reached that level, they would need to be met through increases in consumer bills. It is therefore absolutely right that we have looked at ways to protect value for money and affordability under the levy control framework. I hope hon. Members will agree that on balance, the approach we have taken is the right one. We are closing a demand-led scheme and taking action on overcompensation, while still allowing solar to be deployed under the revised feed-in tariff scheme. That will ensure that solar PV is supported in a way that offers better value for money for consumers. I commend the draft order to the House.
Dr Alan Whitehead (Southampton, Test) (Lab)
It is a pleasure to serve under your chairmanship this afternoon, Mrs Gillan.
As the Minister set out, the effect of the order will be to close access to the renewables obligation for solar arrays of under 5 MW by March 2016. It represents another early closure of the RO, alongside the one for onshore wind and, as she mentioned, the previous one relating to larger solar. One might add that reining back renewables is another perverse, sudden policy intervention. As she mentioned, the category of solar in question eventually proved rather successful. If the solar industry at the sub-5 MW level had been as unsuccessful as, say, the green deal, perhaps the closure would never have happened. Perhaps that is not a terribly good example to use, because of course the green deal has been scrapped as well, on the grounds that it was unsuccessful.
To understand how sudden and random the intervention was, we need only look at the supporting documentation for the statutory instrument, from which we can see that the consultation on the early closure, and the grace periods attached to it, which the Minister drew attention to, commenced on 22 July and closed on 2 September—just when everyone was on holiday; but perhaps that is beside the point.
The date of 22 July happened also to be the date on which projects that were not fully agreed, for example in the planning process, could make no further progress through grace periods. To show how random that turned out to be, I have a note from a leading UK solar company, telling me that the 22 July grace period qualification deadline was
“by definition was unknowable even 24 hours in advance”
of its being announced and that 22 July was the first time anyone in the industry knew about the date. The company had one project, which it was 95% ready to submit as a full planning application; but it did not intend to do so until about a week after the consultation was published.
When the 22 July consultation was published, with the grace period definition within it, the company scrambled within 24 hours to try to submit its project, but failed by one day. With one day’s notice it did quite well to fail by one day; but nevertheless it was still cut off, which means it has £1 million tied up in a project that may now not qualify for anything, solely on a technicality it could not control, despite the fact that the planning application was 100% valid and less than one day late.
Indeed, the process of consultation has been substantially criticised by the Secondary Legislation Scrutiny Committee in another place, which drew particular attention to the deficiencies in the consultation period and the difficulties caused, particularly with the sudden emergence of grace periods, for the industry as a whole.
The central justification for the policy lurch is also to be found in the supporting documents; as the Minister has also mentioned, it is to keep within the levy control framework, that half-mythical, half-real device that now hovers over most renewable deployment for the next 10 years—or should we say the next five years.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
I did intend to intervene on the Minister about that, but is not it high time there was full transparency on the levy control framework, so that given the lurches and changes there have been in policy we could at least have some idea of what is underpinning this? There are investors in particular who have got quite nervous in the last while, with the possible pushing up of premiums they will have to borrow with to invest in the future.
Dr Whitehead
The hon. Gentleman has clearly, with a little long-sightedness, been looking over my notes, because that is exactly the point I need to emphasise now about the levy control framework. Although we think that the issue is about the next 10 years, as far as the deployment of renewables is concerned, we simply do not know in any detail what will happen to the levy control framework between 2020 and 2025, despite the fact that the Government have indicated that detail will be filled in at some stage. Obviously, that is a cause of continued consternation for those attempting to plan some sort of future for their longer-term projects.
We need to emphasise that many of these projects require a number of years to undertake, and therefore some form of guidance and certainty would be useful for projects that may be starting now and may not be operational and available for contracts for difference, if there are such things in the period between 2020 and 2025. It would be helpful if those companies had at least the assurance that they were not wasting their time by putting forward proposals for the future.
The impact assessment for the SI says in its opening lines:
“The proposed interventions intend to limit projected spending under the Renewables Obligation, while not harming projects that have already made significant financial commitments”—
which is not necessarily the case, as we have seen—
“This is to limit the impact on the LCF of significantly greater solar deployment than previously anticipated.”
Of course, we do not know the actual impact on the LCF of significantly greater solar deployment than previously anticipated because we do not know the effect of overspends within the LCF—that is, the LCF’s original projections for spending on solar and the overspend in terms of the variation from those original projections. We do not know that because apparently we are not to be trusted with that information. No variation figures have been published, nor are apparently likely to be.
Indeed, I have now asked three parliamentary questions on the effects of that variation, which is central to the impact assessment of this SI. On each occasion, I have been met in the answer with complete stonewalling, on frankly increasingly spurious grounds, on what those variation totals consist of. I am sure the Minister is aware of that issue, because it was she who signed off the answers to those questions on the future of the LCF variation.
It would be helpful for the passage of this debate if the Minister, perhaps by an intervention, gave me the actual sums for the variations over the period relating to solar. It would be even more helpful if she gave those relating to variations in her Department’s calculations as far as the LCF is concerned below 5 MW. We could then determine whether the variations in spending really had such an impact on the LCF that they caused this particular decision to come about, or whether they were of an order that would not have had much of a substantial impact on the LCF—as I suspect may be the case, though we do not know.
Andrea Leadsom
I am slightly offended to hear that the hon. Gentleman thinks I have ever stonewalled him in answer to a parliamentary question. I assure him that I always seek to reply as openly and fully as I can to parliamentary questions, and I take particular care with his.
In answer to the hon. Gentleman’s question, as I have already set out, this early closure is saving in the region of £60 million to £100 million per year on the levy control framework. In aggregate terms, with the rate of deployment that we were seeing in the smaller solar fields, the total cost over the lifetime of the up to 20-year subsidy could have been up to £2 billion—a fairly princely sum. He will also be aware that the levy control framework projections will be set out by the Office for Budget Responsibility in only a couple of weeks’ time, during its Budget assessment.
Dr Whitehead
I thank the Minister for that intervention. Frankly, the information she has provided the Committee with today is rather in line with the circumstances in which she felt she could respond to my parliamentary questions. I hope the Minister is not offended by any suggestion that she personally prevented me from getting the information that I requested. My point is that the levy control framework is now so opaque, in terms of its operation and its variations, that it affects proper scrutiny of how decisions have come about. That is not as a result of possible spending in the future but about variations in the past—what was originally thought to be the trajectory of the levy control framework and, as reported in the impact assessment, its actual trajectory in terms of overspending, and how that relates to subsets of that, in particular as we are discussing this afternoon, subsets of solar expenditure as they relate to sub-5 MW installations.
Mr MacNeil
Just picking up on the point about the LCF and the OBR, if the LCF is opaque, the OBR varies wildly in its estimates. In November 2014, the projected LCF spending was £6.25 billion in 2021, but by July 2015—eight months later—the forecast spending was £9.8 billion, a huge change of approximately 50% in the OBR’s projections. That further adds to the hon. Gentleman’s call for clarity and an end to the opacity.
Dr Whitehead
I thank the hon. Gentleman for his intervention, despite its length, which underlined the opacity of the levy control framework and the difficulty of getting to grips with what is really going on with those sums of money. We must also bear it in mind that those sums are not Treasury money. They are money from levies that will be raised from supply companies and passed on by, among others, the CfD counter-party body, which we discussed in a recent SI, to generators and, eventually, to bill payers. I mention that aspect of the LCF because the question we may want to ask this afternoon, in terms of the overall aspect of the levy control framework and how it relates to this particular level of solar deployment, is whether the projected effect on the levy control framework would actually be fatal to it or just a small aspect of it. We do not know, because we do not have the variation figures. Figures from the impact assessment suggest that the closure of the RO early for small solar of this range might put about £1, on average, on household bills—or £80 million per annum. While that is important for household bills, it looks to be—at first sight—a drop in the ocean for the entire LCF and, quite possibly, even within the boundaries of an adjustment of the LCF that the Department has available under the terms that it originally agreed.
There is a real question here, to which we will probably never know the answer because we do not have the proper information available. Was it necessary to do all this for just that result, especially when it is beginning to be established that solar deployment is—by moving the merit order on generators’ supply during the day—actually lowering prices to customers over the long term? Has the Minister analysed the impact on customers of that counter-indicator of the effect of solar on merit order? I suspect that if she did some work on that, she might find that the actual cost to customers, over time and in this context, would be close to nil.
We have some very good, immediate comparisons on customers’ bills to look at in the context of this afternoon’s debate. Just yesterday the Department published its proposals for capacity market reform and it has been estimated that, among other things, the new proposals will double the effect on customer bills of the previous capacity market arrangements—from £10 per annum on customer bills to over £20 per annum. That looks to me, at first sight, as though it will have a very substantial impact on the levy control framework, but of course the capacity payments, which do indeed filter through to customer bills in just the same way as levies do for renewables, are not within the LCF framework, or at least not as far as control totals are concerned. So it is official: you can whack up customer bills in a vain attempt to get some investors to invest in gas-fired power stations, with no evidence that it will actually happen, whereas when investors are seeking to invest in real solar power for the future, with the effect that I have described, it is necessary to stop that happening because it might affect the levy control framework.
This is a short-sighted, damaging measure, which never should have been considered in the first place. Solar is now on a good glidepath to no subsidy, perhaps in the next few years. To replace that glidepath with a cliff face in this way will surely kill the very technology that can, with some additional deployment, be of immense value to our energy plans for the future. That is why I am afraid we cannot support this measure today, and wish to divide on the matter.
Melanie Onn (Great Grimsby) (Lab)
It is a pleasure to serve under your chairmanship, Mrs Gillan. Great Grimsby produces a higher proportion of our electricity from renewable sources than any other town or city in the country, making my constituency the renewable capital of England—although mistakenly called a city, for some reason. That is partly as a result of the efforts of the solar industry. We have 10 companies working on solar installation in the town, and perhaps because hundreds of people in the town work on the offshore wind farms, the industry has raised people’s awareness of renewable energy more widely. Solar was, until recently, a growing sector in the town.
The director of Greater Grimsby Community Power has told me today that, although he is confident that he can meet all of his existing plans before the closure of the renewables obligation, the move that is being discussed today will mean that his organisation will not be able to expand beyond its current output. I think that that will be replicated across many organisations and companies in the country today.
My constituency really needs more of the jobs that these organisations are able to offer. For years we have consistently had one of the highest unemployment rates in the country, but the growth in the renewable energy industry from solar and other sources is giving people in the town renewed hope for their employment prospects and those of their children. As I mentioned to the Minister this morning, I recently hosted the renewable energy skills fair. Over 130 people attended, and they are keen to move into the sector, but the Government’s change in policy for the solar industry, particularly since May 2015, has led to the loss of thousands of jobs nationally, with many more at risk of going in the near future. This has been done at a time when the sector really is on the cusp of becoming economically competitive; so many more thousands of jobs could be created if the Government took a different approach.
Looking at the renewables sector more widely, the early closure of the renewables obligation could have a damaging impact on investor confidence across the sector. I know—as does the Minister—from speaking to the major companies that have built offshore wind farms in my constituency, that confidence is the key to unlocking private sector investment. What message are the Government sending to wind, tidal, biomass, nuclear and any other subsidy-reliant sectors by going back on their previous plans and cutting subsidies earlier than they previously agreed? This measure is damaging to our country’s reputation as a safe place to invest.
Helen Hayes (Dulwich and West Norwood) (Lab)
It is a pleasure to serve under your chairmanship, Mrs Gillan. I want to put on record my opposition to this short-sighted and unnecessary measure. The Government’s argument in making this change to the renewables obligation implies that, but for the renewables obligation, there is a level playing field in the energy market for all types of producers. That is simply not the case.
The renewables obligation is an interim measure to support the solar industry, which is still young and emerging in the UK, to establish itself in the market. At the same time, the Government continue to subsidise fossil fuel-dependent producers in multiple ways, so we do not have a level playing field and now they are taking away the one measure that was playing a role in creating a more balanced market and allowing solar to emerge as a mature sector within it.
Despite the impact assessment, I do not believe that the Government have fully explored the impacts of their measure. The solar energy industry is dominated by small businesses. The impact assessment estimates that between 8,700 and 4,500 full-time-equivalent jobs will no longer be supported in the solar industry, but the assessment says that data are poor and that there is a great deal of uncertainty about the figures. Those are big job losses and there is no indication in the assessment that the Government have talked in any detail to small businesses in the solar industry, who will be directly affected, about the impact that the loss of the renewables obligation will have on them.
I met recently with a small-scale solar installation company in my constituency. The proprietor told me that since the announcement the bottom has dropped out of the solar market part of his business. He does a number of other things—he installs windows and so forth—so that did not directly translate into job losses for his business, but he said that interest from domestic consumers in installing solar panels had simply dried up. That has the effect of stopping individual households who want to do the right thing and do their bit towards combating climate change from doing so.
The installer I spoke to was mystified by the Government’s approach. He said that solar panel installation had been growing year on year as a component of his business and that, because prices from his suppliers were falling, it would not have been too long before that part of his business would have been profitable without subsidy. He therefore did not understand why, as my hon. Friend the Member for Southampton, Test said, the Government are leaping from a glide to a cliff-edge and, as the installer put it, the rug was simply being whipped out from underneath the sector.
We have no more pressing challenge than climate change and central to addressing that is a fundamental shift in how we produce energy in this country. This measure damages the progress made towards a shift to renewables. It is short-sighted, bad for business and bad for the environment. I oppose it wholeheartedly.
Callum McCaig (Aberdeen South) (SNP)
It is a pleasure to take part in this debate. The Minister spoke extensively in this and other debates on the renewables sector about how the Government are on track to meet their targets on solar deployment, which we are discussing today, and on onshore wind, which has faced a similar fate. I will read a quote:
“simply meeting the targets we have set ourselves will not be example enough for the rest of the world to follow.”
That is from the reset speech by the Secretary of State, and I agree wholeheartedly with the sentiment expressed there. If we simply focus on meeting the targets set some time ago, we will not be able to achieve what is required.
The UK proudly led the high ambition coalition at the Paris talks last year, but I wonder how we are to achieve that high ambition when we are deliberately curtailing our own ability to meet what is required. That will be damaging for industry, as we have heard from hon. Members, and will have an impact on jobs, but above all it will have an impact on our ability to reduce our carbon emissions in the most cost-effective way. Solar and wind are cheap forms of zero-carbon production, and to limit them in such a crass and blunt manner at a time when they are becoming even more cost-competitive is short-sighted, as a number of Members have said today.
I and my party believe that solar has an important role to play in the energy mix, and I very much agree with the comments made by the hon. Member for Southampton, Test and, in interventions, by my hon. Friend the Member for Na h-Eileanan an Iar, about the absolute requirement of transparency in the levy control framework, the impact that the order will have on it and how low-carbon producers will be able to have certainty going forward.
We cannot look at the costs of the proposal, which the impact assessment says are potentially £100 million, in isolation. We need to look at the costs of replacing the solar capacity that would have come online with something else, but those costs are not clear. Nor can we look at the levy control framework in isolation, because we need to consider the capacity market, the strategic balance and the reserves. We need to look at it in the round, and for far too long debates have been focused on individual smaller policy areas. It is easy to pick off solar or onshore wind in isolation, but for some reason it does not seem to be quite so easy to pick off nuclear in isolation. If it costs £100 million a year to produce 2 GW using solar, I ask the Minister how much the annual costs of Hinkley Point will be. By my reckoning, solar would be better value. That has not been made clear, and there are significant concerns about that.
There are costs to inaction, which have not been and will not be factored in, and some of them are intangible. The order is not a sensible way forward. There is a positive transition to solar—the costs are coming down and deployment is going up, exceeding our ambitions. Coming back to the Secretary of State’s speech, that should be seen as a good thing, not a bad thing, because it means that we have had the right investment framework. More needs to be done, and there are intermittency problems with all forms of renewables, but when we were discussing the Energy Bill—perhaps in this very room—we had debates about storage, which can help make renewables more of a reality and provide the base-load that is required.
Technologies such as solar have a strong part to play in the future if they have the right Government support. The proper support has not been put in place, and the order will further undermine and erode that support and the confidence in the industry that we need in order to deliver what we are requiring of ourselves. As such, the Scottish National party will oppose it today.
Mr MacNeil
I had not intended to speak today, but given the length of my intervention I thought I should make a speech.
I back up the call that the hon. Member for Southampton, Test made. He was on my Committee, the Select Committee on Energy and Climate Change, but sadly for a very short while. Because of his abilities and merits he has been promoted to the Labour Front Bench, and I congratulate him on that. He is absolutely right that the LCF needs to be transparent, and the assumptions and methodologies behind it have to be published. We cannot get far unless we have that.
The Minister said that £60 million to £80 million would be saved through this order on solar. That is less than 1% of an annual LCF payment, so it is not a lot. It is seen as a cost, and not as an investment. That is the philosophical difficulty with the Government. Any spending today is seen as a cost and not as an investment for the future.
The hon. Member for Great Grimsby made a good point: the policy is costing investment and jobs in her constituency. I agree with that. There is another effect: the cost of capital will increase for people borrowing for future projects. In evidence to my Committee, some people said that the cost would increase by 2%, which would come to about £3 billion, which represents about 0.15% of GDP. That shows that DECC’s decisions are costly in many ways. There is also the point about the investment that has not happened in the past few months.
Therefore, I am worried by the direction of travel, the lack of a plan and the lack of transparency at DECC. We have to look at what else has happened over the last number of years, at previous spending on renewables and at what that has done to the wholesale price of energy. The wholesale price of energy has, of course, fallen because of the fall in the price of fossil fuels, but there has been a further push. Once they are constructed, renewables’ energy price is effectively zero. That pushes the wholesale price down further.
I saw a good example of that with my Committee in Denmark last week. We were told that, such was the expansion of renewables in Denmark and in Sweden, a nuclear plant that has been refurbished has asked not to be commissioned and used. Such is the competition from renewables that nuclear in Scandinavia is not competing, apparently. We should be aware of the effects of renewables on the energy market in various parts of Europe.
My Committee will tomorrow publish the investor confidence report, which is slightly hampering some of my remarks today because I would not want to be in contempt of Parliament. However, I encourage everyone to look out for that report tomorrow from the Energy and Climate Change Committee.
Andrea Leadsom
I have to say I am getting sick and tired of the barrage of complaints from Opposition Members on one day about the end to subsidies— at a time when subsidies are no longer necessary at the level they were—and the next day or the next week about fuel poverty, with Members throwing stones at the Government for not doing enough to reduce bills to consumers. They cannot have it both ways. They need to decide. Do they want subsidies to continue, regardless of the impact on bills?
The hon. Member for Southampton, Test, the Chairman of the Select Committee, the hon. Member for Na h-Eileanan an Iar, and others, including the hon. Member for Aberdeen South, complain about fuel poverty and about the effort to avoid the impact on consumer bills—they say it is only a pound, it is only £60 million, it is only £100 million, it is only £2 billion over 20 years. Why is that worth saving? Because the Government’s policy is to be the consumer champion and to ensure we decarbonise at the lowest cost.
Andrea Leadsom
No, the hon. Gentleman has had his say so many times and I am sick and tired of it. He needs to stop peddling that argument. The point of the Government’s policy is to support consumers and to decarbonise at the lowest price. We absolutely support subsidies for renewables. They have been so successful and their costs have come down so much. We have carefully consulted, and we have concluded that they no longer need the subsidies at the rate they were receiving them at and that the potential impact on consumer bills of continuing with subsidies at that rate is too great. That is the end of it. Those are the facts. I am sorry that Opposition Members want to play politics with that but we are on the side of the consumer.
The hon. Member for Southampton, Test specifically asked about the eligibility date and why we chose 22 July 2015. That is the date on which we announced the proposals and the grace period was designed to align with that. The significant financial investment grace period is designed to protect those who made such commitments before we proposed to bring forward the RO closure date for solar PV. Moving the date to enable other less advanced projects to meet the eligibility criteria would increase the risk of more projects deploying at greater cost to the LCF. We have tried to strike the right balance between the public interest, including protecting consumer bills and ensuring the right mix of energy, and the interests of solar developers and the wider industry.
The other thing I will say to Opposition Members is that, since our changes to the feed-in tariff, deployment has continued in the solar sector. They like to speak as if no subsidy somehow means that no solar or renewable projects are coming forward. That is blatantly not the case. A significant and decent amount of renewables are still coming forward. Under the Government’s policy, we believe that the feed-in tariff will enable up to another 1.1 GW of new solar installations between now and 2020, protecting the consumer while protecting and supporting the industry.
The hon. Member for Great Grimsby asked about job losses. The consultation period suggested that up to 23,000 jobs will continue to be supported by subsidy and, potentially, many others without subsidy. We are aware that large-scale solar projects are coming forward without subsidy, so it is simply not true to say, as she did, that there are thousands of job losses and that there will be thousands more. There is no evidence for that.
Other hon. Members asked about the LCF transparency. I will make a further point about that. We have been clear that we do not break down published information on components of LCF spend, because of the potential disclosure of commercially confidential information. In certain sites, that has to be the case and has to remain so.
Other hon. Members talked about our impact assessment not having sufficient data points. I can tell the Committee that there were 55,000 responses to the feed-in tariff review and, from that, we gained about 5,000 extra data points from which we were clearly able to target that policy to continue to support renewables, so it is simply not the case that the draft order has been ill-thought-through or that it is not seeking to strike a balance between the interests of the consumer and the interests of the industry.
We are confident in our policy on renewables. Those industries are superb and great British success stories. Hon. Members will be aware that 99% of all solar installations have taken place since 2010, when the Conservative-led coalition Government came to office. Today, still, the vast majority of solar deployments has taken place under a Conservative Government.
In answer to the specific point about nuclear made by the hon. Member for Aberdeen South, he must realise that solar and nuclear are not directly comparable. Solar is not dispatchable; it provides electricity when the sun is shining. Nuclear is dispatchable; as the hon. Gentleman is aware, most days we get 19% or 20% of our electricity, day in, day out, from dispatchable, reliable nuclear electricity. That cannot be the case from solar.
Callum McCaig
I accept that, but will the Minister likewise accept the point that I made, which is that if we are to be serious about storage, with investment and a proper mechanism for it to happen, solar can do that and, arguably, at a similar cost to nuclear, if not cheaper?
Andrea Leadsom
The hon. Gentleman did not make that point, but I entirely agree. As he well knows, in the Department we are looking closely at what exactly we can do to bring forward more storage. He also mentioned that nuclear in Scandinavia is asking not to be brought forward because it cannot compete with renewables. As he knows, what is meant there is hydroelectricity, which is dispatchable, so he makes my point for me. We cannot compare intermittent technologies with dispatchable electricity—it is simply not relevant to our discussion.
I thank members of the Committee for their contributions to this debate. It is very important to make it clear on the record that this Government are on the side of consumers. We will absolutely keep the lights on and decarbonise at the lowest cost to consumers, keeping the balance right between the interests of consumers and of developers.
Mr MacNeil
I am very grateful to the hon. Lady for giving way. I do not want to make her any more sick and tired, so I will ask her briefly—[Interruption.] I am not sure which one is the Minister.
Mr MacNeil
Does the hon. Lady agree that present-day consumers have benefited from past investment in renewables?
Andrea Leadsom
I absolutely agree. As I have just said, 99% of all solar installations have taken place since 2010. This Government have done more to promote renewables than any other Government ever in the UK. Some £52 billion has been spent on the renewables sector since 2010. I absolutely agree. We utterly support this sector and we are keen to continue to do more for it, but not at any price and not at subsidy levels that harm consumers and are not needed by the industry.
In conclusion, this order achieves a balance between the interests of consumers and the interests of developers. The grace periods will make sure that significant financial commitments are protected.
Question put.